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ARTICLE VII Fenancin� Section 7.1. Developer Financin�_ (a) The parties agree and ac3cnowledge that the Developer intends ta �inance the constr�ction of the Minimum Improvements through issuance by the City of Housing Revertue Bonds". The City agrees ta issue the Housinb Re�en�e Bonds, subject to the terms and conditions of this Section, and compliar�ce with all requirements of State law and the internal Revenue Code of 19$6, as amended and related regulations. (b) The Housing RevenUe Bonds may be issued in one or more series, at Developer's option. Each series of Housing Revenue Bands m�st be issued in accardanee with all tenns and conditions af the City's Pgocedzu-e for Appliea#ion to the City of Arden HiIIs for Private Activity Revenue Bond Financing �ated September l4, 2009 (the "Private Acti�ity Bond Folicies"). Notwithstand�ng anything to the contrary in the Private Activity Bond Policies, the pa�-ties agree that the admir�istrative fee required under Part II, Sectian 9 therein, shall be payable in a lur�p sum at closing on each series of Housing Re�enue Bands. The lump surn shall be one percent o� the original principaI amount of the first $S,Q00,000 i� Housing Revenue Bonds issued; one-half percent of the original principal amount of the next $ I S,OOO,ObO in original principal amount of Housing Rever�ue Bonds issued; and ane-quarter percent of the original principal arrtount of Housing Revenue Bonds issued in excess of $20,000,000. For purposes of the fee calcuIation, the pri�cipaI amount of all Housing Revenue Bonc�s will be ag�-egated; as if all were issued on the sarrte date, but the administrative fees wi�i be payable upon closing of each separate series. In accordance with Part DI, Section 2 of the Private Activity Bond Policies, no additional admi��istraci�e fee is payable �pon issuar�ee of any series of bonds to refund initial Housing Revenue Bor�ds for which a fee was paid at c3osing. If any series of Housing Revenue Bonds are issued in part to refund a prior Housing Revenue Bond and in part to fnance construction of the Minimurn Ir�provements (that is, a mixed refunding and "new money" bond}, only the principa} amount of the bonds a3locable to the new rr�oney portion of that series wi�i be taken into account in determn�ing the administrative fee for tl�at series. (c) Ifthe City determines that issua�ce of any series Housing Revenue Bonds is reaso��ably expected to cause gavernmental bonds issued by the City in that calenc�ar year to be ineligible for designation as "qualified tax exempt obligations" under Section 265(b)(3) of the Interna� Revenue Code of I986, as a�nended (alsa known as "bank qualified"), the Developer wiIt be required to rei��burse the City, at the time of issuance of the City's bonds in t3aat calendar year, for any interest rate differential between bank qualified and rton-barik c�ualified bonds, as determined by tl-►e City`s independent financia] advisor_ {d} Developer may not seek, and City will not consent to, issuance of any series Housing Revenue Bonds by any unit of government other than the City. Section 7.2. Subordination. ln order to facititate issuance of the Housing Revenue Bonds, the Authority agrees to subordinate its rights under this Agreement pro�ided that such subordination shall be subject to such reasor►abie terms and conditions as the Authority and the underwriter and trustee for the Housing Revenue Bonds mutually agree in writing. (The remainder of this page is intentionally left blank.) 378990vIQ SJB AA200-]0 2�