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and prior to City's initial acceptance of the Lot 2 Improvements, Owner shall furnish the <br />security described in Paragraph C with respect to the Lot 2 Improvements. The <br />requirements of Paragraphs A and B may be satisfied by Owner's provision of bonds to <br />the State of California, Department of Housing and Community Development in <br />connection with funding provided for the applicable Improvements to the extent (i) such <br />bonds are in the same form(s), for the same purpose(s) and in the same amount(s) <br />required hereunder, and (ii) City is named as co-obligee on such bonds. <br />Notwithstanding anything to the contrary in this Agreement, with respect to the <br />pedestrian paseo, Owner shall only be obligated to provide the security described in <br />Paragraphs A, B and C below once (i.e., in connection with either Lot 1 or Lot 2). <br />A. Faithful Performance. Either a cash deposit, a corporate surety <br />bond issued by a company duly licensed to conduct a general surety business in the <br />State of California, or an instrument of credit equal in value to one hundred percent <br />(100%) of the estimate set forth in Section 5.1 for the applicable lot, and sufficient to <br />assure City that the Improvements for the applicable lot will be satisfactorily completed. <br />B. Labor and Materials. Either a cash deposit, a corporate surety <br />bond issued by a company duly licensed to conduct a general surety business in the <br />State of California, or an instrument of credit equal in value to one hundred percent <br />(100%) of the estimate set forth in Section 5.1 for the applicable lot, and sufficient to <br />assure City that Owner's contractors, subcontractors, and all persons furnishing labor, <br />materials, or equipment for construction of the Improvements for the applicable lot shall <br />be paid all amounts due therefor. <br />C. Maintenance Security. With respect to Lot 1, either a cash deposit, <br />a corporate surety bond issued by a company duly licensed to conduct a general surety <br />business in the State of California, or an instrument of credit equal in value to ten <br />percent (10%) of the construction cost estimate for the Lot 1 Improvements set forth in <br />Section 5.1 to guarantee that the Lot 1 Improvements are free from defect for a period of <br />one year after final acceptance of said Improvements by City, and with respect to Lot 2, <br />either a cash deposit, a corporate surety bond issued by a company duly licensed to <br />conduct a general surety business in the State of California, or an instrument of credit <br />equal in value to ten percent (10%) of the construction cost estimate for the Lot 2 <br />Improvements set forth in Section 5.1 to guarantee that the Lot 2 Improvements are free <br />from defect for a period of one year after final acceptance of said Improvements by City. <br />If Owner fails or refuses to maintain or repair the Improvements pursuant to Section 6, <br />City is authorized to expend all or any portion of such deposits for such purposes. Upon <br />expiration of the one-year period with respect to the Lot 1 Improvements and the <br />correction by Owner of any defects in the Lot 1 Improvements required by City, City <br />shall terminate, release, return and reconvey any surety bond given to City respecting the <br />Lot 1 Improvements pursuant to this paragraph and shall refund to Owner (or such other <br />party that has provided such deposit) the unused portion (if any) of any cash deposit <br />provided to City pursuant to this paragraph in connection with the Lot 1 Improvements. <br />Upon the expiration of the one-year period with respect to the Lot 2 Improvements and <br />the correction by Owner of any defects in the Lot 2 Improvements required by City, City <br />1328680-7 <br />