HABITAT FOR HUMANITY OF ORANGE COUNTY (5)

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2. SCOPE OF WORK/PROJECT BUDGET The Project Description and Scope of Work is generally described in Exhibit B, and shall comprise of the development, construction, and operation of the Property as providing the six(6) Affordable Housing Units. Any material change to the Scope of Work requested by the Developer shall be subject to the prior written approval of the City Project Manager. The Scope of Work sets forth the construction work that shall be performed on the Property for the Project and timeframes for approvals of such work with a Schedule of Performance. A line-item budget for the Project, including a summary of statement of sources and uses of funds, is incorporated into Exhibit C ("Project Budget"). 3. CONDITIONAL INCLUSIONARY GRANT 3.1 Developer is not subject to a repayment obligation for the Inclusionary Grant, except for an Event of Default, as set forth in Section 16. This Agreement shall automatically terminate when all Affordable Housing Units have been initially transferred to Low Income Households in accordance with the terms of this Agreement and the Regulatory Agreement. In the event the Project is not constructed in compliance with the Scope of Work within two (2)years from the date of the first disbursement of the Inclusionary Grant fiends, the City may terminate this Agreement and, pursuant to the default remedy provisions of this Agreement set forth in Section 16, the City shall be entitled to repayment of Inclusionary Grant monies not expended on the Project or any amounts expended in violation of this Agreement. 3.2 Amount and Purpose. Following complete execution of this Agreement, subject to the terms and conditions of this Agreement, including the conditions set forth in Section 4, City agrees to provide the Inclusionary Grant to Developer from the Inclusionary Housing Fund in the principal amount of up to Two Million Two Hundred Thousand Dollars ($2,200,000), as follows: an initial disbursement of One Million Nine Hundred Eighty Thousand Dollars ($1,980,000) (the "Initial Disbursement"), and a final disbursement of Two Hundred Twenty Thousand Dollars ($220,000) (the"Final Disbursement")upon completion of construction of the Project. Developer represents and warrants that it shall only use the Inclusionary Grant proceeds in accordance with this Agreement for expenses that are actually and reasonably incurred by Developer for the Project and approved by City(such approval not to be unreasonably withheld or delayed), and for no other purpose. 4. CONDITIONS TO DISBURSEMENT OF GRANT PROCEEDS 4.1 Conditions Precedent to Initial Disbursement. City's obligation to make the Initial Disbursement is subject to the satisfaction of the following conditions precedent: (a) City Council. Review, approval and execution of this Agreement, the Regulatory Agreement, and the entitlements for the Project. (b) Code Compliance. Compliance with California Health and Safety Code and applicable regulations set forth in Section 34176, if applicable. 5 55394.00101\42414134.1