05.02 - Tax Increment Financing Project - Lonesome Cottage

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(5) The Tax Increment Note shall be a special and limited obligation of the City and not a general obligation of the City, and only Tax Increments shall be used to pay the principal and interest on the Tax Increment Note. If, on any TIF Note Payment Date, the Tax Increments for the payment of the accrued and unpaid interest on the Tax Increment Note are insufficient for such purposes, the difference shall be carried forward, without interest accruing thereon, and shall be paid if and to the extent that on a future TIF Note Payment Date there are Tax Increments in excess of the amounts needed to pay the accrued interest then due on the Tax Increment Note. (6) The City's obligation to make payments on the Tax Increment Note on any TIF Note Payment Date or any date thereafter shall be conditioned upon the requirement that (A) there shall not at that time be an Event of Default that has occurred and is continuing under this Agreement and(B)this Agreement shall not have been rescinded pursuant to Section 4.2(b). (7) The Tax Increment Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit B. In the event of any conflict between the terms of the Tax Increment Note and the terms of this Section 3.2, the terms of the Tax Increment Note shall govern. The issuance of the Tax Increment Note pursuant and subject to the terms of this Agreement, and the taking by the City of such additional actions as bond counsel for the Tax Increment Note may require in connection therewith, are hereby authorized and approved by the City. Section 3.3 Business Subsidies Act. (1) In order to satisfy the provisions of Minnesota Statutes, Sections 116J.993 to 116J.995 (the "Business Subsidies Act"), the Developer acknowledges and agrees that the amount of the "Business Subsidy" granted to the Developer under this Agreement is the Reimbursement Amount which is $102,600 for costs of the Development Property paid by the Developer and reimbursed by Tax Increments and that the Business Subsidy is needed because the Project is not sufficiently feasible for the Developer to undertake without the Business Subsidy. The Tax Increment District is an "economic development" district and the public purpose of the Business Subsidy is to encourage the construction of manufacturing facilities in the City. The Developer agrees that it will meet the following goals (the "Goals"): It will cause the Operating Entity to create at least two (2) full-time equivalent jobs at a wage of at least $10.50 per hour and at least five (5) full-time equivalent jobs at a wage of at least the then- current federal minimum wage, not including benefits in connection with the development of the Development Property within two years from the `Benefit Date", which is the earlier of the date the Developer completes construction of the Project or occupies the Project. (2) If the Goals are not met, the Developer agrees to repay all or a part of the Business Subsidy to the City, plus interest ("Interest") set at the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2, accruing from and after the Benefit Date, compounded semiannually. If the Goals are met in part, the Developer will repay a portion of the Business Subsidy (plus Interest) determined by multiplying the Business Subsidy by a fraction, the numerator of which is the number of jobs in the Goals which were not created at the wage level set forth above and the denominator of which is seven (7) (i.e. number of job set forth in the Goals). 2055837v2 8