DISBURSEMENT AGREEMENT

This Disbursement Agreement (this "Agreement") is entered into as of

_____________________, by and among ___________________________,

__________________("Borrower” and/or “Development Owner”),

_________________________("Senior Lender"), ______________ (the “Lender”) (the Senior

Lender and any and all individual Lender listed here collectively referred to as “Lenders”), and

the Texas Department of Housing and Community Affairs, as the statutorily designated agency

distributing Exchange Subaward funds on behalf of the State of Texas (“Department”)

RECITALS

A. Senior Lender has agreed to lend to Borrower, and Borrower has agreed
to borrow from Senior Lender, certain amounts, not to exceed $_________________ (the

“Senior Loan” or “Senior Loan Proceeds”), for the purpose of obtaining financing to develop
an apartment Development located as described in Exhibit A (the “Development”). The terms
and conditions of Senior Lender's obligation to lend and the Borrower's commitment to borrow
are set forth in an agreement dated of even date herewith, between Borrower and Senior Lender
(the "Senior Loan Agreement"), and in the other Loan Documents (as such term is defined in
the Loan Agreement).

B. Department has agreed to make a subaward under the Exchange Program

to Borrower in the form of a grant (the “Exchange Proceeds”) in the amount of
$________________ for the purpose of financing the development of the Development. The
terms and conditions of Department’s obligations are set forth in the Tax Credit Exchange
Subaward Agreement (the “Exchange Agreement”) and the exchange Agreement is hereby
incorporated by reference.

C. The parties hereto wish to enter into this Agreement to set forth their
mutual agreement and understanding regarding the terms, circumstances, and conditions under
which proceeds of the Senior Loan and the Exchange proceeds will be made available to
Borrower to pay for development costs for the Development, as hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants, conditions, and

agreements contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Page 1 of 15
 DEFINITIONS

The capitalized terms used in this Agreement shall have the meanings ascribed to them in
the Recitals hereto and in this Article I; provided that certain capitalized terms used and not
defined herein shall have the meanings ascribed to them in Section 42 of the Code or in the
relevant year Qualified Allocation Plan (Title 10 Texas Administrative Code Chapter 49 and/or
50).

“Asset Manager” means the Department or its designee, and any successor thereto
chosen by the Department.

“Budget” means the final sources and uses for the Development as evidenced in the
Department’s underwriting report attached hereto as Exhibit B. The Budget must clearly show
the total Development Costs of the Development and the total amount of Exchange Program
Funds awarded to the Development.

“Eligible Costs” means any of the line-item expenditures to be reimbursed with

Exchange Program Funds and such additional expenditures as may be approved by the Asset
Manager from time to time. The payment of such costs must be permissible under the Program
Requirements. Eligible Costs for each residential rental building in a Development, determined
at the time of Cost Certification, may not exceed 85% of such building’s eligible basis.

“Exchange Proceeds” means the Subaward of Exchange Program Funds in the aggregate
amount to be made by the Department to the Development Owner to assist in the financing of the
Construction of the Development pursuant to all of the terms and conditions of this Agreement.

“Material Change Order” means a change order to the Budget, construction contract or
any of the other Construction Documents in connection with the construction of the
Improvements that would result in an overall increase or decrease in excess of five percent (5%)
in development cost, reflected in the Budget.

“Required Placed In-Service Date” (also, “Placed In-Service Date”) means the date by
which at least one unit in each building in the Development that must be Low-Income Units, and
be ready and available for occupancy in accordance with State and local laws

Any other capitalized term used but not defined herein shall have the meaning given it in
the Exchange Agreement.

SECTION 1

1. Budget. The parties hereto agree and acknowledge that the budget
attached hereto as Exhibit “B” is the construction budget for the Development and has been
approved by Senior Lender and Submitted to the Department as part of the Exchange
Agreement. Except as provided under the terms of the Exchange Agreement, the budget may not
be modified or amended without Notice to all parties. The parties hereto agree that the funding
and construction schedule for the Development is attached hereto as Exhibit “D”. The form
request to be used for purposes of this Agreement is attached hereto as Exhibit “C” (the “Draw
Request”).

SECTION 2

2. Amendments. Neither the Senior Loan Agreement nor the Exchange

Agreement (or any agreement issued pursuant to either of them) shall be amended or modified in
any manner that would affect the amount, timing, and conditions to funding of the Senior Loan
or the Exchange Proceeds without the prior written notification of each party to this Agreement.

SECTION 3

3. Draw Request Procedure.

a. Requests for draws to the Department will be handled under the

terms set out in Article IV of the Exchange Agreement and outlined in this
section. Subject to section 3.(b) below, funds may be drawn monthly or less
frequently as neccessary, until the full amount of Exchange Proceeds is
exhausted. Subject to the terms of this Agreement, any expenditure which, when
added to any prior expenditure, exceeds the Budget or any line item specified in
the Budget, shall require the approval of the Asset Manager (as defined in the
Exchange Agreement and designated by the Department), which approval shall
not be unreasonably withheld.

b. Prior to the first Draw Request for Exchange Proceeds the

Borrower must certify that it has acquired the Development Site, as defined in the
Exchange Agreement, with funds from a source other than Exchange Proceeds.
Thereafter, the Department will disburse funds as requested in draws up to the
total amount of the Exchange Proceeds with Eligible Costs verified at cost
certification.

c. The Development Owner may not request a disbursement of

Exchange Proceeds from the Department until such funds are needed to pay costs
of the Development. Accordingly, the amount of each Draw Request must be
limited to the amount of money needed to pay costs actually incurred by the
Development Owner at the time of the Draw Request and may not include
amounts for prospective or future needs, or placed into escrow accounts or
advanced in lump sums to the Development Owner.

d. Senior Lender will review documentation for incurred costs that

match the draw request and approve any draw of Exchange funds. Department
reserves the right to further review, question and approve draws of Exchange
Proceeds, including using third-party Asset Managers to assist in such approval.

e. Development Owner, the Contractor and the Architect will certify

such Draw Request and provide back-up documentation.
 f. Draw Requests for Exchange funds will be done electronically
through the TDHCA Housing Contract System. Development Owner will obtain
access to the system and submit draw certification and documentation
electronically. The Senior Lender may also be required to obtain access to the
system and electronically approve the draws.

g. Draw Requests to Senior Lender will be conducted under the

mechanism designed in the Senior Loan Documents.

h. Draw Requests shall be submitted for approval to the Asset

Manager together with the completed and signed documents listed in Exhibit C,
each in form and substance reasonably satisfactory to the Asset Manager. The
Asset Manager may withhold any draw pending completion of a site inspection as
deemed necessary by the Asset Manager or the Department to ensure that
construction progress is being made in accordance with the Construction
Documents.

i. The Department shall submit a request for Exchange Program

Funds to the Treasury in an amount equal to the approved amount of the current
Draw Request (not to exceed, in the aggregate, the amount of the Subaward)
within five (5) Business Days of the later to occur of (i) approval of the Draw
Request by Asset Manager or (ii) receipt by the Asset Manager of all of the
completed and signed Draw Documents.

j. The Development Owner shall cooperate with the Asset Manager

in obtaining and providing any additional documentation that may be required by
the Treasury to approve the request for Exchange Program Proceeds.

k. The Development Owner acknowledges and agrees that no

Exchange Program Proceeds may be disbursed after the Expiration Date outlined
in the Exchange Agreement; provided, however, that the Expiration Date may be
extended in the discretion of the Department if, and only to the extent that, the
expiration date for funding subawards of Exchange Program Funds set forth in
Section 1602(d) of the Recovery Act is extended beyond December 31, 2011. All
Draw Requests shall be submitted to the Asset Manager at least sixty (60)
Business Days prior to the Expiration Date.

l. The Department will not make any payments to the Development

Owner for costs that:

a) are prohibited under Program Requirements;

b) are not in accordance with the terms of this Agreement;
c) were requested and/or incurred after termination of this
Agreement;
d) were requested during the occurrence and continuation of an
Event of Default; or
 e) were requested and/or incurred less than sixty (60) Business
Days prior to the Expiration Date.

m. Borrower authorizes and requests that Department and the Senior

Lender each fund Draw Requests by deposit in Borrower’s name into Borrower’s
construction account located at Senior Lender and operated under an agreement
by Borrower and Senior Lender.

n. Upon prior written notice to the Development Owner, the

Department is authorized to make modifications to the disbursement procedures
and Disbursement Agreement set forth herein to establish additional requirements
for payment of the Exchange Proceeds to the Development Owner as may be
necessary or advisable for compliance with all Program Requirements.

o. [ Notwithstanding any provision in the Exchange Agreement or in

any of the Exchange Security Instruments to the contrary, the Department agrees
with Senior Lender that if (i) an event or condition has occurred (whether or not
constituting an Event of Default or Recapture Event under and as defined in the
Exchange Agreement or in any of the Exchange Security Instruments) and is
continuing such that the Department would be entitled to suspend or withhold its
funding of a Draw Request, but (ii) Senior Lender has funded for or agreed to
fund for the costs reflected in such Draw Request, then the Department agrees to
fund such costs contained in the Draw Request, up to the total funding limit in the
Exchange Agreement, provided that such funding would not constitute a violation
by the Department of any applicable law. In consideration of such continued
funding, the Senior Lender and Department will promptly communicate regarding
the feasibility of the completion of the Development and will work together in
good faith to continue to fund and complete the Development with the mutual
desire to operate the Development in accordance with and subject to the LURA.
So long as the Department and the Senior Lender are working in good faith to
identify and implement a solution to complete the project and have it operated by
a qualified operator as an affordable housing development, the Senior Lender will
refrain from exercising its foreclosure rights under the loan documents. If the
Senior Lender determines that such a resolution is not possible, it will give written
notice of this determination to the Department. For the avoidance of doubt, the
parties acknowledge and agree that the foregoing agreement to work together in
good faith does not (i) obligate Senior Lender to complete or cause the
completion of the Development, (ii) obligate the Senior Lender to fund any
proceeds of its loan to the Development Owner if such funding would be contrary
to its Loan Documents (including the requirements concerning sufficiency of
funds available to fund construction to completion), (iii) limit in any way Senior
Lender’s rights, remedies and recourses set forth in its Loan Documents, (iv) limit
the application of any provision terminating the LURA upon a foreclosure of
Senior Lender’s deed of trust as and to the extent set forth in the LURA, or (v)
 obligate Senior Lender or any party to operate the Development in accordance
with the LURA following any such termination thereof.]1

SECTION 4

4. Draw Requests and Change Orders

a. The Development Owner shall obtain the prior written consent of

the Department for any Material Change Order, regardless of whether any
proposed disbursement of Exchange Proceeds would be affected by such Material
Change Order. As a pre-condition to the Department’s consent to any Material
Change Order, the Development Owner shall submit to the Department (with a
copy to the Asset Manager) a description of the curative actions to be taken by the
Developer and the Contractor to accelerate construction progress and/or align the
sources and uses of funds for the Development notwithstanding such Material
Change Order (the “Action Plan”). The Action Plan shall be in form and
substance reasonably satisfactory to the Department and shall be signed by the
Developer and the Development Owner as evidence of their intent to implement
or cause to be implemented the Action Plan as described. Failure of the
Development Owner to submit and/or cause implementation of an Action Plan
reasonably acceptable to the Department shall entitle the Department to suspend
making disbursements of Exchange Program Funds under this Agreement until
such time as an acceptable Action Plan has been received and implementation
thereof has commenced.

b. The Department will not approve any Material Change Order

which would, in the reasonable determination of the Department, (i) cause the
Development to fail to meet the Required In-Service Date, (ii) be in violation of
state or federal law, or (iii) prevent the Exchange Proceeds from being fully
disbursed in a timely manner to the Development Owner in accordance with the
requirements and procedures set forth herein by the Expiration Date.

SECTION 5

5. Developer Fee Payments

a. The Developer shall be entitled to receive the Developer Fee in an

amount set forth in the Budget, not to exceed the limits identified in the QAP.

b. Up to seventy-five percent (75%) of the Developer Fee may be

disbursed in accordance with the percentage of construction completion of the
Development. The balance of the Developer Fee may be paid upon the later to
occur of (i) the Department’s receipt and acceptance of Cost Certification in form
and substance satisfactory to the Department, or (ii) the reasonable determination

1 Section 3(o) is optional language and should be removed unless agreed to by all parties.
by the Department that there are sufficient sources of funds available after
payment of all other Development Costs to pay the balance of the Developer Fee
(unless, in each case, the Development Agreement or the Senior Loan Documents
provide for later payment).

SECTION 6

6. Miscellaneous.

a. BORROWER SHALL INDEMNIFY DEPARTMENT AND

SENIOR LENDER AND HOLD EACH OF THEM HARMLESS FROM
ANY AND ALL CLAIMS, LIABILITIES, LOSSES, ACTIONS, SUITS OR
PROCEEDINGS AT LAW OR IN EQUITY, OR ANY OTHER EXPENSE,
FEES OR CHARGES OF ANY CHARACTER OR NATURE, WHICH IT
MAY INCUR OR WITH WHICH EITHER OF THEM MAY BE
THREATENED BY REASON OF ITS ENTERING INTO THIS
AGREEMENT, AND IN CONNECTION THEREWITH, TO INDEMNIFY
SENIOR LENDER AGAINST ANY AND ALL EXPENSES, INCLUDING
REASONABLE ATTORNEYS' FEES AND THE COSTS OF DEFENDING
OR APPEARING IN ANY ACTION OR RESISTING ANY CLAIM;
PROVIDED, HOWEVER, THAT BORROWER SHALL HAVE NO
OBLIGATION TO INDEMNITY AND HOLD DEPARTMENT AND
SENIOR LENDER HARMLESS FOR ANY SUCH LIABILITIES
INCURRED BY, IMPOSED UPON OR ESTABLISHED AGAINST
DEPARTMENT OR SENIOR LENDER, AS THE CASE MAY BE, FOR
SENIOR LENDER'S WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE.

b. The Disbursement Agreement shall provide the guidance for and

shall take into account all applicable state payment laws, including but not limited
to Chapters 403, 2107 and 2252 of the Texas Government Code, and any
applicable federal payment laws.

c. Any notice, consent, request, demand or other communication

required or permitted to be given hereunder must be in writing and shall be
deemed sufficiently given or made when (i) delivered in person, (ii) sent by
proper courier or national overnight delivery service with proof of delivery and
courier fees paid by sender, (iii) sent by telecopy with telephonic and
confirmation of receipt, or (iv) three days after deposit in the United States mail
by first class mail, registered or certified, return receipt requested, postage
prepaid, as follows:
Senior Lender: _______________________

_______________________

_______________________

With a copy to:

Lender: _______________________

_______________________

_______________________

With a copy to:

Lender: _______________________

_______________________

_______________________

With a copy to:

 To Borrower:

With a copy to:

Department: TDHCA
P.O. B0X 13941
Austin, Texas 78711
ATTN: Teresa A. Shell
Housing Tax Credit Exchange Administrator

d. THIS AGREEMENT SHALL BE GOVERNED BY AND

CONSTRUED IN ACCORDANCE OF LAWS OF THE STATE OF TEXAS
AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

e. This Agreement constitutes the entire agreement of the parties

hereto with respect to the subject matter hereof.

f. Time is of the essence for the performance of the obligations of the

parties hereunder.

g. This Agreement is binding upon and shall inure to the benefit of

the Department, Senior Lender, and Borrower and their respective successors and
assigns.

h. The Parties hereto voluntarily, knowingly, irrevocably and

unconditionally waive any right to have a jury participate in resolving any dispute
(whether based upon contract, tort or otherwise) between or among them arising
out of or in any way related to this agreement or any relationship among the
parties hereto (or any of them). This provision is a material inducement to Senior
Lender to provide the financing described herein or in the Loan Agreement. Both
parties acknowledge that Binding Arbitration is not a part of this Agreement.
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
multiple counterparts as the dates below written.

BORROWER

By:

Name:

Title:

Date: _________________ ____, 200___

SENIOR LENDER

By:

Name:

Title:

Date: ________________ ____, 200___

LENDER

By:

Name:

Title:

Date: ________________ ____, 200___

LENDER

By:

Name:

Title:

Date: ________________ ____, 200___

Department

Texas Department of Housing and Community

Affairs

By:

Name:

Title:

Date: ________________ ____, 200___

Exhibit A

DESCRIPTION OF DEVELOPMENT SITE

[Attached Behind]
 Exhibit B

CONSTRUCTION BUDGET

[Attached Behind]
 Exhibit C

DRAW REQUEST

All draws will be processed electronically through the TDHCA Contract System. All draws will
be processed by TDHCA and electronically relayed to the Texas Comptroller of Public Accounts
Office for disbursement. The Development Owner must have the following items completed
prior to being able to request funds:

1. Application for Texas Identification Number (TIN) – Texas Comptroller of Public

Accounts: http://www.window.state.tx.us/taxinfo/taxforms/ap-152.pdf

2. Vendor Direct Deposit Authorization Form – Texas Comptroller of Public Accounts:

http://www.window.state.tx.us/taxinfo/taxforms/74-176.pdf

3. TDHCA Contract System Access Request Form (Required in order to access requisition
system):http://www.tdhca.state.tx.us/home-division/forms/docs/0201-
contract_Sys_Access.doc

An executed requisition form and back-up documentation must be attached electronically to each
draw request within the TDHCA Contract System. Such requisition form will be provided by the
Department.
 Exhibit D

FINALIZED CONSTRUCTION SCHEDULE