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Nashua Performing Asts Center -- NMTC Term Sheet

October 14, 2020

Confidential

Reserves:

Subject to the terms of the final financial projections, a cash reserve may be
required at the Investment Fund level.

Distributions:

During the NMTC Compliance Period, cash received by Investment Fund from
Sub-CDE will be distributed and used as follows: (1) payment of permitted
administrative and operating expenses, including the annual management fee,
and (2) payment of interest on the Fund Loan.

Put/Call Agreement

At the end of the seven-year NMTC Compliance Period, Investor shall have the
right to put all of its membership interest in Investment Fund to an affiliate of
Borrower, Sponsor or Fund Lender (“Option Purchaser”) for $1,000. In the
event that Investor fails to exercise its put option, Option Purchaser will have an
option to purchase Investor’s membership interest in Investment Fund at fair
market value as determined by an appraisal made by a qualified appraiser
determined by the Option Purchaser.

Other Terms:

Fund Lender wifl not be entitled to collect, receive, or make any claim against
or with respect to any indemnity payments made to Investment Fund pursuant to
the provisions of Sub-CDE's operating agreement or any indemnification
agreement (collectively, “Indemnity Payments”) to satisfy any indebtedness or
other sums due, or that may become due, under or in connection with the Fund
Loan or the Fund Loan Documents, and (b) any and all such Indemnity
Payments, whenever made, shall be permitted to be distributed by Investment
Fund to its member as compensation for the loss or recapture of New Markets
Tax Credits for which such Indemnity Payments shall have been made. Fund
Lender will acknowledge and agree that it has not bargained for, and does not
intend to have, the right to collect or receive any Indemnity Payments, and Fund
Lender will expressly waive and release any and all rights to prohibit, set aside,
revoke, or seek the return of any such Indemnity Payments made to Investment
Fund and distributed to its member, whether pursuant to the Fund Loan
Documents or any bankruptcy, fraudulent transfer, insolvency, or other federal
or state laws providing any such rights.

SUB-CDE STRUCTURE

Sub-CDE
Ownership
Structure:

Sub-CDE will be a single-purpose limited liability company. Investment Fund
will own a 99.99% interest (the “Jnvestor Member”) and Allocatee will own a
0.01% interest and serve as the managing member (the “Managing Member"),

The Sub-CDE may elect to either be taxed as a partnership for federal income tax
Purposes of as a corporation for federal income tax purposes.

Sub-CDE
Management:

The Managing Member shall arrange for the management of operations,
compliance, loan disbursement and servicing, and asset management for Sub-
CDE.

Sab-CDE
Capitalization:

Sub-CDE shall receive a total of $9,750,975 from Investment Fund and Managing
Member. It is anticipated that $9,555,000 of these funds will be used to make the

QLICI Loans to Borrower as outlined below (assuming a fourth quarter 2020
closing):

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Nashua Performing Arts Center - NMTC Term Sheet

October 14, 2020

Confidential

Sources
Qualified Equity Investment $9,750,000
Managing Member Equity $975
Total $9,750,975

Uses
A Note
B Note

$7,108,850
$2,446,150

Sub-allocation fee to Allocatee $195,000
Sub-CDE retained cash $975
Total $9,750,975

QEI:

$9,750,000

Reserves:

None are currently required at the Sub-CDE level; however, the parties may
mutually agree to hold up to 5% of the QEI in a loan loss reserve at Sub-CDE.

Distributions:

Pursuant to the NMTC program, (i) if the Sub-CDE elects to be taxed as a
partnership, only an amount not to exceed the “operating income” of Sub-CDE
will be available for distribution to Investment Fund during the NMTC
Compliance Period and (ii) if the Sub-CDE elects to be taxed as a corporation,
the Sub-CDE will only be able to make distributions to the extent that such
distributions are treated as dividends for federal income tax purposes.

CDE Upfront and
Ongoing Fees &
Expenses:

Up-front Sub-Allocation Fee to MCD at Closing: $195,000

Annual CDE Asset Management Fees to MCD: $34,125 annually for the term of
the QLICI Loans, pro-rated for partial years.

Annual CDE Audit, Compliance AUP and Tax Preparation Fee to MCD:
$13,429 annually for the term of the QLIC] Loans, pro-rated for partial years.

Annual miscellaneous fee of $1,000 per year, pro-rated for partial years, totaling
$7,000 over the Compliance Period, which shall then be paid by Sub-CDE to
MCD.

Exit Fee: None

Sub-CDE
Reporting:

Sub-CDE will be responsible for collecting the reports and information to be
provided by Borrower, and furnishing the same to the Investor Member. Sub-
CDE will also be responsible for providing financial and tax reporting, as well as
copies of all reports and information provided to the CDFI Fund and the Investor
Member. The specific reporting requirements of Sub-CDE to the Investor
Member shall be negotiated and agreed upon by such parties.

Sub-CDE
Relnveatment
Reqaircments:

In any ard ali instances when less than 85% of the QEI remains as a QLICI as
defined in Section 45D of the Code, the Managing Member shall cause Sub-CDE
to reinvest proceeds in one or more replacement QLICIs (collectively, a
“Replacement QLICF’) in a cumulative amount nocessary to ensure that at least
98% of the QEI remains invested in one or more QLICIs. The specific terms

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regarding the determination of a Replacement QLICI shall be negotiated and

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Nashua Performing Arts Center — NMTC Term Sheet Confidential
October 14, 2020

mutually agreed upon by the Managing Member and the Investor Member. |

QALICR
QALICB/Borrower | The Project consists of the acquisition, renovation and development of existing
Description: improvements located at 201 Main Street in the City of Nashua, New

Hampshire. The improvements at the Project shall be owned by Borrower and
shall be leased to Project Sponsor for use as a performing arts center and multi-
purpose community facility. It is anticipated that the Project Sponsor shall enter
into an operating agreement or sublease with a performing arts operator (the
“Project Operator”).

The total cost for the Project, including, without limitation, soft costs, reserves
and contingency, is estimated to be approximately $24,924,430.

QALICB Status: The business operations of Borrower will constitute a QALICB for purposes of
the NMTC program. Borrower is reasonably expected to maintain its QALICB
status, based on the Basic Conditions to the QLICI Loan Documentation
(outlined below), among other requirements, as prescribed under Section 45D of
the Code,

The covenants of the QLICE Loan Documentation will require Borrower to
retain eligibility as a QALICB for so tong as any QLICI remains unpaid. Loss
of QALICB status shall constitute an event of default and a due on demand
clause shall be enforced, whereby any recovered proceeds shall be redeployed,
subject to the provisions described under the Sub-CDE operating agreement.

QLICI Notes & The following notes and terms are anticipated for the QLICIs (collectively, the
Terms: “QLICI Loans”) to be made by Sub-CDE to Borrower:

Amount: Aggregate principal amount of $9,555,000.

Use of Funds: Generally for the development, rehabilitation and reuse of the
improvements at the Property; provided, that the use of the proceeds of the
QLICI Loans is subject in all events to the NMTC program requirements,
including without limitation, MCD’s NMTC allocation agreement. The QLICIE
Loans are to be term loans in nature and not structured as revolving working
capital lines of credit.

Maturity: Both Note A and Note B are expected to have a term of at least thirty
(30) years.

Interest Rate: The interest rate on the OLICI Loans will be blended based upon
the interest rate on the Fund Loan and management and other fees paid through
interest; however, each QLICI must either: (2) have an interest rate that is at
least 50 percent below market; or (2) otherwise satisfies at least five indicia of
flexible or non-traditional rates and terms, as outlined in Allocatee's NMTC
allocation application. For purposes of this measurement, any QLICI that is
subordinate to another secured creditor shall be compared to the market rate of
subordinated debt.

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Nashua Performing Arts Center -- NMTC Term Sheet Confidential

October 14, 2020

Amortization: The QLICI Loans will be interest-only for at least seven (7)
years following the closing date. Thereafter, the loans will amortize on to-be-

agreed upon terms.

Coltateral: First priority lien on the real estato and any personal property of
Borrower with such additional collateral to be determined, in part based upon
requirements of Investor’s tax counsel and the completion of Investor's
underwriting of the transaction after review of the final transaction structure and
due diligence. Sub-CDE, Borrower and Sponsor (as tenant under the Lease)
will enter into a Subordination, Non-Disturbance, and Attornment Agreement
on commercially reasonable terms.

Loan Guarantees:
In addition to the guaranty to be provided by Project Sponsor set forth in the
section entitled “QALICB Indemnifications”, Project Sponsor shall also be
required to provide (i) a construction completion and payment guaranty and (ii)
an environmental indemnification.

Fund Lender shall also be required to provide (i) a construction completion and
payment guaranty and (ii) an environmental indemnification. With respect to
Fund Lender’s payment guaranty only, such payment guaranty may be limited
to QLICI Loan interest payments needed to source payment of fees and
expenses at the Sub-CDE level if such limitation is determined to be necessary
by Investor’s tax counsel.

For purposes of clarification, the construction completion guaranty shall
include, without limitation, a guarantee (i) that the Project wil] be completed in
accordance with the approved General Contractor's Contract in a lien free
manner on or before a date to be agreed upon by the parties (which date shall
not be more than twelve (12) months after closing of the QLICI Loan unless
otherwise agreed to by Investor and MCD in their sole and absolute discretion),
and (ii) to pay any “Deficiency” needed to complete the Project. For purposes
of this letter, “Deficiency” shall mean the amount that the uses to complete the
Project as set forth in the budget approved by Investor and MCD exceed the
committed sources for the Project (as determined by investor and MCD) at any
time until completion of the Project.

QALICB Level
Ongoing Fees &
Expenses:

an Structuring, Modeling and Closing Fee to Baker Tilly Capital, LLC:
7,500.

Annual Loan Servicing Fee to The Valued Advisor Fund, LLC: $24,375
annually for the term of the QLICY Loans, pro-rated for partial years.

Exit Fee: None

QALICB Counsel
Legal Opinions:

Typical federal income tax opinions, at a “should” level of assurance, will be
required from QALICB counsel, including, without limitation, the following
opinions:

(a) that Borrower should constitute a QALICB;

(b) that the QLICI Loans should each constitute a QLICI;

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Board of Aldermen
February 23, 2016 Page 14

down the path that Mayor Lozeau pointed out last year of increased costs for flat-lined services and a loss of
value.

Alderman Clemons

’ve heard a lot spoken tonight about the spending cap. | want to address that at least for constituents who
elected me to represent them. | did not run with a pledge of upholding the spending cap. The spending cap
was put into place in 1995 and it’s gone up with inflation so if you think of it in those terms we are spending
1995 dollars in 2016. For a city this size and that has grown in different ways; we have a more diverse
population than we had in 1995, we have different struggles particularly that the police department has to deal
with than they had to in 1995 and yet here we are arguing about whether or not these gentlemen should get
raises that essentially would be the equivalent of raising their pay with 1995 dollars. | don’t think it is fair and |
don’t think it is right. That’s my opinion and the voters at least in Ward 6 didn’t vote for me to come into office
to make sure that everything would fall under the spending cap. They wanted me to use my judgement and
my judgement is that we need to make sure that our police department is taken care of so that people like
Alderman Moriarty said, want to come and work in Nashua and so that people want to stay in Nashua and
retire in Nashua because if we don’t do that then what is going to happen is we are not going to get the top
quality candidates that we have gotten in the past and that’s going to affect our crime rate and everything
thereon down. For those reasons | am going to vote for this contract regardless of the spending cap because |
don’t believe the spending cap should come into discussions because | think it is something that is strangling
the city.

Alderman O’Brien

| would just like to throw out an air of caution. To say that people retire just to retire may not necessarily be
true. There’s a whole host of reasons why an employee choses to retire. It could be health reasons or
something else that is going on in their particular life or maybe we are not paying them enough and they are
seeking employment. To that end we do have a Board of Police Commissioners that did due diligence
negotiating with this particular union. They brought us back a contract for us to approve. | am going to vote in
support of it but if we shoot this down then may | recommend to come join with me and let’s roll up our sleeves
and sharpen our pencils and do the work of the police commission or are we going to trust a duly appointed
Board that brings back negotiations from an organization whether it be the Board of Fire Commissioners or the
Board of Public Works or whoever is up on their contracts. | understand that we do have the right to shoot it
down despite what other people think but again, | would not say as a complete blanket statement that people
retire just to retire, they retire for a whole host of reasons and we have to respect the individuality and maybe
we need to look at what age these people are retiring at. If they are getting out at the first opportunity then
maybe something is wrong and we need to look at it. That has not been brought up by this Board because we
are not sitting here with the negotiations so maybe we need to be a little bit more active and take a look at what
is the particular reason.

Alderman Lopez

| would like to speak in support of the police because we’ve been talking mostly about the spending cap.
Alderman Siegel made some good points about the potential of our vote tonight doing nothing but signaling to
the police that we put a dollar value on their service and then ultimately having to pay them anyway. There is
that concern but | would like to acknowledge more along the line of what Alderman Clemons was pointing out
of not only do we have a heroin epidemic which has received a lot of publicity and public support from my
fellow Aldermen and the Mayor a commitment to do something about it. | don’t think it’s a good time to
necessarily start cutting back on our number one tool to address that. The Public Health Department is very
effective. Numerous community organizations are also stepping up with trying to help with prevention and
recovery but the police department are the ones that are dealing with the emergency calls and issuing the
Narcan and dealing with the emergency situations that arise. They are usually our first line of response so
making sure that they are coordinated and trained and overseen by qualified, competent supervisors | think is
a major priority for our city. | recognize what Alderman Moriarty said about the pieces of the pie and you can’t

Nashua Performing Arts Center -- NMTC Term Sheet Confidential

October 14, 2020

(c) that the lease should constitute a true lease for federal income tax

purposes; ;

(d) that cach of the QLICI Loans and Fund Loan should constitute true debt
for federal income tax purposes;

(¢) an economic substance opinion; and

(f) such other appropriate opinions as requested by Investor and CDE after
review of the structure and underlying transaction documentation.

Additionally, appropriate state law opinions regarding existence and
authorization of various transaction parties, and enforceability of transaction
documents, will be required.

Financial
Projections:

Baker Tilly US, LLP shall be engaged to provide financial projections,
including ongoing financial statements of Borrower, schedules of the QLICI
Loans, and the activity of Sub-CDE and Investment Fund.

Underwriting and

Disbursement

B and Un iting: Investor is responsible for undertaking
its own underwriting review, including seeking all necessary internal approvals,
in connection with Borrower and the Project. Investor will advise Allocatee of
any required guarantors of the QLICI Loans (whether payment or performance).

Balanced Sources and Uses: As a condition of closing, Borrower shall provide
evidence satisfactory to Investor and MCD that (i) Borrower bas obtained

committed sources sufficient to pay all uses necessary to complete the Project
and (ii) Borrower bas sufficient equity or other committed sources to stabilize
the Project. All equity sources and parties (and agreements evidencing
commitments to provide equity) must be approved by Investor and MCD,

Disbursement Process: To the extent the QLICI Loans are not fully funded at
closing, Investor, Allocates and Sub-CDE shall agree on conditions required of
Borrower for disbursement of funds held in escrow at closing, which may
include the following terms/conditions: Guaranteed Maximum Price Contract;
Payment & Performance Bond; Disbursing Agent; Third-Party Construction
Inspector; Construction Draw approval process.

OTHER TERMS AND CONDITIONS

Transaction Costs:

Borrower and/or Project Sponsor shall be responsible for the payment of ail of
Investor’s cosis and expenses associated in connection with the transaction,
including, without limitation, Investor’s organizational and administrative costs
and expenses in connection with the formation of the Investment Fund.

Borrower and Project Sponsor each acknowledges and agrees that Allocates and
investor may enter into a prefunded QEI with respect to all or a portion of the
proposed allocation for the transaction whereby the QEI is made to Sub-CDE in
advance of tha date the QLICI Loans are anticipated to be funded (the
“Prefunded QEI") and that any cost and expenses incurred by Allocatee and
Investor in connection with the Prefunded QE! shall be included as transaction
costs for which Borrower and Project Sponsor are responsible,

Deposit:

Upon execution of this term sheet, Project Sponsor and/or Borrower shall pay a
non-refundable it_in the amount of $50,000 to Investor (the “Initial

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Nashua Performing Arts Center ~ NMTC Term Sheet Confidential

October 14, 2020

Deposit”) to be credited to the Project at closing.

Upon Investar’s counsel's legal fees reaching or exceeding 75% of the Initial
Deposit, Project Sponsor and/or Borrower shall be required to pay an additional
non-refundable deposit in the amount of $50,000 to Investor (the “Additional
Deposit’) to be credited to the Project at closing,

It should be noted that if the transaction does not close, Investor will use the
deposits received, including the Initial Deposit and any Additional Deposit, to
cover its legal costs and other fees and expenses incurred in connection with the
transaction, but Borrower and/or Project Sponsor are obligated to reimburse
Investor for transaction costs, fees and expenses actually incurred exceeding the
Initial Deposit and any Additional Deposit.

The Initial Deposit (and the Additional Deposit if applicable) shall be made via a
Mascoma Bank account offset or a wire transfer to the following account:

Beneficiary: Mascoma Bank
Bank: Mascoma Bank
243 Sykes Mountain Ave
White River Jet, VT
ABA# 211770213
Account# 89-202010
Ref: NPAC-Investor
Atin: Katie Washburn

If the Initial Deposit is not received within five (5) Business Days of the
execution of this letter, Investor, in its sole discretion, may suspend all work, and
direct its counsel and agents to suspend all work, tegarding the transaction until
the Initial Deposit is received.

While this document serves to describe some of the business terms of a potential
New Markets Tax Credit transaction with the Investor and does not constitute a
binding document except as cxpressly set forth in the first paragraph of this
Letter, the proposed Borrower should remain aware that timing is of the essence
and Investor will suffer economic damages should the transaction not timely
close.

This letter will expire if the parties have not closed the transaction by December
15, 2020.

Confidentiality:

Subject to the provisions and requirements of New Hampshire R.S.A. Chapter
91-A, (i) Investor, Project Sponsor and Borrower agree to treat the tenms of this
letter as confidential and shall not share the terms with any other party without
the express written consent of the other parties, except the letter may be shared
with each party’s counsel and tax advisor and (ii) all information and materiats
received by Investor, Project Sponsor and Borrower are to be kept confidential,
and each party will negotiate in good faith to close the transaction.

Notwithstanding the foregoing, the parties hereto shall be permitted to disclose to
any and all persons, without limitation of any kind, the tax treatment and tax
Structure (as defined in Treasury Regulation Section 1.601 1-4(c)) of the

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transaction contemplated by this letter and all materials of any kind (including

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Nashua Performing Arts Center - NMTC Term Sheet Confidential

October 14, 2020

opinions or other tax analyses) relating to such tax treatment and tax structure.

Termination:

1. Investor may terminate the agreement created by this letter by written
notice to Borrower if:

a. Project Sponsor or Borrower fails to comply with any material
term or condition of this letter,

b. Project Sponsor, Borrower or any of the owners thereof:

i. Applies for or consents to the appointment of a receiver,
trustee, or liquidator for it or for any of its property;

ii. Admits in writing an inability to pay its debts as they
mature:

iii. Makes a general assignment for the benefit of creditors;
iv. Is adjudicated as bankrupt or insolvent; or

v. Asa debtor, files or has filed against it petitions in
bankruptcy, or petitions secking reorganization or an
arrangement with creditors or to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation law or statute;

c. Any representation, warranty, statement, certificate, or other
information made or furnished to Investor is false or misleading
in any material respect as of the date made or furnished;

d. There has been a material adverse change in the facts set forth in
the underwriting materials or in the financial condition of Project
Sponsor, Borrower or any of their respective owners;

¢. The improvements involved in the Project is destroyed, in whole
or in material part, by fire or other casualty, or is condemned or
notice of condemnation proceedings are sent to the owner of
owners thereof, or is transferred without the prior written consent
of Sub-CDE:; or

™

An action involving Borrower which questions or challenges the
validity of the formation of Borrower or the ability of Borrower
or Project Sponsor to enter into the transactions contemplated
hereby is brought or threatened by any party not related to
investor.

2. Upon the termination of the agreement created by this letter by
Investor, Borrower and/or Project Sponsor shail, no later than fifteen (15)
calendar days after such termination, pay to Investor an amount equal to
Investor's legal costs and other fees and expenses in connection with the

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transaction that exceed the aggregate amount of the Initial Deposit and any
1]

Nashua Performing Arts Center — NMTC Term Sheet Confidential

October 14, 2020

i Deposit actually paid by Borrower and/or Project Sponsor to
Investor.

3. The parties to this letter agree and acknowledge that the
foregoing provisions of this letter shall be the sole and exclusive remedy
available to the parties to this letter upon a termination of this letter and that no
other damages or remedies (whether at law or equity) shall be available to
them.

| QALICB and
Gasrantor

In addition to any reporting requiroments of Allocatce and Sub-CDE, Borrower
and guarantors) will be required to satisfy these reporting requirements
throughout the investment term and such requirements will be incosporated in the
QLICI Loan Documentation. These reposting requirements will include, at a
minimum:

1. Annus! GAAP basis financial statements of Borrower and financial
statements of Project Sponsor under the governmental accounting standards
applicable, including supplemental schedules, within such time periods as
required by Investor and MCD

2 IRS Tax Return of Borrower within such time periods as required by Investor

and MCD.

bee Catent” 4

3. Annual delivery of & copy of the Project Sponsor’s"S&P, Fie and/or
Moody’s bond rating report.

4. Quarterly financial statements including a balance sheet, income statement,
cash flows, and equity statement (if application) of Borrower within such
time periods as required by Investor and MCD.

6. Other information reasouably requested by Investor and/or SubCDE to
evaluate the financial condition and cash flow of Bomower and Project

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On an on-going basis, Borrower, Project Sponsor (to the extent permitted by
law) and each guarantor shall provide at Investor’s and/or Sub-CDE’s request:
(1) copies of all board and finance committee reports, stat reports, or any reports
as requested that could impact Borrower and/or any guarantor, and (2) any other
information reasonably necessary.

Representations &
Warranties:

Borrower and Project Sponsor will each make usual representations and
warranties as of the closing and in connection with each advance including, but
not limited to, corporate existence, compfiance with laws, enforceability, tue title
to properties, environmental protection, governmental approval, no pending or
threatened material litigation, ERISA compliance, insurance, absence of default,
absence of material adverse change, and full disclosure.

Borrower, Project Sponsor and each guarantor will also make representations and
warranties as of the closing customary to NMTC transactions of similar size and

type.

QALICB
Indemnifications:

Borrower, Project Sponsor and Fund Lender shall provide an indemnity for the
benefit of Investor for the recapture or disallowance of NMTCs, including,
without limitation, the recapture of disallowance of NMTCs arising from any of
the following:

(i) Borrower failing or ceasing to be a QALICB;
(ii) any portion of the QLICI Loans not constituting a QLICI;

(iii) fraud, material misrepresentation, abuse, gross negligence or willful
misconduct of Borrower, any other indernitor or affiliate thereof:

(iv) prepayment of the QLICI Loans (whether voluntary or as a result of
foreclosure or similar proceeding, and including any recapture resulting from a
subsequent redemption by Sub-CDE of any portion of the QE, or resulting from
the Sub-CDE’s failure to maintain substantially all of the QEI invested in QLICIs
following such prepayment);

(v) the use of QLICI proceeds constituted an inappropriate or abusive use of such
proceeds or that such use is inconsistent with the purposes of Section 45D of the
Code and the related Treasury Regulations, as provided in Treasury Regulation
Section 1.45D+i(g);

(vi) the failure of any tenant or subtenant of the Project to be classified as a tenant
qualified business; or

(vii) an event of default or other action or inaction of Borrower, any other
indemnitor or affiliate thereof.

Insurance:

Borrower will be required to maintain builder's risk, property and general
liability insurance. Investor and Allocatee will review and provide certain
minimum insurance requirements that will be attached to the QLICI Joan
documents and/or other transaction documents,

Basic Conditions to
the QLICI Loan
Documentation:

Each QLICI described herein is predicated upon the QLICE Loans from Sub-CDE
to Borrower qualifying as and remaining a Qualified Low-Income Community
Investment as defined under the NMTC program. Borrower will be required to
make standard NMTC representations, covenants and certifications, which will be
uired to be made Borrower to Sub-CDE at closing and periodica

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