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E. Permits — Prior to the start of any construction, the developer's contractor shall apply for and receive all necessary permits for the Improvements from the City and/or government agencies having jurisdiction. Site grading shall not commence until a land alteration permit has been issued. Developer is advised that an erosion control permit must be obtained from the Minnehaha Creek Watershed District as well as the required NPDES construction site permit, before commencing any grading activity on the site. F. Construction—The construction, installation and materials shall be in accordance with the Plans approved by the City. G. Inspection — The City, through its staff and/or consultants, shall inspect the installation of the Improvements to ensure compliance with the Plans. The cost of such inspections will be paid by the Developer and are anticipated to be approximately $5,000.00 to $10,000.00 but could exceed these amounts if major problems arise. An escrow account in the amount of$15,000 to cover the costs of inspection shall be established with the City by the Developer. H. Insurance—The Developer will cause each person who constructs and installs any portion of the Improvements to maintain complete insurance coverage including Workmen's Compensation, Liability and Property Damage (with coverages consistent with industry standards). 8. Performance Security. For the purposes of assuring to the City that the Improvements will be completed according to the terms of this Agreement, and that the Developer will pay or will cause to have paid all claims for work done and materials and supplies furnished, the Developer or its general contractor will deposit with the City prior to issuance of site grading and building permits an irrevocable letter of credit (LOC) from a local (Twin Cities area) financial institution in a form satisfactory to the City,providing that the City is able to draw upon such letter of credit in its sole discretion to complete the Improvements if the Developer fails to satisfactorily complete the work prior to the completion date specified in Section seven (7) above. Further, if the required improvements are not completed at least thirty (30) days prior to the expiration of the LOC, the City may also draw on the LOC. If the security is drawn down,the draw shall be used to cure the default. The amount of the LOC shall be 150% of the estimated improvement costs. The estimated improvement cost is $713,723.75; therefore, the LOC amount shall be $1,070,585.63. As substantial elements of the Improvements are completed and approved by the City Engineer, the City will authorize reduction of the LOC in an amount equal to 150% of the cost estimate for that phase of the improvements deemed complete,but in no case shall the LOC be reduced to a point less than 10% of the original amount until all Improvements are complete and accepted by the City. The LOC shall expire no sooner than one year after the completion date specified in Section 7 above, to allow for at least one freeze-thaw cycle for parking lot settlement. Security to ensure survival of landscaping vegetation shall be retained for eighteen (18) months after planting. Developer Initial City Clerk Initial Page 5 of 9