Agmt 2006 Mercy Housing California XXXIII (4)

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ARTICLE V DEVELOPMENT OF THE PROPERTY 5.1 Construction of Improvements. Tenant agrees to rehabilitate the existing motel located on the Property as a 68-unit multi-family residential rental project, together with related improvements (the "Project"), in accordance with plans and specifications approved by the City and any other applicable governmental agency or authority. The Project shall include sixty-five (65) studio apartments, two (2) one-bedroom units and one (1) two-bedroom resident manager's unit, common area facilities including a lobby and a community meeting room, outdoor landscaping and sixty-two (62) parking spaces. Tenant shall comply with all terms and conditions set forth in the DDA. 5.2 Construction Schedule. Tenant agrees to use diligent efforts to complete construction of the Project within twelve (12) months after the Commencement Date, with construction targeted to be completed by February 29, 2008, but in no event later than April 29, 2008, if Developer has obtained an allocation of tax credits in the second round for the year 2006, unless an extension is approved by Landlord. 5.3 Construction Standards. 5.3.1 General Construction Standards. All work done in connection with construction of Improvements on the Land, including any subsequent improvement, alternation or replacement, shall be conducted in a first class and workmanlike fashion in accordance with plans and specifications approved by Landlord and in compliance with all applicable local, state and federal statutes, codes, ordinances, laws and regulations (collectively, "Applicable Laws"). Tenant shall take all reasonably necessary measures to minimize any damage, disruption or inconvenience caused by such work and make adequate provision for the safety of all persons affected thereby. Tenant shall have the sole responsibility for obtaining all necessary governmental permits and approvals for the rehabilitation of the Improvements, at Tenant's sole cost and expense. Landlord shall cooperate with Tenant in connection with obtaining any such governmental permits and approvals. Tenant shall pay (or cause to be paid) all costs and expenses associated with the Improvements rehabilitated by Tenant on the Property and shall indemnify, defend and hold Landlord harmless from and against all claims, liabilities, losses, costs and expenses (including reasonable attorneys' fees) incurred by or brought against Landlord for the failure of Tenant to pay for the cost of such work, any mechanics' or other liens filed against the Property in connection therewith, or the failure of Tenant to comply with Applicable Laws including without limitation, California Labor Code Section 1770 et seq. ("Prevailing Wage Laws") as and to the extent applicable. Upon Landlord's request, Tenant shall make available for Landlord's inspection, certified payrolls from the general contractor and all subcontractors. 5.3.2 Inspection During Construction. Tenant agrees to allow Landlord's authorized representatives, agents or employees reasonable access, upon 24 hours prior notice to inspect any construction Tenant undertakes on the Land. 833368-4 8