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ARTICLE III Development Property; Public Development Costs Section 3.1. Status of PropertX. As of the date of this Agreement, the Developer has entered into a purchase agreement to acquire the Development Property (the "Purchase Agreement"). On or before the closing of its purchase of the property and construction of the Project, Developer, as owner of the Development Property, will enter into the Lease under which the Tenant will operate the Minimum Improvements. The Authority shall have no obligation to acquire the Development Property or any portion thereof. Section 3.2. Environmental Conditions. (a) The Developer acknowledges that the Authority makes no representations or warranties as to the condition of the soils on the Development Property or the fitness of the Development Property for construction of the Minimum Improvements or any other purpose for which the Developer may make use of such property, and that the assistance provided to the Developer under this Agreement neither implies any responsibility by the Authority for any contamination of the Development Property nor imposes any obligation on such parties to participate in any cleanup of the Development Property. (b) Without limiting its obligations under Section 8.3 hereof the Developer further agrees that it will indemnify, defend, and hold harmless the Authority and its governing body members, officers, and employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants existing on or in the Development Property, unless and to the extent that such hazardous wastes or pollutants are present as a result of the actions or omissions of the indemnitees. Nothing in this Section will be construed to limit or affect any limitations on liability of the Authority under State or federal law, including without limitation Minnesota Statutes, Sections 466.04 and 604.02. Section 3.3. Public Development Costs; Issuance of Note. (a) Generally. The Authority has determined that, in order to make development of the Minimum Improvements financially feasible, it is necessary to reimburse Developer for a portion of the cost of land acquisition, site preparation, including soil correction, public infrastructure improvements, and other qualified costs (collectively referred to as "Public Development Costs"), related to the Development Property, subject to the terms of this Section. The Authority has determined that the Public Development Costs described in the attached EXHIBIT E are eligible to be reimbursed with Tax Increment pursuant to the TIF Act. (b) Terms. To reimburse a portion of the Public Development Costs incurred by Developer, the Authority shall issue and the Developer shall purchase the Note in the maximum principal amount of $1,200,000. The Note shall not bear interest. The Authority shall issue and deliver the Note to the Developer when the Developer has: (i) delivered to the Authority written evidence reasonably satisfactory to the Authority that Developer has incurred Public Development Costs in an amount at least equal 7 482405v6