05.02 - Tax Increment Financing Project - Lonesome Cottage

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EXHIBIT C ASSESSMENT AGREEMENT THIS AGREEMENT, dated as of this day of August, 2007, is between the City of Pequot Lakes, Minnesota (the "City") and Lonesome Real Estate, LLC, a Minnesota limited liability company(the "Developer"). WITNESSETH WHEREAS, on or before the date hereof the City and Developer have entered into a Development Agreement dated as of August , 2007 (the "Development Agreement") regarding certain real property located in the City (the "Development Property"). WHEREAS, it is contemplated that pursuant to said Development Agreement, the Developer will construct an approximately 27,200 square foot manufacturing facility (the "Project") on the Development Property in accordance with construction plans approved by the City. WHEREAS, the City and Developer desire to establish a minimum market value for the portion of the Development Property and the improvements constructed or to be constructed thereon,pursuant to Minnesota Statutes, Section 469.177. WHEREAS, the Developer has acquired the Development Property consisting of land, the legal description of which is attached hereto as Exhibit A. WHEREAS, the City and the Assessor have reviewed Construction Plans for the Project. NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1. As of January 2, 2008 through and including January 1, 2015, the minimum market value, which shall be assessed for the Project, shall be $1,369,600. 2. As of January 2, 2015 through and including January 1, 2016, the minimum market value, which shall be assessed for the Project, shall be $1,374,100. 3. As of January 2, 2016, the minimum market value, which shall be assessed for the Project, shall be $1,422,200. 4. The minimum market values herein established shall be of no further force and effect and this Agreement shall terminate on the earlier of(i) December 31, 2017; (ii) the date on which the City's Tax Increment Financing District No. 1-13 expires or is otherwise terminated or (iii) the date on which the Developer has repaid the Promissory Note (as such term is defined in the Development Agreement)and all accrued interest thereon to date of payment, and all accrued interest to date of payment (the "Termination Date"). If the Termination Date is earlier than 2055837v2 C-1