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/ 1 ARTICLE III. CITY OBLIGATIONS FOR HOUSING BONDS AND SUBORDINATED HOUSING NOTE; DEFERMENT OF FEES; ACQUISITION OF DEVELOPMENT PROPERTY; CONSTRUCTION OF PUBLIC IMPROVEMENTS Section 3.1 Housing Bonds and Subordinated Housing Note. The City agrees to issue the Housing Bonds and Subordinated Housing Note pursuant to the Housing Act in an aggregate amount, not to exceed $8,070,000, which is estimated by the Developer to be sufficient to pay the estimated Project Costs; provided, however, that the aggregate principal amount of the Housing Bonds shall not exceed $7,800,000 and the principal amount of the Subordinated Housing Note shall not exceed $250,000. The obligation of the City to issue the Housing Bonds and Subordinated Housing Note is subject to the following conditions: (a) The Financing Documents, in form and substance satisfactory to the City and the City Attorney, have been duly executed and delivered by the Developer and the other parties thereto. (b) The Developer shall have executed and delivered the Ground Lease and the PUD Agreement. (c) Faegre & Benson LLP, as bond counsel, shall have delivered its opinion that the Housing Bonds and Subordinated Housing Note were validly issued and that the interest thereon is exempt from federal income taxation. (d) The City shall have received opinions of counsel to the Developer and the other parties to the Financing Documents, in form and substance satisfactory to it, to the effect that the Ground Lease and Financing Documents are valid and binding obligations of such parties, enforceable in accordance with their terms. (e) The Developer shall have entered into a contract for construction of the Improvements with , in form and substance satisfactory to the City, and providing for a guaranteed maximum price of not more than $ (f) All conditions precedent to the execution and delivery of the Financing Documents shall have been satisfied without regard to any waivers which the City has not approved. 10