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of any kind whatsoever of the City under this Note or otherwise. To the extent that Tax Increments are received with respect to the property taxes payable in any particular year in amounts insufficient at the time of receipt or receipts to pay in full either the July 15 or December 15 Scheduled Payment Amounts for that year, said Tax Increments applicable to the property taxes payable in that year shall be applied to discharge any remaining amount owing with respect to said Scheduled Payment Amounts as and when the City shall have received final settlement of those Tax Increments for that year from Ramsey County, but in the interim there shall be no additional interest accruing on any unpaid portions of such Scheduled Payment Amounts. In all cases, payments made by the City pursuant to the provisions of this Note shall first be applied to discharge the applicable principal of the Scheduled Payment Amounts, and then to the interest portion thereof. Notwithstanding the foregoing, as provided in the Development Agreement, including particularly but without limitation Section 3.4(d) (ii) thereof, the City shall have a first claim on the Tax Increments and shall retain for itself Tax Increments from the Tax Increment District in the amounts and at the times set forth in the attached Exhibit 2, which prior claim of the City (1) shall be superior to the City's obligations to pay on this Note and (2) shall continue until the respective amounts listed in Exhibit 2 shall have been retained by the City from such Tax Increments as and when due, or, if overdue because of insufficient revenue of such Tax Increment, as, when, and to the extent that additional Tax Increments from the Tax Increment District shall become available to the City. The City's obligation hereunder to pay each Scheduled Payment Amount shall be further conditioned on the fact that there shall not at the time have occurred and be continuing an Event of Default under that certain Contract for Private Development, dated as of January 14, 1988, as amended pursuant to a certain First Amendment to Contract for Private Development, dated as of May 17, 1988, and as the same may be amended from time to time (the "Development Agreement") by and between the City and Golden Pond Limited Partnership, a Minnesota limited partnership (the "Company"), and, further, if pursuant to the occurrence of an Event of Default under the Development Agreement the City elects to cancel and rescind the Development Agreement, the City shall have no further debt or obligation under this Note whatsoever; provided, however, that the City's payment obligations under this Note are subject to the terms applicable thereto contained in that certain Subordination and Warranty Agreement, dated as of , 1988, as the same may be amended (the "Subordination Agreement"), by and between the City and Marquette Bank Minneapolis, National Association (the "Bank"), and said provisions of the Subordination Agreement shall govern, with respect to said payment hereof, at the times, in the manner, and to the extent they shall apply, notwithstanding any provision of this Note to the contrary. Reference is hereby made A-2