10-25-01 6. DEVELOPMENT AGREEMENT

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an amount equal to the lesser of(1)the Available Tax Increments (which generally consist of 90%of the tax increments from the HRA's Tax Increment Financing District No. 1-1 within its Housing Project Area No. 1) received by the HRA within the 6-month period preceding said Payment Date and(2)the sum of(i)the accrued and unpaid interest on the Principal Amount and (ii)the unpaid Principal Amount of this Note. All payments made by the HRA under this Note shall be applied first to pay the accrued and unpaid interest on the Principal Amount of this Note and second to pay the unpaid Principal Amount hereof. The HRA shall have the right on any Payment Date to prepay the principal amount of this Note in whole or in part without penalty or premium and without the prior written consent of the Registered Owner or the Developer. [5] This Note shall terminate and be of no further force and effect on any date upon which the HRA shall have terminated the Development Agreement or on the last Payment Date following payment thereon of the amounts due hereon, whichever occurs earliest. [6] The HRA makes no representation or covenant, express or implied, that the revenues described herein will be sufficient to pay, in whole or in part, the amounts which are or may otherwise become due and payable hereunder. Any amounts which have not become due and payable on this Note on or before the final Payment Date or Additional Payment Date, as the case may be, shall no longer be a debt or obligation of the HRA whatsoever. [7] The HRA's payment obligations hereunder shall be further conditioned on the Developer's compliance with the terms and conditions of the Development Agreement and on the fact that there shall not at the time have occurred and be continuing an Event of Default under the Development Agreement, and, further, if pursuant to the occurrence of an Event of Default under the Development Agreement the HRA duly elects to terminate the Development Agreement pursuant to its terms, the HRA shall have no further debt or obligation under this Note whatsoever; provided that if, pursuant to an Event of Default,the HRA elects pursuant to Section 7.2 of the Development Agreement to withhold payment otherwise due hereon, said suspended payment shall become payable hereon upon cure of the Event of Default. Reference is hereby made to the provisions of the Development Agreement for a fuller statement of the obligations of the Developer and of the rights of the HRA thereunder, and said provisions are hereby incorporated by reference into this Note to the same extent as though set out in full herein. The execution and delivery of this Note by the HRA, and the acceptance thereof by the initial Registered Owner hereof, shall conclusively establish this Note as the "TIF Note" (and shall conclusively constitute discharge of the HRA's obligation to issue and deliver the same) under the Development Agreement. [8] This Note is a special and limited revenue obligation but not a general or moral obligation of the HRA and is payable by the HRA only from the sources and subject to the qualifications and limitations stated or referenced herein. Neither the full faith and credit nor the taxing powers of the HRA are pledged to or available for the payment of this Note, and no property or other asset of the HRA, save and except the above referenced Available Tax Increments, is or shall constitute a source of payment of the HRA's obligations hereunder. [9] This Note is issued by the HRA in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 through 469.179, and including specifically but without limitation Section 469.178, Subdivision 4, thereof. C-2