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D. Determination of Taxability. In the event of a Determination ofT axability (as defined in the Loan Agreement hereinafter referred to) the rate of interest hereon will be automatically increased to an annual rate of interest equal to 2.85% in excess of the rate of interest payable hereon as the same is adjusted according to the terms hereof. Such increased rate is to be effective as of the Date of Taxability (as defined in said Loan Agreement) and will be considered an Adjustment Date hereunder. The City will forthwith pay to the Holder, solely from the source hereinafter provided, an amount (the "Tax Loss Amount") equal to (a) the aggregate difference between (i) the amounts actually paid hereunder between the Date of Taxability and the date of receipt of notice of the Determination ofTaxability, and (ii) the amounts which would have been due during such period if the increased interest rate had been in effect, together with (b) the amount of interest and penalties, if any, incurred by the Holder as a result of such change in taxable status. E. Prepayment. This Note is subject to prepayment in immediately available funds on any date at the option of the Obligor, in whole or in part and without penalty as provided in Section 5.01 of the Loan Agreement. To exercise this option, the Obligor must give written notice in the name of the City to the Holder not less than 30 days prior to the date fixed for prepayment; provided that the Holder may waive or provide alternative notice requirements. The prepayment price is equal to the outstanding principal amount of this Note to be prepaid plus accrued interest. At the date fixed for prepayment, funds must be paid to the Holder at its registered address. If the Obligor so requests, and if partial prepayment is in an amount equal to the applicable Redemption Percentage of Bonds Outstanding on the date notice is given the then outstanding principal balance of this Note, on the date of a partial prepayment of the Note, the installments hereunder will be adjusted to amortize the then outstanding principal amount over the remaining term of this Note, payable commencing with the next installment due after such prepayment. This Note is issued by the City for the purpose of providing funds to be loaned to St. Ann's Residential Services, Inc., a Minnesota nonprofit corporation (the "Obligor"), pursuant to the terms of a Loan Agreement of even date herewith between the City and the Obligor (the "Loan Agreement"), to be used for a project, as defined in Minnesota Statutes, Section 469.153, Subd. 2(d), consisting of financing the cost of a project (as more fully described in the Loan Agreement) located in the City and the Host Municipalities (as more fully described in the Loan Agreement), and paying necessary expenses incidental thereto. This Note is secured by an assignment of the Loan Agreement by the City to the Holder pursuant to a Pledge Agreement of even date herewith and a Mortgage, Security Agreement and Fixture Financing Statement, of even date herewith, between the Obligor, as mortgagor, and the City, as mortgagee and assigned by the City to the Holder (the "Mortgage "). The disbursement ofthe proceeds of this Note is subject to the terms and conditions of the Loan Agreement. 1096613.2 B-3