Minutes of Meeting of the Executive Committee Of

MINUTES OF MEETING OF THE BOARD OF DIRECTORS OF

MICHIGAN MAGNET FUND

April 22, 2010

A meeting of the Board of Directors of Michigan Magnet Fund, a Michigan non-profit corporation (“MMF” or the “Corporation”) on behalf of itself and a manager of the following limited liability companies and subsidiary CDE’s: Michigan Magnet Fund A, LLC; Michigan Magnet Fund B, LLC; Michigan Magnet Fund C, LLC; Michigan Magnet Fund D, LLC; Michigan Magnet Fund E, LLC; Michigan Magnet Fund F, LLC; Michigan Magnet Fund G, LLC; Michigan Magnet Fund H, LLC; Michigan Magnet Fund I, LLC; Michigan Magnet Fund J, LLC; MMF AA CDE, LLC; MMF BB CDE, LLC; MMF CC CDE, LLC; MMF DD CDE, LLC; MMF EE CDE, LLC; MMF FF CDE, LLC; MMF HH CDE, LLC; MMF JJ CDE, LLC; and MMF KK CDE, LLC was held on April 22, 2010 via teleconference. The following Board members participated: Mary King (King) as proxy for Dave Blaszkiewicz (Blaszkiewicz), Detroit Investment Fund; Wendy Dant Chesser (Chesser), Cornerstone Alliance; K. Scott Fleming (Fleming), The Enterpirse Group of Jackson; Angie Gaabo (Gaabo), CEDAM; Richard J. Hosey, III (Hosey), Bank of America; Tom Edmiston (Edmiston) as proxy for Mark McDaniel (McDaniel), Great Lakes Capital Fund; Mark Morante (Morante), Michigan Economic Development Corporation; Ted Rozeboom (Rozeboom), Loomis, Ewart, Parsley, Davis & Gotting; Jason Paulateer (Paulateer), National City Community Development Association; Jeffrey Sykes (Sykes), MSHDA; Annette Williams (Williams), Fifth Third Bank CDC; and Kara Wood (Wood), Grand Rapids Economic Development. The following guests also participated: Albert Bogdan (Bogdan), Charles A. Fiedler (Fiedler), and Rick Laber.

Bogdan organized the agenda for the meeting and assembled a Board Package (the “Package”) which was distributed to the Board members via the Corporation’s secured web page. It was determined that a quorum was present and the meeting was called to order at 3:30 p.m. The Chair asked for approval of the agenda and hearing no objections requested that Bogdan commence with the agenda.

I. APPROVAL OF MINUTES

The first order of business was the approval of minutes from the prior Board and Executive Committee meetings. Upon motion duly made by Paulateer, seconded by Edmiston and unanimously adopted, it was:

BE IT RESOLVED, that the minutes from the February 25, 2010 Board of Directors meeting are approved; and

BE IT FURTHER RESOLVED, that the minutes from the April 16, 2010 Executive Committee meeting are approved; and

1 II. FINANCIAL REPORT

The next order of business was the financial statement as of March 31, 2010. Laber presented a draft unaudited income statement and balance sheet for the Corporation. No action was required or taken.

III. PROJECT MATTERS

The next order of business was a discussion of project matters involving MMF as manager of the subsidiary CDE involved with the project the materials for which are included in the Package.

a. East Forest Art Project Bogdan reported that the East Forest Art Project, involving Michigan Magnet Fund D subsidiary CDE, continues to remain a problem. The project’s accounting firm has stopped working since they have not been paid for a year. The certification of state tax credits has been delayed from 2009 to 2010 so that cash to pay bills, including the Corporation’s fees, is still not available. The payments on the HUD note are being made by the City of Detroit which has not taken any action toward the project. The restaurant is moving along but the project has decided to apply for a building liquor license instead of just for the restaurant, in order to permit greater sale of alcoholic beverages. Fiedler was asked to see if the subsidiary CDE has any method of recovering the cost of the audit from other project participants. Laber pointed out the subsidiary CDE owns 18% of the QLICB which means that a QLICB audit must be completed prior to the subsidiary CDE’s audit in order to obtain an unqualified opinion on the subsidiary CDE’s financial statements. Laber presented alternatives such as a qualified opinion (which would not include the 18% ownership) or writing off the 18% ownership based on impairment of value which would allow an unqualified opinion to be issued. Laber pointed out that although the CDFI Fund requires an audit, it is unclear as to whether such audit must include an unqualified opinion. It was the consensus of the Executive Committee to continue to hold taking any action pending receipt of the state tax credit funds.

b. Studio One Project. Bogdan provided an update on the Studio One Project. Fifth Third and Studio One have finally negotiated an agreement which involves a refinancing by Fifth Third, additional project loans and equity, and payment of liens and other project costs but the Corporation’s consent is needed to implement the agreement. Fiedler has reviewed and modified the necessary documents which involve Michigan Magnet Fund H, the subsidiary CDE and has prepared a proposed resolution for the Board, a copy of which is attached. In essence, the subsidiary CDE will remain in the first secured position, but permit the implementation of a SWAP replacement, permit an entity controlled by James DeFoe, a project sponsor and guarantor, to make a loan to the project in exchange for removal as a guarantor on the Fifth Third refinancing. All of the guaranties for the subsidiary CDE will continue as a guaranty of collection and not payment. Upon motion duly made by Paulateer, seconded by Morante and unanimously adopted (Williams abstaining), it was:

2 A. Background

WHEREAS, Studio One Apartments, LLC (the “Owner”) is the owner and master lessor of an interest in real property located at the northwest corner of Woodward Avenue and Canfield Avenue in Detroit, Michigan, commonly known as 4501 Woodward Avenue (the “Property”) commonly known as Studio One Apartments (the Property together with such improvements are collectively, the "Project"); and

WHEREAS, Michigan Magnet Fund H, LLC, (the “CDE”) whose member manager in Michigan Magnet Fund (the “Corporation”) and Owner entered into a Construction and Term Loan Agreement (CDE Loan) dated May 3, 2007 (the “CDE Loan Agreement”) and related documents (the “CDE Loan Documents”) under which the CDE had made secured construction and term loan (the “CDE Loan) in the principal amount of $3,600,000 with a first priority lien and security interest in the Project; and

WHEREAS, Fifth Third Bank (“Fifth Third”) and Owner entered into a Construction and Term Loan Agreement (Direct Loans) dated May 3, 2007, as amended by a First Amendment to Construction and Term Loan Agreement (Direct Loans) dated October 9, 2008, (the “Direct Loan Agreement”) with a second priority lien and security interest in the Project under which Fifth Third has made (i) a secured construction and term loan in the principal amount of $11,900,000 (the “Direct Construction Loan”) and a secured cost overrun loan in the principal amount of $1,150,000 (the "Direct Cost Overrun Loan") (collectively called the “Direct Loans”). The Direct Loan Agreement, underlying promissory notes and related documents, including an interest swap hedging agreement (the “Swap Agreement”) are (collectively referred to as the “Direct Loan Documents”); and

WHEREAS, Fifth Third and Owner entered into a overdraft loan dated December 22, 2009 in the principal amount of $127,207 to cover a bank overdraft (the “Overdraft Loan”); and

WHEREAS, CDE, Owner and Fifth Third entered into an Intercreditor/Subordination Agreement dated as of May 3, 2007 (the "2007 Intercreditor Agreement") pursuant to which the Direct Loans shall be subordinate in right of payment to the obligations of Owner to CDE under the CDE Loan; and

WHEREAS, Michael Houseman has relinquished his remaining membership interests in the Owner (10% of the Owner's membership interests). These membership interests (the "Pledged Membership Interests") are currently held in the treasury of the Owner; and

WHEREAS, Marcel D.P. Burgler; Max Coon; Paul A. Snow; Thomas G. O'Hare, individually and as Trustee of The Thomas O'Hare Revocable Trust Agreement; Paula J. Bont, individually and as Trustee of the Paula Bont Trust; James DeFoe, individually and as Trustee of The James DeFoe Trust; and Michael Houseman (collectively the “Guarantors”) have provided the CDE and Fifth Third certain guaranties of indebtedness associated with the Project; and

WHEREAS, documents related to the Direct Loans include a Debt Service Coverage Ratio Maintenance Agreements (the “DSCM Agreements”) given by the Guarantors; and 3 WHEREAS, documents related to the Direct Loans include an Amended and Restated Limited Guaranty (the “Fifth Third Limited Guaranty”) given by the Guarantors whereby the Guarantors each guaranteed payment of specified percentage of the Direct Loan; and

WHEREAS, documents related to the CDE Loan include a Limited Guaranty (the “CDE Limited Guaranty”) whereby the Guarantors each guaranteed payment of specified percentage of the CDE Loan as set forth in the CDE Limited Guaranty; and

WHEREAS, documents related to the CDE Loan include a Completion Guaranty (the "CDE Completion Guaranty") and Tax Credit Guaranty Agreement (the "CDE Tax Credit Guaranty”); and

B. Project Status; Additional Financing and Related Actions

WHEREAS, costs of completing the Project (which is now at about 100% occupancy) have exceeded the Project budget compounded by one of the subcontractors on the Project declaring bankruptcy without paying its subcontractors and the general contractor has also declared bankruptcy with such events resulting in total construction liens against the Project of around $1,000,000 some of which are the subject of enforcement action (i.e. lawsuits) against the CDE, the Owner and others; and the Swap Agreement resulting in a significant increase in the interest costs to the Owner; and

WHEREAS, Owner is in default under the Direct Loan Documents and the CDE Loan Documents due to construction liens, the failure to make monthly installment payments on the Direct Notes and CDE Note when due; the failure to pay real property taxes on the Project, before such taxes become delinquent; and allowing its accounts with Fifth Third to be overdrawn (collectively the “Specified Defaults”); and

WHEREAS, Fifth Third and Owner have agreed to terminate the Swap Agreement in return of a payment in the approximate amount of $2,000,000; and

WHEREAS, Owner has arranged for secured loans from Fifth Third Bank in the principal amounts of $10,575,000, (the “Fifth Third Loan A”) and approximately $4,400,000 (the “Fifth Third Loan B”) (depending on final termination fee for the Swap Agreement) to refinance the Direct Loans, to pay anticipated fee for termination of the Swap Agreement and to refinance the Overdraft Loan (the “Refinance Loan”). Fifth Third Loan A will accrue interest at a fixed rate of 5.0% per annum and mature on November 3, 2014 (same maturity date as the former Direct Loan) and will require payment of principal and interest based on 25 year amortization. Fifth Third Loan B will accrue interest at a fixed rate of 6.0% per annum and mature of November 3, 2014, with payment of principal and interest based on excess cash flow, with balance due upon maturity; and

WHEREAS, Owner has arranged for a secured loan in the principal amount of $1,200,000 to be made by DeFoe Investments, LLC ("the Subordinate Lender"), subordinate to

4 the lien and security interest of the CDE Loan and Refinance Loan (the “Subordinated Loan”) and

WHEREAS, Owner has arranged for an equity investment in the Owner of $556,500 by DeFoe Investments, LLC and $43,500 by Max Coon (or an entity controlled by Max Coon) for an aggregate amount of $600,000 (the “Equity Investment”) and in exchange Fifth Third will release James Defoe and his trust from his Fifth Third Limited Guaranty and his DSCM Agreement; and

WHEREAS, the Refinance Loan will continue to be secured by the same collateral that presently secures the Direct Loans, including second priority lien position and Fifth Third Limited Guaranties by the Guarantors (except James Defoe) and DSCM Agreements by the Guarantors (except James Defoe); and

WHEREAS, Owner, CDE and Fifth Third will enter into a Forbearance Agreement (the “Forbearance Agreement”) under which the CDE and Fifth Third will: (i) forbear during the a period commencing on the date of the Forbearance Agreement until the earlier of November 3, 2014 or the date on which an (“Event of Default”) (as defined under the CDE Loan Documents or Direct Loan Documents occurs from exercising those remedies under the CDE Loan Documents and Fifth Third Loan Documents and applicable law that it is entitled to exercise with respect to the Specified Defaults; (ii) amend the DSCM Agreements with the all Guarantors (except for James Defoe) to change the DSCR from 1.15:1.00 to 1.10:1.00; (iii) require the Owner to maintain certain covenants regarding payment of property taxes and insurance and not make any distribution, whether in cash or otherwise to members, pay management fees or similar fees to its members or any affiliate, including development fee; and

WHEREAS, pursuant to the Forbearance Agreement, Owner will: (i) make all past due interest payments under the Loan Documents; (ii) discharge or bond over all construction liens and dismiss all litigation against the Project with prejudice, except for Joseph J. Sciamana, Inc. vs. Houseman Construction Company, Inc. et al., Wayne County Court Case No. 09-007434-C and any other unresolved liens to the satisfaction of Fifth Third and the CDE; (iii) pay all retainages and amounts owing to all contractors, subcontractors, suppliers and materialmen on the Project and provide final lien waivers to CDE and Fifth Third; (iv) pay the Overdraft Loan, including principal and interest, in full; (v) pay all reasonable outstanding legal and consulting fees and costs relating to the Project; and (vi) pay other Project related costs and provide Fifth Third and the CDE with a sworn statement confirming that the Project is complete, with the exception of the final commercial space of approximately 2019 square feet; and

WHEREAS, Section 6.3 of the CDE Loan Agreement provides, in relevant part, that the Owner will keep the Property and the Project free from all liens, security interests and encumbrances, except those contemplated by the CDE Loan Agreement; and

WHEREAS, the 2007 Intercreditor Agreement will be amended and restated (the “2010 Intercreditor Agreement”) to: (i) establish the following priorities with respect to the repayment of the above described loans and the liens securing such Owner’s indebtedness as follows: first, the CDE Loan, second, the Refinance Loan; third, the Subordinate Loan; and (ii)

5 prohibit the Owner from making principal, interest and other payments on the Subordinated Loan so long as the Refinance and CDE Loan are outstanding; and

WHEREAS, Owner will grant to the CDE a first priority lien on and security interest in the Pledged Membership Interests and to Fifth Third a second priority lien and security interest in the Pledged Membership Interests; and

WHEREAS, the CDE Limited Guaranty with each Guarantor be amended and restated as a guaranty of collection vs. payment, providing that such other terms of each existing CDE Limited Guaranty, including but not limited to, waivers and the percentage limits of each Guarantor are not changed; and

WHEREAS, except as set forth in this Resolution, the CDE Loan will continue to be in the same principal amount and secured by the same collateral that presently secures the CDE Loan, including first priority lien position, the CDE Tax Credit Guaranty and the Completion Guaranty.

C. Resolutions

BE IT RESOLVED, that the Corporation, as managing member of the CDE approves the Overdraft Loan; and

BE IT FURTHER RESOLVED, that the Corporation, as managing member of the CDE consents to the Subordinated Loan; and

BE IT FURTHER RESOLVED, that the Corporation, as managing member of the CDE approves the Forbearance Agreement, the 2010 Intercreditor Agreement, the Membership Pledge Agreement; and Amended and Restated Limited Guaranty with each Guarantor; and

BE IT FURTHER RESOLVED, that the President or Vice-President is authorized, on behalf of the Corporation as the managing member of the CDE, to execute the Forbearance Amendment, the 2010 Intercreditor Agreement, the Membership Pledge Agreement and the Amended and Restated Limited Guaranty with each Guarantor consistent with the foregoing and to execute and deliver such further instruments, certificates, and documents as they shall determine to be necessary, appropriate or desirable to carry out the intent of these resolutions and in such form as approved by CDE’s counsel and approved by the President or Vice-President and to take such other actions as necessary or required to complete this transaction.

a. Michigan Motion Pictures Studios Project. Bogdan provided an update on the Michigan Motion Pictures Studio Project. The Full Application has been submitted and has been reviewed. Bogdan, along with Fiedler, are in process of working with the project team to review documents. It has been agreed that U.S. Bancorp Community Development Corporation (USBCDC) attorneys will have the lead in preparing initial drafts of the documents. Bogdan pointed out that there are two issues that conflict with our policies. USBCDC, as they did in the Rowe Building Project in Flint, is requiring the Corporation to provide unlimited indemnification for so called bad acts to include gross negligence, willful neglect and fraud. The Board of Directors

6 waived this policy for the Rowe Building due to the need for USBCDC to save the deal from potential foreclosure. In this case, USBCDC is the predominant purchaser of tax credits in the nation. There followed discussion of whether the change in indemnification should be a permanent change in the policy since other banks are also acting as syndicators of their tax credits. It was the consensus of the Board that the policy should not be changed at this time and that this Project should be presented as variation of the indemnification policy. The second issue is if there is a default and there is a cash distribution to the subsidiary CDE. The Corporation initially insisted that the funds would need to be invested in Michigan since we were the common geography for all of the CDEs involved in the project. USBCDC, joined by Stonehenge, would not accept this rationalization. USBCDC, which has no footprint in Michigan, insists that the funds be invested anywhere in the nation so they have the most flexibility in reinvesting the QEI. Therefore, the Corporation is being asked to have all funds received in the event of a default placed into a single pot of national reinvestment of which the Corporation will have last priority. There followed discussion of several reasons why the Corporation should accept this proposal which allows a $60 million investment in the State of Michigan. Bogdan distributed a proposed resolution which included a diagram on the structure of the deal. Subject to the sponsor verifying that the project complies with Corporation’s Allocation Agreement, the resolution will authorize the Corporation to allocate tax credits and to authorize the President to sign the necessary agreements. Upon motion duly made by Morante, seconded by Chesser and unanimously adopted (Hosey and Williams abstaining), it was:

A. Background on Project and Reservation of NMTC

WHEREAS, Michigan Magnet Fund (the “Corporation”), is a Michigan nonprofit corporation, organized on a directorship basis and tax-exempt under Sections 501(c)(3) and 509(a) of the Internal Revenue Code of 1986, as amended (the “Code”); and

WHEREAS, the Fourth Amended and Restated Bylaws of the Corporation provide for a Board of Directors, Officers, and an Executive Committee and sets forth their duties and authority; and

WHEREAS, the Corporation has been certified as a Community Development Entity (CDE) by the Community Development Financial Institutions (CDFI) Fund; and

WHEREAS, on November 6, 2009, MMF AA CDE, LLC (“MMF AA”) has been formed as a Michigan limited liability company by filing Articles of Organization pursuant to Act Number 23 of the Michigan Public Acts of 1993, as amended (the “MI LLC Act”); and

WHEREAS, as of November 3, 2009, an initial Operating Agreement for MMF AA was entered into by and between the Corporation and AAB Development Strategies, LLC, a Michigan limited liability company (the “Withdrawing Member”), as the Initial Members; and

WHEREAS, MMF AA has been certified as a CDE by the CDFI Fund; and

WHEREAS, the Corporation is the managing member of MMF AA; and

7 WHEREAS, effective January 12, 2010, the Corporation entered into a New Markets Tax Credits (“NMTC”) Allocation Agreement (the “MMF Allocation Agreement”) whereby the Corporation received an allocation of NMTC from the CDFI Fund in the seventh round of the NMTC Program (CY 2009) in amount of $60,000,000 (the “MMF NMTC Allocation”); and

WHEREAS, the MMF Allocation Agreement requires that the Corporation invest in qualified projects within the State of Michigan and which meet other economic development and job creation criteria established by the Corporation; and

WHEREAS, the MMF AA is a subsidiary allocatee and is a party to the MMF Allocation Agreement; and

WHEREAS, Michigan Motion Picture Studios, LLC, a Michigan limited liability company (the “Owner”), is the owner and master lessor of a former General Motors Corporation plant located on property with address of 1999 Centerpoint Parkway East, Pontiac, Michigan, intended for development as a motion picture studio expected to create about 4,000 new jobs within the State of Michigan and consisting of the construction of an approximately 185,000 square foot building and the rehabilitation of an existing approximately 368,400 square foot building (the “Project”); and

WHEREAS, on January 20, 2010, the Board of Directors approved a reservation to the Owner of $10,000,000 of MMF’s NMTC Allocation to MMF AA for the Project, evidenced by terms and conditions as set forth in a Reservation Letter by and between the Corporation and the Owner, including but not limited to conditions related to submission by the Owner of a full application which meets criteria as set forth in MMF’s Allocation Agreement and other economic development and jobs creation established by the Corporation; and

WHEREAS, there are two closings anticipated for the Project. The first closing (expected in May, 2010) will facilitate funding in the form of loans by MMF AA, USB CDE Sub-CDE LV, LLC (“USBCDE”), Stonehenge Community Development XV, LLC (“Stonehenge CDE”) and Raleigh Motion Picture CDE, LLC (“Fifth Third CDE”). The second closing (expected in October, 2010) will facilitate funding by sale by the Owner of certificates for State of Michigan Film Production Tax Credits the proceeds of which will be loaned to the Project. As used in the resolution USBCDE, Stonehenge CDE and Fifth Third CDE are sometimes (collectively referred to as the “Other Participating CDE’s”); and

B. Project Investment Matters

WHEREAS, on February 9, 2006, the Board of Directors of the Corporation approved a policy on indemnification by the Corporation for gross negligence, willful misconduct and fraud (collectively the “Bad Acts”); and

WHEREAS, indemnification by both the CDE’s manager and the CDE for Bad Acts is standard in the industry for NMTC transactions which involve the possibility of NMTC recapture (the CDE typically does not have any significant assets outside the project), however, a formula or fixed monetary cap on damages is many times negotiated between the parties; and

8 WHEREAS, the Corporation’s policy on indemnification for Bad Acts requires a cap on the dollar amount of any indemnification equal to sum of to the fees paid or to be paid to the Corporation for the specific project; and

WHEREAS, USBCDC requires as a condition of the Corporation’s involvement in the Project that there be unlimited indemnification by the Corporation for Bad Acts and that such indemnification be included in the closing documents for the Project; and

WHEREAS, USBCDC is the largest provider of new market tax credit investment in the nation and does so by syndicating their NMTC investments thereby uses a standard set of criteria to include terms regarding indemnification to permit broad syndication which tends to increase the amount USBCDC is willing to invest in return for NMTC; and

WHEREAS, on June 30, 2005, the Board of Directors of the Corporation approved criteria for projects of the Corporation in the form of Underwriting Guidelines (the “Guidelines”); and

WHEREAS, consistent with the Guidelines, the form of standard operating agreement for use by the Corporation as manager of its subsidiary CDE’s and prepared in accordance with the Guidelines, provides, in relevant part, for a NMTC recapture avoidance mechanism whereby any capital, equity or principal returned by the subsidiary CDE to the investor member in the subsidiary CDE is to be used toward a replacement Qualified Low-Income Community Investment (QLICI) within the State of Michigan meeting the criteria as set forth in the MMF’s Allocation Agreement; and

WHEREAS, the Other Participating CDE’s have requested that any replacement investment only meet the criteria as set forth in their respective Allocation Agreements which include a footprint both within and outside the State of Michigan which is inconsistent with the Guidelines; and

WHEREAS, in connection with the Project, MMF AA will enter into a form of Intercreditor Agreement (the “Intercreditor Agreement”); and

WHEREAS, the proposed terms of the Intercreditor Agreement are expected to provide, in relevant part, that in the event of a return of capital, equity or principal from the Owner that such return will be placed into a common “sweep” account for the benefit of the MMF AA and the Other Participating CDE’s (the “Proceeds”). If such Proceeds are less than or equal to the total loans of the Other Participating CDE’s, the Proceeds will be allowed to be directed to reinvestment either within or outside the State of Michigan consistent with their Allocation Agreements. If such Proceeds are greater than the total loans of the Other Participating CDE’s, then such excess proceeds must be directed to reinvestment within the State of Michigan consistent with MMF’s Allocation Agreement; and

WHEREAS, if the Corporation does not agree to the foregoing proposals, the Corporation will likely not be allowed to participate in the Project which has received broad

9 support and endorsement from the State of Michigan and the Michigan Economic Development Corporation; and

C. Transfer of Sub-Allocation to the Project

WHEREAS, there are two “sides” of the Project involving the use of two investment funds, being RMS NMTC Investment Fund I, LLC, a Missouri limited liability company (or such other name selected) (the “Investment Fund I”) and RMS NMTC Investment Fund II, LLC, a Missouri limited liability company (or such other name selected) (the “Investment Fund II”), however, only Investment Fund I involves the MMF AA’s side of the Project; and

WHEREAS, upon the first closing of the Project, Investment Fund I will be the recipient of (i) a loan of funds representing the proceeds of Recovery Zone Facility Bonds (A Tranch) issued by Oakland County Economic Development Corporation, an Economic Development Corporation, a public body corporate (the “OCEDC”) in the amount of $18,000,000 (the “Fund Loan #1”), Recovery Zone Facility Bonds (B and C Tranchs) in the amount of $10,000,000 (the “Fund Loan #2”); a loan from a Michigan corporation, to be formed (“Fund Lender #2”) in the approximate amount of $4,833,234 (the “Fund Loan #3”) and an equity contribution U.S. Bancorp Community Development Corporation, a Minnesota corporation (USBCDC) for NMTC in the approximate amount of $12,606,497 (the “USBCDC Capital Contribution”), which amounts are in the aggregate approximate amount of $44,279,934; and (ii) an approximate amount of $1,700,000 from the sale of certificates for State Film Tax Credits by the Owner in connection with the second closing; and

WHEREAS, in connection with the second closing, Investment Fund II will be the recipient of a loan in the approximate amount of $8,443,566 from STC, LLC and equity investment in the approximate amount of $3,336,703 from Bank of America Community Development Corporation, for a total approximate amount of $11,780,269, less load in the approximate amount of $60,202, for a net approximate amount of $11,720,067, the proceeds of which will be used to make an equity investment in two (to be named) subsidiary CDE’s in the aggregate approximate amount of $11,720,067, all of which will be loaned by the CDE’s to the Owner for the Project; and

WHEREAS, upon the first closing, the proceeds of Fund Loan #1, Fund Loan #2, Fund Loan #3 and the USBCDC Capital Contribution, in the aggregate approximate amount of $45,439,732, less load of $1,159,798, for a net approximate amount of $44,279,934, will be used, to make equity investments in MMF AA in the amount of $10,000,000; USBCDE in the approximate amount of $8,000,000; Stonehenge CDE in the approximate amount of $8,279,93 and Fifth Third CDE in the approximate amount of $18,000,000; and

WHEREAS, the Other Participating CDE’s, in accordance with their respective Allocation Agreements, have an investment “footprint” both within and outside the State of Michigan; and

WHEREAS, upon the first closing and in order to assist in the successful development and operation of the Project, the Corporation has also agreed as managing member of MMF AA

10 to four loans made by MMF AA to the Owner in aggregate amount of $10,000,000 which will be combined with loans by the Other Participating CDE’s in the approximate amount of $34,279,934 all of which shall be QEI in connection with the first closing and approximately $1,700,000 all of which shall be QEI in connection with the second closing for loans to the Owner in the aggregate approximate amount of $45,979,934; and

WHEREAS, while the proposed Project is located within United States population census tract number 26125142300 which is a Qualified Low Income Community and eligible for NMTC, it also must meet the investment criteria as set forth in the MMF Allocation Agreement and other economic development and job creation criteria established by the Corporation; and

WHEREAS, based on the foregoing, the Corporation is willing to sign on behalf of itself and as managing member of MMF AA a NMTC Transfer Agreement transferring the approximate amount of $10,000,000 of NMTC Allocation to MMF AA; and

WHEREAS, the Corporation is willing to sign an Amended and Restated Operating Agreement of MMF AA and any related documents to include the foregoing provisions regarding indemnification and reinvestment; and

WHEREAS, upon the first closing, the Corporation shall make an additional equity contribution to MMF AA in the approximate amount of $999.99 as the second and final installment of total equity investment of $1,000 into MMF AA; and

WHEREAS, the Corporation is also willing to sign in its capacity as Managing Member of the MMF AA, CDE Loan Agreements by and between the Owner and Other Participating CDE and applicable related documents; and

WHEREAS, the Corporation wishes to authorize other actions in order to further the successful development and operation of the Project; and

BE IT RESOLVED, that the Corporation approves the Project and that MMF AA shall be transferred a NMTC Allocation in the amount of $10,000,000; and

BE IT FURTHER RESOLVED, that the Corporation is authorized and affirmed to participate in and act as the managing member of MMF AA pursuant to the Amended and Restated Operating Agreement of MMF AA and to acquire and hold up to a .01% interest in MMF AA pursuant to the Amended and Restated Operating Agreement; and

BE IT FURTHER RESOLVED, that this resolution shall in no manner change the Corporation’s indemnification policy or reinvestment policy for use with other past, present or further projects of the Corporation and that any future requests for changes to said policy must be the subject of a separate action of the Board of Directors; and

BE IT FURTHER RESOLVED, that the NMTC Transfer Agreement which transfers the amount of $10,000,000 of MMF’s NMTC Allocation to MMF AA, is in all respects

11 approved and adopted; and

BE IT FURTHER RESOLVED, that any one Officer or member of the Executive Committee, is authorized, on behalf of the Corporation, as the managing member of MMF AA, any time after the adoption of this resolution and outside further action by or authority or direction from the Board of Directors of the Corporation, to execute all necessary documents and to take such other acts as may be necessary, convenient or appropriate to accomplish the actions envisioned above, including but not limited to the Amended and Restated Operating Agreement of MMF AA, Loan Agreement, promissory notes, Mortgage; Security Agreements; Assignment of Leases, Subleases and Rents; Assignment of Licenses, Permits and Agreements; Environmental Indemnification Agreement; Guaranty of Completion of Construction; Bank Account Pledge Agreement; Agreement(s) for Servicing and Disbursement; the UCC financing statements, the Intercreditor Agreement and any other documents thereto and in general, to effectuate the Corporation’s desire to support and participate in the Project; and

BE IT FURTHER RESOLVED, that any one Officer or member of the Executive Committee, is also authorized, on behalf of the Corporation, as managing member of MMF AA, to negotiate and make such changes and modifications in documents, and actions envisioned above, including the dollar amounts (as long as the amount of the NMTC transfer to MMF AA, is not changed, except for an increase of up to 10% based on financial projections) and to execute and deliver such further instruments, certificates, and documents as they shall determine to be necessary, appropriate or desirable to carry out the intent of these resolutions with respect to any aspect of the Corporation’s participation in the Project, any such determination to be conclusively presumed by the doing and performing of any act or thing, or the preparing and executing of any such instrument, certificate or document, and any actions taken with respect thereto are hereby ratified and affirmed by the Board of Directors of the Corporation; and

BE IT FURTHER RESOLVED, that the foregoing resolutions are expressly conditioned on the Project meeting investment criteria as set forth in the MMF Allocation Agreement.

b. The Lofts on Ludington Project. Bogdan provided an update on the Lofts on Ludington Project. The project has received the full financing commitment from First Bank up to its maximum lending limit of $1.5 million. The Full Application has been received and additional information has been requested. Bogdan has initiated inquiries for HTC and NMTC investment and so far, PNC and USB have declined due to the small size of the investment.

c. Heart of the City Project. Bogdan provided an update on the Heart of the City Project. Bogdan traveled to Grand Rapids to meet all of the parties and to walk the site. Site work is already in process. Bogdan is awaiting the Full Application. This project is moving along with indications that JP Morgan Chase will be the investor and provide the bridge financing for the Project. The time to closure will depend on the timing of the J.P. Morgan Chase commitment. No action was required or taken. . d. Kirsch Industrial and Kirsch Lofts Project. Bogdan provided an update on this project which will involve an industrial building and a mixed-use building along with his review

12 of the two sites. The mixed-use project looks attractive with existing industrial building with an enclosed swimming pool. The industrial project is attractive as a multi-tenant industrial building - high ceilings, good pole separation, concrete floors and additional land for parking and expansion. The major obstacle to fast closure will be obtaining a Part 2 HTC approval from the National Park Service. Bosgraaf has committed to the leveraged debt. The Part 1 application is underway and Bosgraaf will initiate the processing of the Part 2 application in parallel. The main obstacle is the backlog of MDOT Act 106 applications that have slowed the entire historic approval process. The project could be expedited with a cooperative, friendly SHPO and banker. No action was required to taken.

IV. RESERVATION LETTERS

a. Verso Paper Project. Bogdan distributed a summary of the Verso Paper Project and mentioned that he has been working closely with MEDC which has made a commitment to help obtain NMTC for the project which is a bio-fuel electric generator that will use the residual material from lumber cutting to fuel the plant. The project is seeking a $30 million QEI. LISC has indicated that they are considering allocating up to $17 million of QEI. The project will retain 472 jobs and create approximately 45 jobs created in subcontractors cleaning the forest to gather stumps and residual wood to fuel the generator. Upon motion duly made by Fleming, seconded by Paulateer and unanimously adopted, it was:

WHEREAS, the Corporation has been allocated a NMTC Allocation by the CDFI Fund (the “NMTC Allocation”) of a total of $60,000,000; and

WHEREAS, the Verso Paper Project, within the State of Michigan, totaling $10.0 million of the NMTC Allocation have been recommended by the Executive Committee to best meet the goals and objectives of the CDFI Fund and the Corporation; and

WHEREAS, the Board has reviewed materials for the Verso Paper Project including: (i) project sponsor; (ii) a general description of the project; (iii) total project cost; (iv) total requested NMTC, the Corporations’ participation in total requested NMTC, and the number of projected new jobs; and

WHEREAS, a standard form of Reservation Letter has been developed for use with the projects; and

BE IT RESOLVED, that the Verso Paper Project is approved for a reservation of NMTC Allocation in the amount of $10.0 million, subject to the terms and conditions as set forth in the Reservation Letter; and

FURTHER BE IT RESOLVED, that Bogdan is authorized to sign the Reservation Letter on behalf of the Corporation consistent with the foregoing.

b. Establishment of Revolving Loan Fund. Bogdan provided a summary of a proposed revolving loan fund. The Corporation in past NNTC applications has proposed a revolving loan

13 fund to finance smaller projects than are typically cost justified under the NMTC program. Bogdan explored the concept with Northern Initiatives, but failed due to the lack of a source of leveraged debt. The Corporation unsuccessfully explored with the MEDC the concept of using HUD 108 funds for the leverage debt. Bogdan contacted Huntington Bank (HB) which has taken initiatives to help finance small business. HB indicated that they would seriously consider an investment but would prefer that the Michigan Interfaith Trust Fund and not the Corporation manage the fund. Bogdan requested 60 to 90 days to work with HB to put together the structure of a fund which would address a market need and would help the Corporation in all future applications and build the foundation for expansion. It was suggested that Bogdan present a proposal to the Board prior to consideration of a reservation letter. No action was required or taken.

V. NMTC APPLICATION-2010 ROUND

The next order of business was the NMTC 2010 Application for the eighth round. Bogdan mentioned that CDFI Fund has announced the Application with a due date of June 2, 2010, conditioned on the Corporation having received $12.0 million of QEI from its investors or $6.0 million in QEIs and $18.0 million committed by its investors by July 21, 2010. Based on the progress of the Michigan Motion Picture Studios project, Bogdan has confidence that MMF will have $10.0 million in closed QEI. To have complete assurance of meeting this milestone, the Corporation can offer to increase the QEI to MMPS project from $10.0 million to $12.0 million. As an alternative, Williams mentioned the possibility of Fifth Third Bank CDC providing the required commitment. It was the consensus of the Board that any decision on the submission of the NMTC Application or additional QEI to the MMPS project be placed on hold pending receipt of any offer from Fifth Third Bank. No action was required or taken.

VI. REVIEW AND APPROVAL OF PROPOSED CONTRACTS WITH ARIEL VENTURES AND RELATED ACTIONS

. The next order of business was a review of proposed service contracts. Included in the Package were service contracts between the Corporation and Ariel Ventures, LLC (AV). It is proposed that there will be two contracts with AV. The first contract will be for assistance in preparing the 2010 NMTC Application. The second contact will be for work involved in compliance, management and reporting with regard to the 2009 MMF Allocation. AV is already under contract with the Great Lakes Capital Fund (GLCF) for compliance, management and reporting with regard to the 2005 NMTC Allocation and in this regard there needs to be amendment to the Amended and Restated GLCF Services Agreement to include the supervision of GFLCF over these services. All contracts have been reviewed by Fiedler and approved by the Executive Committee.

a. Ariel Ventures Contracts.

Upon motion duly made by Morante, seconded by King and unanimously adopted (Edmiston abstaining), it was:

14 WHEREAS, Michigan Magnet Fund (the “Corporation”) is a Michigan nonprofit corporation; and

WHEREAS, effective December 29, 2005, the Corporation entered into a NMTC Allocation Agreement (the “2005 MMF Allocation Agreement”) whereby the Corporation received an allocation of NMTC from the CDFI Fund in the third round of the NMTC Program (CY 2005) in amount of $60,000,000 (the “MMF 2005 NMTC Allocation”) based on an application to the CDFI Fund and effective January 12, 2010, the Corporation entered into a New Markets Tax Credits (“NMTC”) Allocation Agreement (the “2009 MMF Allocation Agreement”) whereby the Corporation received an allocation of NMTC from the CDFI Fund in the seventh round of the NMTC Program (CY 2009) in amount of $60,000,000 (the “MMF 2009 NMTC Allocation”); and

WHEREAS, Michigan Magnet Fund A, LLC; Michigan Magnet Fund B, LLC; Michigan Magnet Fund C, LLC; Michigan Magnet Fund D, LLC; Michigan Magnet Fund E, LLC; Michigan Magnet Fund F, LLC; Michigan Magnet Fund G, LLC; Michigan Magnet Fund H, LLC; Michigan Magnet Fund I, LLC; and Michigan Magnet Fund J, LLC are all parties to the 2005 MMF Allocation Agreement; and MMF AA CDE, LLC; MMF BB CDE, LLC; MMF CC CDE, LLC; MMF DD CDE, LLC; MMF EE CDE, LLC; MMF FF CDE, LLC; MMF GG CDE, LLC; MMF HH CDE; LLC and MMF JJ CDE; LLC are all parties to the 2009 Allocation Agreement (individually, a “Company”) have been formed as Michigan limited liability companies by filing Articles of Organization pursuant to Act Number 23 of the Michigan Public Acts of 1993, as amended and certified as a CDE by the CDFI Fund; and

WHEREAS, the Corporation is the Managing Member of each Company; and

WHEREAS, the CDFI Fund requires the Corporation and each Company to comply with the rules and regulations of the NMTC Program; and

WHEREAS, the Corporation and Great Lakes Capital Fund (GLCF) have entered into an Amended and Restated Services Agreement under which GLCF provides NMTC consulting services to the Corporation (the “GLCF Agreement”) with regard to the 2005 MMF NMTC Allocation and 2009 MMF Allocation; and

WHEREAS, GLCF and Ariel Ventures, LLC (AV) entered into an engagement letter agreement for NMTC compliance, management and reporting with regard to the 2005 MMF Allocation (the “2005 AV Agreement”) under which the Corporation was a third-party beneficiary and billed for the services; and

WHEREAS, AV has proposed providing NMTC compliance, management and reporting services as required under the terms of the 2009 MMF Allocation directly to the Corporation as set forth in proposed engagement letter agreement (the “2009 AV Agreement”); and

15 WHEREAS, regardless of the contracting parties, AV’s services under the 2005 AV Agreement and 2009 AV Agreement require supervision and oversight by the GLCF and as a condition of contracting directly with AV, the Corporation will require third-party indemnification by the GLCF for acts and omissions of AV in providing the services, except for so called bad acts for which indemnification will be sought directly from AV; and

WHEREAS, it is desirous for the Corporation to prepare an application to the CDFI Fund for a 2010 Allocation of New Markets Tax Credits (the “2010 Application”) with final decision on submission to be approved by the Board; and

WHEREAS, AV has proposed providing services in connection with the 2010 Application as set forth in attached proposed engagement letter agreement (the “2010 AV Application Agreement”); and

WHEREAS, the Corporation, on behalf of itself and in its capacity as Managing Member of each Company, is willing to enter into the 2009 AV Agreement; and

WHEREAS, the Corporation, is willing to enter into the 2010 Application Agreement with AV; and

BE IT FURTHER RESOLVED, that the Board empowers the President or Vice-President of the Corporation to enter into the 2009 AV Agreement; with such changes as suggested by the Corporation’s counsel, including provisions with regard to liability for so called bad acts; and

BE IT FURTHER RESOLVED, that the Board empowers the President or Vice-President of the Corporation to enter into the 2010 Application Agreement; and

a. Amendment to GLCF Contract.

Upon motion duly made by Wood, seconded by William and unanimously adopted (Edmiston abstaining), it was:

WHEREAS, it is desirous to enter into an Amendment to the Amended and Restated Services Agreement with GLCF to: (i) set forth GLCF’s role in supervision and oversight of services provided by AV to the Corporation under the 2005 AV Agreement and 2009 AV Agreement; and (ii) provide for indemnification of the Corporation by GLCF for acts and omissions of AV, except for so called bad acts for which indemnification shall be provided by AV; and

BE IT RESOLVED, that the Board hereby authorizes the President of the Vice-President to enter into an Amendment to the Amended and Restated Services Agreement with GLCF, consistent with this Resolution on behalf of the Corporation to reflect GLCF’s role in supervision and oversight of AV’s services to the Corporation.

16 . VII. CHANGE OF CONTROLLING ENTITY

The next item of business was the proposed change in the controlling entity from MSHDA to the MEDC. Rozeboom reported that the MEDC has completed its due diligence on the change and a draft notice has been prepared advising the CDFI Fund of a material event as required under the 2005 and 2009 Allocation Agreements. Prior to submitting the notice, the Board is requested to approve the change. The Corporation intends to use MEDC as the controlling entity on any 2010 application for NMTC. Upon motion duly made by Edmiston, seconded by Sykes and unanimously adopted, it was:

WHEREAS, Michigan Magnet Fund (the “Corporation”) is a Michigan nonprofit corporation organized on a directorship basis; and

WHEREAS, the Articles of Incorporation, as amended of the Corporation (the “Articles”) and Bylaws, as amended of the Corporation (the “Bylaws”), provide that the Michigan State Housing Development Authority, an agency of the State of Michigan (MSHDA) has the authority to approve a majority of the Board of Directors of the Corporation thus qualifying MSHDA as the controlling entity of the Corporation as such term is used by the CDFI Fund in the administration of the New Markets Tax Credit (NMTC) Program (the “Controlling Entity”); and

WHEREAS, effective December 29, 2005, the Corporation entered into a NMTC Allocation Agreement (the “2005 MMF Allocation Agreement”) whereby the Corporation received an allocation of NMTC from the CDFI Fund in the third round of the NMTC Program (CY 2005) in amount of $60,000,000 (the “MMF 2005 NMTC Allocation”) based on an application to the CDFI Fund with MSHDA as the Controlling Entity; and effective January 12, 2010, the Corporation entered into a New Markets Tax Credit (“NMTC”) Allocation Agreement (the “2009 MMF Allocation Agreement”) whereby the Corporation received an allocation of NMTC from the CDFI Fund in the seventh round of the NMTC Program (CY 2009) in amount of $60,000,000 (the “MMF 2009 NMTC Allocation”) based on an application with MSHDA as the Controlling Entity. As used herein the 2005 MMF Allocation Agreement and 2009 MMF Allocation Agreement are (collectively referred to as the “Allocation Agreements”); and

WHEREAS, MSHDA is no longer willing to serve as the Controlling Entity and desires to be replaced with regard to the Allocation Agreements and all future applications to the CDFI Fund for NMTC; and

WHEREAS, the Michigan Economic Development Corporation (the “MEDC”), a public body corporate whose purpose is to engage in economic development and job creation within the State of Michigan is willing to serve as Controlling Entity; and

17 WHEREAS, the Allocation Agreements, provide in relevant part that a change of Controlling Entity is a “material event” requiring notice to CDFI Fund; and

WHEREAS, the Corporation desires to provide notice to the CDFI Fund of the change in Controlling Entity and take such further steps as necessary and required to comply with CDFI Fund rules and regulations regarding the change in Controlling Entity; and

WHEREAS, the Corporation desires that any application to the CDFI Fund for 2010 allocation round and any future rounds either list the MEDC as Controlling Entity or provide for no Controlling Entity as determined upon approval of by Board of Directors of the application to the CDFI Fund; and

BE IT RESOLVED, the Corporation hereby approves, subject to notice and compliance with any all CDFI rules and regulations, a change in the Controlling Entity for the MMF 2005 NMTC Allocation, MMF 2009 NMTC Allocation from MSHDA to the MEDC; and

BE IT FURTHER RESOLVED, that the Board hereby authorizes the officers and Chief Business Development Officer to take such further actions consistent with this Resolution, including, but not limited to further amendments to the Articles and Bylaws, as necessary or required.

VIII. BUSINESS INTEGREGITY PROGRAM

The next order of business was a proposed business integrity program to include background checks on project sponsors. In view of recent events involving award of economic development incentives to a non-qualified recipient, the MEDC has initiated a background check using a private firm of businesses and persons seeking tax credit of other business benefits programs from MEGA or the MEDC. The Executive Committee recommends that the Corporation adopt a similar policy which would allow the Corporation receive information gathered by the MEDC and in those rare instances where the MEDC is not providing data (i.e. MEDC is not involved in the transaction) to hire an private firm to conduct independent checks for the Corporation. Fiedler was requested to look into privacy issues both with regard to sharing of information with the MEDC and gathering of independent data. It was also the consensus of the Board that the policy should also be expanded to include individual project guarantors. Upon motion duly made by Morante, seconded by Chesser and unanimously adopted, it was:

WHEREAS, the Michigan Magnet Fund (the” Corporation”) is a Michigan non-profit corporation, tax exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended; (the “Code”);

WHEREAS, effective January 12, 2010, the Corporation entered into a New Markets Tax Credit (“NMTC”) Allocation Agreement (the “2009 MMF Allocation Agreement”) whereby

18 the Corporation received an allocation of NMTC from the CDFI Fund in the seventh round of the NMTC Program (CY 2009) in amount of $60,000,000 (the “MMF 2009 NMTC Allocation”); and

WHEREAS, it is desirous to protect the interest of the Corporation upon its contemplating entering into a NMTC transaction that may benefit the private interests of certain disqualified persons; and

WHEREAS, toward compliance with the rules to regulations of the NMTC Program and other State of Michigan economic development programs provide that the Corporation should consider adopting a Business Integrity Program; and

WHEREAS, the Board has been presented with a Business Integrity Program; and

BE IT RESOLVED, the Business Integrity Program is hereby approved; and

BE IT FURTHER RESOLVED, the that any one Officer or member of the Executive Committee, is also authorized, on behalf of the Corporation, to take such steps as are necessary or desired to implement and carry out the Business Integrity Program.

IX. MISCELLANEOUS

Bogdan also distributed a letter from GLCF informing the Corporation that Aaron Seybert will be joining JP Morgan Chase where he will working on NMTC investments.

X. INPUT FROM LOW-INCOME REPRESENTATIVES AND OTHER BUSINESS

There followed a request for input from Low-Income representatives and barring none and there being no further business to come before this meeting, upon motion duly made and unanimously adopted, it was adjourned at about 4:35 p.m.

Respectfully submitted,

______Mark Morante, Secretary