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a. Phase 1 in the form of a pay-as-you-go (PAYGO) note in the amount of up to $5,632,000, bearing simple, non-compounding interest at a rate per annum of up to the lesser of 5% or the rate of interest on the first lien mortgage financing for the Minimum Improvements. The PAYGO note will be payable from 90% of the tax increment generated from the Minimum Improvements for a period of up to 20 years; and b. Phase 2 in the form of a pay-as-you-go (PAYGO) note in the amount of up to $3,631,000, bearing simple, non-compounding interest at a rate per annum of up to the lesser of 5% or the rate of interest on the first lien mortgage financing for the Minimum Improvements. The PAYGO note will be payable from 90% of the tax increment generated from the Minimum Improvements for a period of up to 20 years The PAYGO note will be issued upon completion of the Minimum Improvements and proof of expenditures for qualified TIF-eligible costs. 8. Fees: Within two (2) weeks of approval of this Term Sheet by the City, Developer shall deposit to the City the sum of Ten Thousand Dollars ($10,000.00) to pay for the reasonable out-of-pocket legal, financial consultant and administrative fees associated with this transaction. Unexpended funds will be returned to the Developer and if, additional funds are needed to pay such expenses, the Developer will deposit such additional funds upon request by the City. 9. Look-Back Provision: The TIF Agreement will include a look-back provision to review actual project performance and returns on investment against initial projections. If returns on investment exceed certain limitations, then the TIF notes may be reduced. 10. Development Fees / Plat: Development fees, including but not limited to Park Dedication, Sewer, Water, Storm Sewer will be included in the Development Agreement. Any reduction or amendment to these standard fees will require City Council approval. The Developer acknowledges that except for Section 8 above which shall be binding upon the Developer, this Term Sheet shall not be deemed conclusive or legally binding upon either the Developer or the City, and neither the Developer nor the City shall have any obligations regarding the Property, the Minimum Improvements or the Public Assistance described herein, unless and until a definitive TIF Agreement is approved by the City Council and executed by both the Developer and the City. PRESBYTERIAN HOMES HOUSING AND ASSISTED LIVING, INC., A MINNESOTA NON-PROFIT CORPORATION By: _________________________ Its: _________________________