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Agreement (collectively, the "City Costs "). All City Costs shall be paid by the Developer to the City within 10 days of written demand by City, which written demand shall be accompanied by copies of receipts, bills, invoices, contracts and other reasonable evidence of such City Costs. If at any time the City reasonably estimates that all City Costs will exceed $550,000, the City shall notify the Developer, and in such event, the City shall not expend more than $550,000 in City Costs without the prior approval of the Developer, provided, however, that no spending limitation shall be applicable in the event that the Development Property is acquired by the City through the process commonly known and referred to as the "quick- take" method of condemnation. The City agrees that it will notify the Developer prior to employing the "quick- take" method of condemnation in acquiring the Development Property or any portion thereof. Unless Developer notifies the City in writing that it desires to delete from the Development Property that parcel shown at item 1 of Exhibit A attached hereto in accordance with Section 3.1(0 hereof, City Costs shall also include a charge of $16,000 previously incurred by the City for the removal of the house from said parcel. Section 3.7. Letter of Credit. In order to secure the obligation of the Developer to pay all City Costs, the Developer has delivered, or will deliver, to the City the Letter of Credit. In the event any City Costs are not paid by the Developer when due, the City is hereby authorized, from time to time, to obtain a draw or draws under the Letter of Credit in an amount equal to the unpaid City Costs. If the City, in the exercise of its reasonable business judgment, determines, from time to time, that the amount of the Letter of Credit is insufficient to fully cover the remaining anticipated unpaid City Costs, the Developer shall, within 5 days, deliver to the City a replacement letter of credit (or an amendment to the existing letter of credit) increasing the amount thereof to the amount so determined by the City. The Letter of Credit will be released by the City at such time as all of the Development Property has been acquired and the Developer has paid all outstanding City Costs and such additional City Costs as the City reasonably expects to incur thereafter. To the extent the Developer acquires the Development Property itself in accordance with Section 3.1(b) and delivers to the City evidence satisfactory to the City of such acquisition and the payment by the Developer of the Land Acquisition Costs related thereto, the City will agree to a reduction in the amount of the Letter of Credit equal to the amount of such Land Acquisition Costs. 1058683.RED V5 to V4; 7/14/99 16 PAGE 33