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10-1019_TCAG, INC._Agr Re Oper Covenant & Restr Covenants
AGREEMENT REGARDING OPERATING- COVENANT AND RESTRIC'T'IVE COVENANTS This AGREEMENT REGARDING OPERATING COVENANT AND TRICTIVE COTENANT (the "Agreement") is entered into this day of b U�, 2010 (the "Date of Agreement"), by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency") and TCAG; INC., a California corporation ("TCAG.'), with reference to the following facts: A. The automobile dealership operating as Capistrano Ford -under a Ford Motor Co1nlpany franchise (the "Capistrano Ford Franchise") has been operating at its present location at 33949 Camino Capistrano in the'City of San Juan Capistrwno (the "Capistrano Ford Parcel") for a number of years. The Capistrano Ford Parcel is currently scheduled to be sold to Costco Wholesale Corporation ("Costco") on or about December 1, 2010. Costco proposes to lease the Capistrano Ford Parcel back to the owner of the Capistrano Ford Franchise for a period of months_ The sale of the Capistrano Ford Parcel to Costeo and the termination of the leasebacl, to the owner of the Capistrano Ford Franchise will result in the closure of Capistrano Ford if Capistrano Ford's Franchise rights are not acquired and relocated as contemplated herein. B. TCAG is attempting to acquire frorn Borrego Development, hic. ("BDI") that certain real property located at 33375 and 33235 Camino Capistrano (the "Property") together with those certain automobile dealership improvements ("Automobile Dealership Improvements") located on the Property for the purpose of relocating the Capistrano Ford Franchise thereto (the "TCAG-/BDI Transaction"). The, Property is more particularly described in Exhibit A attached hereto and incorporated herein by this reference and showy on the Site Map re -fl ected on Exhibit B attached hereto and incorporated herein by this reference. C. The Agency has found that it would benefit the Redeilelopment Project Area, specifically, and the City, generally, to (i) induce TCAG to acquire both the Capistrano Ford Franchise and the Property and to relocate the Capistrano Ford Franchise to the Property for the operation of a Ford Dealership under the name "Tuttle- Click's Capistrano Ford" and (ii) cause a portion of the Property consisting of approximately two (2) acres of the Property to be conveyed to The Hogan Family Trust to be operated as part of Capistrano Toyota. D. TCAG is willing to be bound by the terms of the Covenants contained herein in return for which the Agency will pay to TCAG the Covenant Consideration also described herein. E. The purpose and intention of the Agency entering into this Agreement with TCAG is to (i) assist in the elimination of blight, (ii) enhance local. ernployment, and (iii) expand the Agency's and City's revenue base. NOW, THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth, the parties hereto agree as follows: 6146314009247 v7 7 1. Definitions. 1.1 "Additional Covenants of TCAG" is defined in Section 9. 1.2 "Affiliate" means any person, directly or indirectly, in control of, controlled by, or under common control with, a Party. A Party shall be deemed to control another person if such Party possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other person, whether through the ownership of voting securities, by contract or otherwise. 1.3 "Agency" means the San Juan Capistrano Community Redevelopment Agency, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law, and any assignee of or successor to its rights, powers and responsibilities. . 1.4 "Agreement" means this Agreement Regarding Operating Covenant and Restrictive Covenants. 1.5 "Automobile Dealership Improvements" is defined in Recital B. 1.6 "Business Days" and "Days" are defined in Section 32. 1.7 "BDI" means Borrego Development, Inc., the seller of the Property pursuant to the TCAG/BDI Transaction. 1.8 "Capistrano Ford" means the Ford Dealership operating as "Capistrano Ford" currently located at 33949 Camino Capistrano, San Juan Capistrano, CA 92675. 1.9 "Capistrano Ford Franchise" is defined in Recital A. 1.10 "Capistrano Ford Parcel" is defined in Recital A. 1.1.1 "Capistrano Toyota" means the Toyota automobile dealership located at 33395 Camino Capistrano, San Juan Capistrano, CA 92675 and operating as Capistrano Toyota. 1.12 "Capistrano Toyota Parcel" means the approximately two (2) acres of the Property to be conveyed to The Hogan Family. Trust as shown on the Site Map. corporation. 1.13 . ,"City" means the City of San Juan Capistrano, a California municipal 1.14 "Conditions Precedent" is defined in Section 4. 1.15 "Costco" is defined in Recital A. 1.16 "Covenant Consideration" is defined in Section 3.1. 1.17 "Covenants" is defined in Section 2.4. 614631400924117 2 1.18 "Date of Agreement" is defined in the Preamble. 1.19 ."Escrow Account" is defined in Section 3.5. 1.20 "Escrow Holder" shall mean First American Title Insurance Company, located at 777 South Figueroa Street, 4th Floor, Los Angeles, CA 90017, Atte: Carolyn Marcial, Senior Escrow Officer. 1.21 "Environmental Claim" shall mean any claim, action, suit, or proceeding for personal injury (including sickness, disease or death), or for tangible or intangible injury or damage to property or natural resources or the environment, including, without limitation, compensation for lost profits, wages, business income, or other economic loss, consequential damages, diminution of property value or loss of use of property, nuisance, or for any violation or alleged violation of, or noncompliance with, the requirements of any Environmental Law. 1.22 "Environmental Cleanup Liability" shall rnean any cost or expense incurred to investigate, monitor, remove, remediate, treat, clean up, abate or otherwise respond to any Release or threatened Release of Hazardous Materials, including, without limitation, the cost of obtaining site closure from applicable governmental agencies and the cost of restoring the affected property upon completion of responsive `action, all to the extent necessary in consideration of the commercial use ofthe Property. 1.23 "Environmental Compliance Costs" shall mean any cost or expense necessary to enable the real property impacted by the presence of Hazardous Materials to comply with all applicable Environmental Laws. 1.24 "Environmental Law" shall mean any applicable federal, California, regional or local law, statute, ordinance, rule, regulation or order for the protection of human health or the environment, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601, et seq.); the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.); the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.); the Clean Air Act (42 U.S.C. § 7401 et seq.); the Safe Drinking Water Act (42 U.S.C. § 300f et seq.); the Emergency Planning and Community Right To Know Act of 1986 (42 U.S.C. § 11001 et seq.); the Occupational Safety and Health Act (29 U.S.C. § 651 etseq.); the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.); the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.); the Carpenter Presley Tanner Hazardous Substance Account.Act (Health and Safety Code § 25300 et seq.); the Hazardous Waste Control Law (Health and Safety Code § 25100 et seq.); the Hazardous Waste Disposal Land Use law (Health and Safety Code § 25220 et seq.); the Porter Cologne Water Quality Control Act (Water Code § 13000 et seq.); Hazardous Materials Release Response Plans and Inventory (Health and Safety Code § 25500 et seq.); Underground Storage of Hazardous Substances (Health and Safety § 25280 et seq.); The Safe Drinking Water and 'Toxic Enforcement Act of 1986 (Proposition 65) (Health and Safety Code § 25249.5 25249.13); the Asbestos Notification Law (Health and Safety Code § 25915 et seq.); the California Occupational Safety and Health Act (Labor Code § 6300 et seq.); Chapters 10 and 11, Division 4.5, Title 22, California Code of Regulations; and any law or regulation implementing, amending 614634009241v17 3 or succeeding any of the foregoing, and any similar laws or regulations at any time in effect having any of the purposes designated above. 1.25 1.26 1.27 "Event of Default" is defined in Section 5. ":Force Majeure" is defined in Section 17. "Ford Dealership" means a dealership operating pursuant to a franchise agreement with Ford Motor Company. 1.28 "Franchise(s)" means, the Ford Dealership which will operate under the name "Tuttle -Click's Capistrano Ford" on the Property and any other automobile dealership permitted to operate on the Property hereunder. 1.29 "Governmental Requirement(s)" means all valid and enforceable laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State, the County, the City or any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over Agency, Developer or the Property, including, without limitation, all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical' codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation (to the extent applicable), Labor Code Sections 1770 et seq., the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights, Act, Civil Code Section 51, et seq. 1.30 "Hazardous Materials" shall mean any pollutant, contaminant, hazardous or toxic substance, material or waste which is or becomes identified, listed or regulated as such under any Environmental Law by the United States government, the State of California or any regional or local governmental authority having jurisdiction over the Property. 1.31 "Indemnitees" is defined in Section 2.3. 1..32 "indemnification Agreement" is defined in Section 36.2 1.33 "Initial Payment" shall be an amount equal to Three Million Dollars ($3,000,000), except that if, despite TCAG's good faith efforts to enter into an agreement with The Hogan Family Trust to convey the Capistrano Toyota Parcel to The Hogan Family Trust, TCAG is unable to reach an agreement with The Hogan Family Trust in accordance with the provisions of Section 4(c) below, the Initial Payment shall be an amount equal to Two Million Dollars ($2,000,000). 1.34 "Initial Payment Date" is defined in Section 3.1. 1.35 "Liquidated Damages Amount" is defined in Section 5.4. 1.36 "Non -Intended Prevailing Wage Requirement" is defined in Section 9.2. 614631400924tvi7 Section 2.1. 1.37 "Normal Closing Contingencies" is defined in Section 3.5 1.38 "Opening for Business" or "Open(ed) for Business" is defined in 1.39 "Operate" or "Operation" is defined in Section 2.1. 1.40 "Operating Period" is def ped, in Section 2.1. 1.41 "Operator(s)" is defined in Section 10. 1.42 "Permitted Assignee" is defined in Section 10. 1.43 "Person" or "Party" is defined in Section 18. 1.44 "Property" is defined in Recital B. 1.45 "Redevelopment Project Area" means the geographical boundaries of the redevelopment plan ("Redevelopment Plan") approved and adopted by the City Council of the City on July 12, 1983 by Ordinance No. 488, as the same has been amended from time to time. 1.46 "Release" shall mean the release, as defined in Health and Safety Code §§ 25320 and 25321, of a Hazardous Material or Hazardous Materials. 1.47 "Sales and Use Tax Law" is defined in Section 1.48. 1.48 "Sales Tax Revenues" means that portion of tax revenues derived and received by the City from the imposition of the Bradley Burns Uniform Local Sales and Use Tax Law, commencing with Section 7200 of the Revenue and Taxation Code of the State of California, as amended, or its equivalent (the "Sales and Use Tax Law"), that the State Board of Equalization ("SBOE") determines are generated by the Ford Dealership and any additional Franchises on the Property, including any internetlon-line sales, conducted from the .earlier to occur of (a) the Opening for Business of the Franchise(s) on the -Property, or (b) the date that TCAG opens and commences operation of its Ford Dealership on the Capistrano Ford Parcel prior to Opening for Business on the Property, until the expiration or earlier termination of the Operating Period, in accordance herewith (the "Sales Tax Revenue Accrual Period"); provided that if the Sales Tax Revenue Accrual Period commences in accordance with (b), the Semi - Annual Payments shall not be first paid unless and until the Initial Payment Date occurs and the accrual of such Sales Tax Revenues for purposes of computing the Semi -Annual Payments shall be for a period of not to exceed one hundred eighty (180) days. In addition, the Sales Tax Revenue Accrual Period shall not commence in accordance with clause (b) above unless and until the Agency has been relieved of its obligation to make payments of "Auto Tax Revenues" as described in that certain Second Amendment to Disposition and Development Agreement between Agency and The Price Company dated June 20, 1994 which was assigned to the Price Family Charitable Trust, which relief shall be requested by the Agency but the Agency shall be under no obligation to secure such relief. Sales Tax, Revenues shall be based upon the total Sales Tax Revenues received by the City (Less any State 894rd of Equalization adjustments that would 6146314©09241v17 have modif ed previous payments to TCAG) during the applicable preceding semi-annual period (for the February 1 st payment, Sales Tax Revenues received during the preceding months of April through September, and for the August 1st payment, Sales Tax Revenues received during the preceding months of October through March) as confirmed by the report furnished by the City's sales tax consultant as provided by the State Board of Equalization, and the sales tax returns as filed by TCAG, and any verifiable reporting as it relates to sales and leasing activities generated by TCAG and use taxes assessed and collected thereon by a third party leasing or financing company.. TCAG shall provide documentation supporting the calculation of Sales Tax Revenues to the Agency. In the event that the first payment measured by Sales Tax Revenues hereunder (i.e., other than the Initial Payment) or the last such payment due hereunder covers less than a full semi-annual period, the amount of Sales Tax Revenues for said partial semi- annual period shall be calculated by multiplying the total Sales Revenues for the entire semi- annual period (assuming that TCAG was entitled to receive Covenant Consideration for the semi-annual period) by a fraction in which the .numerator equals the number of days in such semi-annual period included within the period of Agency's payment obligation and'in which the denominator equals the total number of days in the semi-annual period. 1.49 "Sales Tax Revenue Accrual Period" is defined in Section 1.48. 1.50 "SBOE" is defined in Section 1.48. 1.51 "Semi -Annual Payments" is defined in Section 3.1. 1.52 "Sign Easement" is defined in Section 11. 1.53 "Sigh Easement Parcel" is defined in Section I I and shown on the Site Map. 1.54 "Site Map" means that map attached hereto as Exhibit B and incorporated herein by reference showing the Property, the Capistrano Toyota Parcel, and the Sign Easement Parcel. 1.55 "TCAG" means TCAG, Inc., a California corporation. 1..56 "TCAGIBDI Transact on".means the conveyance of the Property from BDI to TCAG. 1.57 "The Hogan Family Trust" means the owner of Capistrano Toyota. 1.55 "Tuttle -Click's Capistrano Ford" means the name under which TCAG will operate the Ford Dealership on the Property. 2. Operating Covenant and Restrictive Covenants. 2.1 Operating Covenant. Subject to the Conditions Precedent described in Section 4 hereof, TCAG hereby covenants and agrees that it shall open, or cause to be opened, for business to the general public ("Opening for Business" or. "Open(ed) for Business") and continuously operate, or cause to be operated, an automobile dealership during normal business 61463\4009241v17 6 hours under the name "Tuttle -Click's Capistrano Ford" on the Property primarily for the sale and lease of all makes and models of Ford Motor Company vehicles, and secondarily, the sale and lease of used vehicles, and other ancillary automotive uses commonly associated with such uses from time to time, including without limitation the servicing and repair of vehicles, and vehicle parts sales ("Operate" or "Operation") for a period of twenty-seven (27) years from the date of Opening for Business (the "Operating Period"). Such continuous Operation shall be subject to the Force Majeure provisions of Section 17 hereof, and temporary interruptions for casualty losses, repairs, and the like. In addition, notwithstanding the provisions of the preceding sentence, TCAG shall have the right to Operate under a different name than "Tuttle -Click's Capistrano Ford" so long as any other name under which TCAG Operates includes the name "Capistrano." 2.2 Restrictive Covenants, During the Operating Period, TCAG shall do or cause to be done the following; (1) designate the Property as the point of sale for sales tax purposes in all retail sales and lease contracts for vehicles whose sales and leases ofiginate from the Property, (2) to the extent commercially reasonable cause all vehicles purchased through internet/online sales and scheduled for delivery in the local sales area of the Franchises to be delivered from the Property; and (3) at no cost to Agency, keep and maintain the Property and the Automobile Dealership Improvements thereon and all facilities appurtenant thereto, consistent with first class automobile dealerships, in good order and repair and safe condition, and the whole of the Property, the Automobile Dealersl i Improvements, and landscaping in a clean, sanitary, and orderly condition free from debris, graffiti and waste materials. In addition, during such Operating Period and subject to TCAG's right to contest same, TCAG shall observe and comply with all Governmental Requirements. 2.3 Indemnities/Release. TCAG agrees to indemnify, protect, defend, reimburse and hold the Agency and City and their elected and appointed officials, employees, representatives, agents, consultants, attorneys, volunteers, successors and assigns, each of them jointly and severally (collectively, the "Indemnitees"), harmless from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs or expenses, proceedings, lawsuits, orders, judgments, fines, obligations, encumbrances, liens, expenses (including without limitation all costs and expenses reasonably incurred to investigate and defend claims, whether or not any such claim is ultimately defeated, and costs and expenses reasonably incurred for consultants, court fees, administrative fees, expert witness fees, and attorneys' fees and remedial and response costs) of whatever kind or nature, contingent or otherwise, matured or not matured, foreseeable or unforeseeable, at law or in equity, any of which are suffered or incurred by said Indemnitees, or assessed, levied or asserted by any person or entity (whether governmental or private) against said Indernnitees, relating to, resulting from, arising out of or based upon, in whole or in part, the following: (i) any act, omission or negligence of TCAG or any lessee of TCAG, or their respective contractors, licensees, invitees, agents, sublessees, servants or employees, wheresoever on or adjacent to the Property that the same may occur, (ii) any use of the Property, or any accident, injury, death or damage to any person or property occurring in, on or about the Property or any part thereof, or from the conduct of TCAG's business or from any activity, work or thing done, permitted or suffered by TCAG or its sublessees, contractors, employees, or invitees, in, on, or about the Property, (iii) TCAG's failure to comply with Governmental Requirements, (iv) the presence, release, use, generation, discharge, storage, disposal, removal or 61463\4009241v17 7 remediation of any Hazardous Materials on, in, under, or emanating from the Property, (v) the violation, or alleged violation, or compliance with the requirements of any Environmental Law, or any other statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials to, from, on, in, under, about or around the Property, or (vi) any Environmental Cleanup Liability or Environmental Compliance Costs related to the Property. This indemnity shall include, without limitation, any liabilities arising from or out of Or relating in any manner to any Environmental Claire or any nuisance, contamination,, leak, spill, release or other adverse effect ori the environment caused by or resulting from any Hazardous Material, or toxic substances or waste existing on, under, or emanating from the Property. Notwithstanding the foregoing, the indemnities described in (i) and (ii) above shall not apply to the extent of the sole negligence or willful misconduct of the Indemnitees. TCAG, on behalf of itself and its successors, Affiliates, partners, and assigns hereby fully and entirely releases and discharges the Agency and City (including their elected and appointed officials, employees, representatives, agents, consultants, attorneys, volunteers, successors and assigns), and of each of them alone, of and from any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs or expenses, proceedings, lawsuits, orders, judgments, fines, obligations, encumbrances, or liens, of whatever kind or nature, matured or not matured, anticipated or unanticipated, known or unknown, at law or in equity, on account of the presence of any Hazardous Materials (i) in, on, under, or emanating from the Property, or (ii) in connection with, or in any way related to, the Property, or (iii) for or on account of the physical condition of the Property. This release constitutes an explicit waiver by TCAG of each and all of the provisions of California Civil Code Section 1542, which states as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." TCAG hereby declares and represents that it is effecting and executing this release of the Agency after having read all of this release and with full understanding of its meaning and effect and after having received full legal advice as to its rights from an attorney. 2.4 Covenants, The foregoing sub -Sections 2.1, 2.2 and 2.3 are collectively hereinafter referred to as the "Covenants." 2.5 Additional Franchise(s). Subject to compliance with applicable laws related thereto, including, without limitation, the provisions of Health and Safety Code Section 33426.7, TCAG, or any Affiliate of TCAG, shall have the right to Operate additional Franchise(s) on the Property without the prior written approval of the Agency; provided however, TCAG shall notify the Executive Director of the Agency of TCAG's intent to open an additional Franchise on the Property. 3. Covenant Consideration, 61463\4009241vi7 8 3,1 Payment of Consideration. In consideration for TCAG's agreement to be bound by the Covenants, Agency agrees to pay to TCAG (i) the all cash sum in the amount of the Initial Payment within five (5) business days from the date of Opening for Business (the "Initial Payment Bate") plus (ii) an amount equal to (x) one hundred percent (100%) of, the Sales Tax Revenues each year (i.e., from April 1 st through March 31st) during the Sales Tax Revenue Accrual Period in excess of One Hundred Fifty Thousand Dollars ($150,000) (but not to exceed Three Hundred Thousand Dollars ($300,000)) of Sales Tax Revenues in such year and (y) fifty percent (50%) of all Sales Tax Revenues in excess of Three Hundred Thousand Dollars ($300,000) in Sales Tax Revenues in each such year generated during the Sales Tax Revenue Accrual Period, which payments shall be made until the earlier of (a) receipt by TCAG of an amount equal to Two Million Dollars ($2,000,000); or (b) expiration of or earlier termination of the Sales Tax Revenue Accrual Period (payments described in clause (ii) are referred to herein as the "Semi -Annual Payments," and together with the Initial Payment are collectively referred to herein as the "Covenant Consideration"). TCAG shall notify the Agency when the Initial Payment is due; provided, however, in no event shall the Initial Payment 'or the first Semi -Annual. Payment be due earlier then five (5) business days following the Agency's receipt of notice from TCAG that the Initial Payment Date has occurred. TCAG and Agency acknowledge and agree that the definition of Sales Tax Revenues as used herein is used strictly as a measure of the amount of payment due hereunder and as a means of computing the Semi - Annual Payments. Serpi-Annual Payments shall be made semi annually, on or before February 1st and August 1 st of each year during the Sales Tax Revenue Accrual Period, consistent with the procedure described in the definition of "Sales Tax Revenues" above. The Agency, prior to making each such Semi -Annual Payment, shall work with the City to determine the total Sales Tax Revenues actually paid. to the City during the prior semi-annual. period. Based on the data provided by the SBOE to City, and based upon such determination and the formula described above, the Agency shall determine the amount of the applicable Semi -Annual Payment. 3.2 Cap on Consideration. Notwithstanding anything else herein contained, in no event shall the Semi -Annual Payments paid to TCAG pursuant to Section 3.1 exceed the sum of Two Million Dollars ($2,000,000). 3.3 No Acceleration. It is acknowledged by the parties that any payments by the Agency provided for herein may only be paid in those periods in which TCAG is in compliance with the Covenants provided for herein. Therefore, the failure of the Agency to make any payments as and when provided for in Section 3.1 shall not cause the acceleration of any future payments by the Agency to TCAG beyond the date of TCAG's uncured default. 3.4 Character of Consideration. All payments made by the Agency to TCAG pursuant to this Section 3 are intended by TCAG to be, and shall be characterized by TCAG as, contributions to capital pursuant to Section 118 of the Internal Revenue code of 1986, as amended, and the Treasury Regulations promulgated thereunder. Notwithstanding the foregoing, neither Agency nor City shall be liable for and TCAG shall indemnify, defend and hold harmless Agency and City, their elected and appointed officials, employees, agents, representatives, consultants, attorneys, volunteers and assigns from and against any loss, cost, expense, claim, action, cause of action, liability, penalty, fine, damages or fees (including accountant, consultant and attorneys' fees) suffered: by TCAG and/or Agency and/or City due to such characterization of such payments. 6146314009241 v 17 9 3.5 initial Payment to Escrow. Within five (5) business days after TCAG notifies the Agency in writing that the Conditions Precedent described in subsections (a), (c), (d), (e) and (f) of Section 4 have been satisfied or waived and TCAG's deposits under the agreement to acquire the Property have become non-refundable and except, for "Normal Closing Contingencies" (as hereinafter defined), all conditions precedent to the closing of the Property have been satisfied, the Agency shall deposit cash in the amount of the Initial Payment into a joint escrow account for the benefit of Agency and TCAG ("Escrow Account"} with Escrow Holder, which funds shall remain in the Escrow Account until the earlier to occur of (a) the date the Initial Payment is required to be made to TCAG in accordance with Section 3.1 above, at which time such funds shall be disbursed by Escrow Holder to TCAG, or (b) the date that this Agreement is terminated as provided herein at which time such funds shall be disbursed by Escrow Holder to Agency. Except for accrued interest (which shall be and remain the sole property of the Agency and shall be disbursed by Escrow Holder to the Agency from time to time as requested by the Agency without the requirement of the joint signature of T(CAG) and except following termination hereunder, no disbursements or withdrawals may be made from. the Escrow Account without the joint signature of an authorized representative of the Agency and an authorized representative of TCAG. Agency and TCAG shall each cooperate to open the Escrow Account and deliver to Escrow Agent a commercially reasonable agreement and/or instructions that Escrow Agent may reasonably request in order to hold and manage the Initial Payment funds. As used in this Agreement, the term "Normal Closing Contingencies" shall mean the contingencies that, following the end of the due diligence period under the agreement to acquire the Property, must, in the ordinary course of business, be satisfied prior to the closing of the transaction specifically including only that there are no adverse changes in title (following TCAG's approval of title during the due diligence period), there are no Releases, no material damage or destruction having occurred to buildings, furniture, fixtures or equipment on the Property, all representations and warranties of the parties continue to be trice and correct, no Force Majeure event has occurred, and a Grant Deed, a Mon-Forcign (FIRPTA) Affidavit and a California Franchise Tax Board. Form 593-C have been signed and placed in escrow by the seller, certified copies of any corporate resolutions authorizing the transaction have been placed in escrow, any assignment and assumption agreements required by the transaction have been executed by the seller and TCAG and placed in escrow, escrow closing statements have been executed by the seller and TCAG, all closing casts have been placed in escrow, the purchase price has been placed into escrow by TCAG and the title company is prepared to issue appropriate forms of title insurance: 3.6 Delayed Closing with The Rogan Fancily Trust. If, having reached an agreement with The Hogan Family Trust, TCAG Opens for Business on the Property but has not yet conveyed the Capistrano Toyota Parcel to The Hogan Family Trust, TCAG shall notify the Agency of that fact and in that case Two Million Dollars ($2,000,000) of the Initial Payment shall be paid to TCAG in accordance with the provisions of Section 3.1 above, and the remaining One Million Dollars ($1,000,000) of the Initial Payment shall be paid by the Escrow Holder to TCAG concurrently with the close of escrow of the conveyance by TCAG of the Capistrano Toyota Parcel to The Hogan Family Trust. If the TCAG/The Hogan Family Trust transaction fails to close within twelve (12) months of the date TCAG Opens for Business on the Property or is earlier terminated by the parties thereto, the remaining One Million Dollars ($1,000,000) of the Initial Payment shall be returned by the Escrow Holder to the Agency. 614631400924M7 7 10 4. Conditions Precedent. The following are the Conditions Precedent to the parties' obligations hereunder: (a) TCAG (directly or through an Affiliate) shall have acquired the Franchise rights of Capistrano Ford, with the approval of Ford Motor Company; (b) TCAG (directly or through an Affiliate) shall have acquired the Property (or the balance of the Property if the Capistrano Toyota Parcel is conveyed to The Hogan Family Trust concurrently with the closing of the TCAG/BDI Transaction); (c) TCAG shall have notified the Agency that TCAG has either (i) reached an agreement with The Hogan Family Trust whereby. the Capistrano Toyota Parcel will be conveyed to The Hogan Family Trust, in which case the provisions of either Section 36.2 or 36.3 shall apply, or (ii) after exercising commercially reasonable good faith efforts to reach an agreement with The Hogan Family Trust (as described in Section 36.1 below), TCAG has been unable to reach an agreement with The Hogan Family Trust; (d) TCAG shall be satisfied that all matters requiring the City entitlements, permits or approvals including, but not limited to, credits for building square footage and other development rights from the Capistrano Toyota Parcel; the number, width and location of driveways; the design, location and construction of pylon and monument signs for the Ford Dealership; the relocation of cell towers that are currently located on the Capistrano Toyota Parcel; and development fee credits, can, in TCAG's sole and absolute discretion, be obtained in a timely manner so that TCAG may, without delay, proceed with its full and complete Ford Dealership Operation of Tuttle Click's Capistrano Ford on the Property; (e) Each party shall have reviewed and approved the financial condition of the other party; and (f) A lot line adjustment shall have been approved by the City whereby the Capistrano Toyota Parcel constitutes a separate legal lot. The foregoing Conditions Precedent (other than the Condition Precedent described in subsection (d) above) are for the mutual benefit of TCAG and the Agency, and each of TCAG and the Agency shall have the unilateral right but not the obligation, in such party's sole and absolute discretion, to waive any one or more of such Conditions Precedent as it applies to such party's obligations hereunder. The foregoing Condition Precedent described in subsection (d) above is for TCAG's benefit and TCAG shall have the unilateral right, but not the obligation, in TCAG's sole and absolute discretion, to waive such Condition Precedent. In no event shall TCAG be considered to be in breach or default of this Agreement as a result of the failure of any of the Conditions Precedent to be satisfied for any reason whatsoever. 5. Defaults and Remedies. Occurrence of any or all of the following shall constitute a default by TCAG under this Agreement: 5.1, TCAG's failure to fully and completely comply with the Covenants as and when such compliance is required. 6 T 45314009241 v1'7 11 5.2 The filing of a petition in bankruptcy by or against TCAG or appointment of a receiver or trustee of any property of TCAG, or an assignment by TCAG for the benefit of creditors, or adjudication that TCAG is insolvent by a court, and a failure of TCAG to cause such petition, appointment or assignment to be removed or discharged within sixty (60) days. 5.3 The failure by TCAG to comply with any other provision of this Agreement. In the event of any default under the terms of this Agreement, the nondefaulting party shall give written notice to the defaulting party. The defaulting party shall commence and diligently thereafter pursue the curing of said default within thirty (30) days after receipt of notice of such default; provided, however, if such a cure cannot reasonably be effected within such thirty (30) day period, such failure shall not be a default so long as the defaulting party promptly commences a cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. Failure to cure, as specified above, shall constitute an "Event of Default" hereunder. 5.4 Liquidated Damages. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, IF THERE IS AN EVENT OF DEFAULT BY TCAG HEREUNDER AFTER THE DATE THAT THE INITIAL PAYMENT IS RELEASED TO TCAG IN ACCORDANCE WITH SECTION 3, THEN AGENCY'S SOLE AND EXCLUSIVE REMEDY FOR SUCH EVENT OF DEFAULT SHALL, BE TO TERMINATE THIS AGREEMENT AND RECEIVE FROM TCAG AS LIQUIDATED DAMAGES AN AMOUNT EQUAL TO TWO MILLION DOLLARS ($2,000,000) MINUS FIFTY PERCENT (50%) OF THE DIFFERENCE BETWEEN THE TOTAL AMOUNT OF SALES TAX REVENUES (AS DEFINED ABOVE) GENERATED AS OF THE DATE OF SUCH TERMINATION AND THE TOTAL AMOUNT OF SEMI-ANNUAL PAYMENTS RECEIVED BY TCAG AS OF THE DATE OF SUCH TERMINATION (THE "LIQUIDATED DAMAGES AMOUNT"). THE PARTIES HAVE AGREED THAT AGENCY'S ACTUAL DAMAGES, IN THE EVENT OF SUCH AN EVENT OF DEFAULT BY TCAG, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGES AMOUNT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT AGENCY WOULD INCUR IN SUCH EVENT. BY PLACING THEIR INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. THE PARTIES ACKNOWLEDGE THAT SUCH PAYMENT OF THE DEPOSIT IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO AGENCY UNDER CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677, Initials: Agency TCAG 6146314009241 v 18 12 5.2 The filing of a petition in bankruptcy by or against TCAG or appointment of a receiver or trustee of any property of TCAG, or an assignment -by TCAG for the benefit of creditors, or adjudication that TCAG is insolvent by a court, and a failure of TCAG to cause such petition, appointment or assignment to be removed or discharged within sixty (60) days. 5.3 The failure by TCAG to comply with any other provision of this Agreement. In the event of any default under the terms of this Agreement, the nondefaulting party shall give written notice to the defaulting party. The defaulting party shall commence and diligently thereafter pursue the curing of said default within thirty (30) days after receipt of notice of such default; provided, however, if such a cure 'cannot reasonably be effected within such thirty (30) day period, such failure shall not be a default so long as the defaulting party promptly commences a cure within said thirty (30) clay period and thereafter diligently prosecutes such cure to completion. Failure to cure, as specified above, shall constitute an "Event of Default" hereunder. 5.4 Liquidated Damages. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, IF THERE IS AN EVENT OF DEFAULT BY TCAG HEREUNDER AFTER THE DATE THAT THE INITIAL PAYMENT IS RELEASED TO TCAG IN ACCORDANCE WITH SECTION 3, THEN AGENCY'S SOLE AND EXCLUSIVE REMEDY FOR SUCH EVENT OF DEFAULT SHALL BE TO TERMINATE THIS .AGREEMENT AND RECEIVE FROM TCAG AS LIQUIDATED DAMAGES AN AMOUNT EQUAL TO TWO MILLION DOLLARS ($2,000,000) MINUS FIFTY PERCENT (50%) OF THE DIFFERENCE BETWEEN THE TOTAL AMOUNT OF SALES TAX REVENUES (AS DEFINED ABOVE) GENERATED AS OF THE DATE OF SUCH TERMINATION AND THE TOTAL AMOUNT OF SEMI-ANNUAL PAYMENTS RECEIVED BY TCAG AS OF THE DATE OF SUCH TERMINATION (THE "LIQUIDATED DAMAGES AMOUNT"). THE PARTIES HAVE AGREED THAT AGENCY'S ACTUAL DAMAGES, IN THE EVENT OF SUCH AN EVENT OF DEFAULT BY TCAG, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGES AMOUNT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT AGENCY WOULD INCUR IN SUCH EVENT. BY PLACING THEIR INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. THE PARTIES ACKNOWLEDGE THAT SUCH PAYMENT OF THE DEPOSIT IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO AGENCY UNDER CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677. Initials: Agency TCAG 61463A00924107 12 In the Event of Default by TCAG, and without seeking judicial relief, the following shall automatically and immediately occur: (i) TCAG's right to receive Covenant Consideration during the period that the Franchise is not in compliance with the Covenants shall be suspended and the term of the payment period described in Section 2 herein shall not be extended; and (ii) subject to the provisions of Section 17 below, in the event the Franchise is closed for a continuous period of one (1) year, TCAG's right to receive payments from Agency pursuant to this Agreement shall be permanently terminated and the terms of this Agreement shall be of no further force or effect, except for the provisions of Sections 2.3, 5, 9, 11, 14 and 22 hereof which shall survive termination as set forth herein.. 6. Representations and "Warranties of TCAG. TCAG hereby represents and warrants as follows, each of which representations and warranties is made, as of the Date of Agreement: 6.1 TCAG is a California corporation, duly organized, validly existing and in good standing under the laws of the State of California, with corporate and/or partnership powers adequate for the making and performing of this Agreement and for carrying on the business now conducted or proposed to be conducted by it. TCAG has taken all corporate action required to execute, deliver and perforin this Agreement and to make all of the provisions of this Agreement the valid and enforceable obligations they purport to be and has caused this Agreement to be executed by a duly authorized partner or officer. Such corporate action is evidenced by a Resolution of the Board of Directors of TCAG which resolution shall be delivered to Agency concurrently with TCAG's delivery to Agency of an executed copy of this Agreement. 6.2 The execution and delivery of this Agreement and all related documents and the performance of its obligations hereunder by TCAG do not conflict with any provision of any law or regulation to which TCAG is subject, conflict with or result in a breach of or constitute a default under any of the terms, conditions or provisions of any agreement or instrument to which TCAG is a party or by which TCAG is bound, or any order or decree applicable to TCAG, or result in the creation or imposition of any lien on any of TCAG's assets or property which would materially and adversely affect the Agreement; and TCAG has obtained all consents, approvals, authorizations or orders of any court or governmental agency or body, if any, required for the execution, delivery, and performance by TCAG of its obligations under this Agreement. 6.3 There are no judgments, orders or decrees of any kind of record against TCAG which are unpaid or unsatisfied, nor are there any other legal or administrative proceedings pending, threatened or reasonably anticipated which could be filed before any court or administrative agency which has or is likely to have any material adverse effect on (a) the business or assets or the condition, financial or otherwise, of TCAG, or (b) the ability of TCAG to perform its obligations under this Agreement. 6.4 TCAG has not filed any petition seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any law relating to bankruptcy or insolvency, nor has any such petition been filed against TCAG. No general assignment of TCAG's property has been made. for the benefit of creditors, and no receiver, master, liquidator, or trustee has been appointed for TCAG or any of its 6146314009241 vI7 1.3 property. TCAG is not insolvent and the consummation of the transactions contemplated by this Agreement shall not render TCAG insolvent. TCAG'has now and will have throughout the term of this Agreement, sufficient capital or net worth to meet its current obligations, including all obligations under this Agreement. 6.5 TCAG is a sophisticated investor and its decision to enter into this Agreement is based upon its own independent investigations, evaluations, and assessments. TCAG has not relied in entering into this Agreement upon any oral or written information from Agency or its employees, agents, consultants, advisors, or representatives, other than the express representations, and warranties of Agency specifically set forth herein. TCAG acknowledges no employee, agent, consultant, advisor or representative of Agency has been authorized to make, and TCAG has not relied upon, any statements or representations made thereby, other than those specifically contained in this Agreement. 6.6 The information provided to Agency by TCAG was, is, and shall remain true and correct and accurate and complete in all material respects throughout the term of this Agreement. 7. Representations and Warranties of Agency. Agency represents and warrants as follows, each of which representations and warranties is made as of the Date of Agreement: 7.1 The execution of this Agreement and the performance by Agency of its obligations hereunder have been duly authorized and approved. The term of the Redevelopment Plan expires on July 12, 2028. 7.2 The execution and delivery of this Agreement and all related documents and the performance of Agency's obligations hereunder by Agency do not conflict with or result in a breach of or constitute a default under any of the terms, conditions or provisions of any agreement or instrument to which Agency, is a party or by which Agency is bound, or any order or decree applicable to Agency, or result in the creation or imposition of any lien on any of Agency's assets or property which would materially and adversely affect the Agreement; and Agency has obtained all consents, approvals, authorizations or orders of any court or governmental agency or body, if any, required for the execution, delivery, and performance by Agency of its obligations under this Agreement. 7.3 There are no judgments, orders or decrees of any kind of record against Agency which are unpaid or unsatisfied, nor are there any other legal or administrative proceedings pending, threatened or reasonably anticipated which could be filed before any court or administrative agency which has or is likely to have any material adverse effect on (a) the business or assets or the condition, financial or otherwise, of Agency; or (b) the ability of Agency•to perform its obligations under this Agreement. 7.4 Agency has not filed any petition seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any law relating to bankruptcy or insolvency, nor has any such petition been filed against Agency. No general assignment of Agency's property has been made for the benefit of creditors, and no receiver, master, liquidator, or trustee has been appointed for Agency or any of its 61463\4009241v17 14 property. Agency is not insolvent and the consummation of the transactions contemplated by this Agreement shall not render Agency insolvent. 7.5 The infor-nation provided to TCAG by Agency was, is, and shall remain true and correct and accurate and complete in all material respects throughout the term of this Agreement. 8. Disclaimer of Representations and Warranties of Agency. 8.1 There are no representations, agreements, arrangements, or circumstances, oral or written, between the parties hereto relating to the subject matter contained in this Agreement that are not fully expressed herein, and Agency has not made and does not make any representation or warranty concerning any matter or thing affecting or relating to the Capistrano Ford Franchise and/or the Property. 8.2 Agency has made no representations or warranties with regard to zoning and subdivision laws, ordinances, resolutions and regulations of governmental authorities having jurisdiction over the Property, and the use and improvement of the Property. 9. Additional Covenants of TCAG. The following are referred to herein as "Additional Covenants of TCAG." 9.1 Nondiscrimination Covenants. TCAG herein covenants by and for itself, and its successors and assigns, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section: 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall the TCAG or any person claiming under or through TCAG, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or'vendees in the Property. The foregoing covenants shall run with the Property. Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the immediately preceding paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph. Any deeds, leases or contracts for the sale, lease, sublease or other transfer of any portion of the real property consisting of the Property shall contain the following language: (a) In deeds: The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or. through them, that there shall be no discrimination against or segregation of, any person or group 514631400924M7 15 of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendee$ in the premises herein conveyed. The foregoing covenants shall run with the land. Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the immediately preceding paragraph shall be construed to affect Sections 51.2, 51.3; 51.4, 51:10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph. (b) In leases: The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased. Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 129559 of the Government Code. With respect to familial status, nothing in the immediately preceding paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, . relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph. (c) In contracts: There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, 614631400924 f 0 ? 16 tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. The Agency shall be a third -party beneficiary of such provisions in each such deed, lease or contract. 9.2 Compliance with Governmental Requirements. Subject to TCAG's right to contest same, TCAG shall, at all times, comply with all applicable laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State of California, the County of Orange, the Agency or any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, TCAG, or the Property, including all applicable federal, state and local occupation, safety and health laws, rules, regulations and standards, applicable state and labor standards, applicable prevailing wage requirements, the City zoning and development standards; building, plumbing, mechanical and electrical codes, and all other provisions of the City of San Juan. Capistrano and its Municipal Code, and all applicable disabled and handicapped access requirements, including, without the limitation, the Americans With Disabilities Act, 42 U.S.C. § 12101 et seq., Government. Code §4450 et seq., and the Unruh Civil Rights Act, Civil Code §51 et seq. ("Governmental Requirements"). Nothing in this Agreement is intended by the parties to in any way require, or be construed to require, TCAG to pay prevailing wages with respect to any work of construction or improvement within the property (a "Non -Intended Prevailing Wage Requirement"). But for the understanding of the parties as reflected in the immediately preceding sentence, the parties would not have entered into this Agreement based upon the terms and conditions set forth herein. TCAG and Agency have made every effort in reaching this Agreement to ensure that its terns and conditions will not result in a Non -Intended Prevailing Wage Requirement. These efforts have been conducted in the absence of any existing judicial interpretation of the recent amendments to the California prevailing wage law. If, despite such efforts, any provision of this Agreement shall be determined by any court of competent jurisdiction to result in a Non -Intended Prevailing Wage Requirement, such determination shall not invalidate or render unenforceable any provision hereof; provided, however, that the parties hereby agree that, in such event, the parties, each acting in their sole and absolute discretion, shall attempt to reform this Agreement such that each provision of this Agreement that results in the Non -Intended Prevailing Wage Requirement may be removed from this Agreement as though such provisions were never a part of the Agreement, and, in lieu of such provision(s), replacement provisions including, without limitation, the provisions of Section 2 and this Section 9.2, may be included that are legal, valid and enforceable but without. resulting in the Non - Intended Prevailing Wage Requirement. 9.3 Participation in Business Improvement District. Subject to commercially reasonable standards and conditions, TCAG agrees to participate in, and actively support, a business improvement district or similar type association of automobile dealers the purpose of which is to promote sales of automobiles in San Juan Capistrano. 61463\4009241v17 17 1.0. Assignment and Assumption. Subject to the provisions of Sections 36.2 and 36.3 below, the terms, covenants, and obligations of TCAG pursuant to this Agreement shall run with the Property aid be binding upon TCAG's lessees, successors and assigns to the Property or any portion thereof. It is understood that it is possible that the identity of the fee owner of the Property may be different from TCAG and different from the operator of the Franchisc(s) (the "Operator (s)"). Wherever the term TCAG is used in this Agreement, such term shall be deemed to refer to TCAG and/or any other owner of all or. a portion of the Property and/or the Operators and any authorized successor or assign of same, as provided 'herein. Except as to a transfer described in the last paragraph of this Section 10, notwithstanding any transfer by TCAG of the Property or any portion thereof or any rights therein or any assignment by TCAG of any obligations under this Agreement. to an Affiliate or any other person or entity, TCAG shall remain fully liable for all obligations and requirements set forth in this Agreement. During the Operating Period, TCAG shall include reference to this Agreement in any lease or operating agreement respecting the Property, and each lessee or Operators must, in such lease or operating agreement, acknowledge and agree (i) that its interests, rights and obligations are subject to this Agreement, and (ii) that it must comply, or enable TCAG to comply, with all teens and provisions of this Agreement applicable and in force and effect following the effective date of such lease or operating agreement. The rights of TCAG under this Agreement shall not be subject to assignment by attachment, execution or proceedings under any provision of the Bankruptcy Act, and any such assignment or transfer shall be wholly void and of no force and effect unless written consent thereto is first obtained from the Agency. TCAG may transfer its interests in all or any portion of the Property and/or Franchise(s) being operated on the Property, including its rights and obligations under this Agreement, without the approval or consent from the Agency, to any entity approved by the Ford Motor Company or, if more than one Franchise is being operated on the Property, to any entity approved by the automobile manufacturer issuing the Franchise that is the subject of TCAG's proposed transfer (a "Permitted Assignee"); provided that in any such event, TCAG shall remain liable hereunder. If TCAG elects to request the Agency's consent to an assignment by TCAG of its interests in the Property and/or a Franchise, including its rights and obligations under this Agreement, the Agency, acting in its sole and absolute discretion, shall have the right to approve TCAG's proposed assignee; provided, however, that Agency shall not withhold such consent if the proposed assignee has financial capability and operating experience at least equal to TCAG's and the proposed assignee expressly assumes the obligations of TCAG hereunder. If the Agency approves TCAG's proposed assignee, TCAG shall, following the date of such assignment, be relieved of any and all obligations including, without limitation, the Covenants set forth in Section 2 and the "Additional Covenants of TCAG" set forth in Section. 9 above, accruing after the date of.such assignment. 11. Sign Easement. Subject to the acquisition by TCAG of the Property, during the Operating Period TCAG hereby grants to Agency an option to acquire an casement, for consideration equal to One Dollar ($1.00), for purposes of erecting and maintaining a sign ("Sign Easement") over that certain portion of the Property shown on the Site Map as "Sign Easement Parcel;" provided, however, that such option must be exercised and the Sign Easement acquired by Agency, if at all, no later than one hundred eighty (180) days after the date that TCAG 6146314009241 vi 7 is provides written notice to Agency triggering said one hundred eighty (180) day period, which TCAG shall have the right, in TCAG's sole and absolute discretion, to deliver to Agency at any time following the second anniversary of the Opening for Business. If Agency fails to exercise the option and acquire the Sign Easement within such one hundred eighty (180) day period, the option shall from and after such date irrevocably lapse and terminate and be of no further force or effect. The terms of the Sign. Easement document shall be subject to the reasonable approval of TCAG. 12. Notices. All notices under this Agreement shall be given in writing by personal delivery, or by certified mail or registered United States Mail, return receipt requested, postage prepaid, or by overnight delivery, or by facsimile and shall be deemed communicated when received if given by personal delivery or upon receipt or rejection if mailed as provided above or upon the delivery date or attempted delivery date shown on the air bill or facsimile on a business day during business hours in the location where received, and if not then on the next business day, as the case may be. Mailed notices shall be addressed as set forth below, but either party may change its address by giving written notice thereof to the other in accordance with the provisions of this article: To Agency: San Juan. Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attention: Agency Executive Director With a copy to: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660 Attention: Thomas P. Clark, Jr., Esq. To TCAG: Tuttle -Click Automotive Group 41 Auto Center Drive Irvine, CA 92618 Attention: Christopher B. Cotter With a copy to: Cox, Castle & Nicholson, LLP 2049 Century Park East, 28th Floor Los Angeles, CA 90067 Attention: Ronald I. Silverman, Esq. 13. Miscellaneous. This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements and understandings written and oral. This Agreement may not be modified or amended except in a writing signed by all parties hereto. 14.. Brokerage Commissions. Agency and TCAG shall each indemnify, defend and hold the other party harmless from and against any and all costs, liabilities, losses, damages, claims, causes of action or proceedings which may result from the lndemitor's dealing with any 6146314009241v17 19 broker, agency or finder, license or otherwise in connection with the transaction covered by this Agreement. 15. Construction. The parties agree that each party and its counsel have reviewed and revised this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement or any amendments or exhibits to this Agreement. 16. Police Power. Nothing contained in this Agreement shall be deemed to limit, restrict, amend or modify, or to constitute a waiver or release of, any ordinances, notices, orders, rules, regulations or requirements (now or hereafter enacted or adopted and/or as amended from time to time) of the City and Agency, or their departments, commission, agencies and boards and the officers of the City and Agency, including without limitation, any redevelopment or general plan or any zoning ordinances, or any of their duties, obligations, rights or remedies thereunder or pursuant thereto or the general policy powers, rights, privileges and discretion in the furtherance of the public health, welfare and safety of the inhabitants of the City of San Juan Capistrano, provided, however, that neither shall take any action to frustrate or hinder the intent or effect of this Agreement. 17. Force Majeure. Time for perfonnance hereunder shall be extended by any period of delay caused by circumstances beyond the reasonable control of the party claiming the delay despite the party's diligent efforts, other than financial ability, provided the party claiming the delay provides written notice to the other party within a reasonable period following commencement of any such circumstances which circumstances shall include, without limitation, fire/casualty losses; dealer protests; strikes; litigation; unusually severe weather; inability to secure necessary labor, materials, or tools; environmental remediation; including governmental review and processing of environmental remediation; delays of any contractor, subcontractor, or supplier; delay caused by the other party; and acts of God (collectively, "Force Majeure"). 18. Interpretation. In this Agreement the neuter gender includes the feminine and masculine, and singular aumber includes the plural, and the words "person." and "Party" include corporation, partnership, firm, trust, or association where the context so requires. 19. Time of the.Essence. Time is of the essence of this Agreement and all parties' obligations under this Agreement. 20. Authority to Execute. The person or persons executing this Agreement on behalf of TCAG warrant and represent that they have the authority to execute this Agreement on behalf of their corporation, partnership or business entity and warrant and represent that they have the authority to bind TCAG to the performance of its obligations hereunder. 21. Warranty Against Payment of Consideration for Agreement. TCAG warrants that it has not paid or given, and will not pay or give, to any third person, any money or other consideration for obtaining this Agreement, other than normal costs of conducting business and costs of professional services such as architects, engineers and attorneys. 22. Release of Public Officials. No member, official, agent, employee,, or attorney of the City or Agency shall be personally liable to TCAG, or any successor in interest of TCAG, 61463400924 1 v1 7 20 in the event of any default or breach by the Agency or for any amount which may become due to TCAG or its successors, or on any obligations under the terms of this Agreement. TCAG hereby waives and releases any claim it may have personally against the members, officials, agents, employees, consultants, or attorneys of the City and Agency with respect to any default or breach by them or for any amount which may become due to TCAG or its successors, or on any obligations under the terms of this Agreement. TCAG makes such rclease with full knowledge of Civil Code Section 1542, and hereby waives any and all rights thereunder to the extent of this release, if such Section 1542 is applicable California Civil Code Section 1542 provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." 23. Headings. The headings to the Sections of this Agreement have been inserted for convenience reference only and shall not to any extent have the effect of modifying, amending or changing the expressed terms and provisions of this Agreement. 24, Venue. In the event of any litigation under this Agreement, all such actions shall be instituted in the Superior Court of the County of Orange, State of California, or in an appropriate municipal court in the County of Orange, State of California. 25. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 26. Successors and Assigns. The provisions of this Agreement shall be binding upon, and inure to the benefit of, the Agency and TCAG and their successors and assigns as the case or context may require. 27. No Joint Venture. Nothing contained in this Agreement shall be construed to render the Agency in any way or for any purpose a partner or joint venturer, or in any manner associated in any relationship with TCAG, -nor shall this Agreement be construed to authorize any party to act as agent for the other. 28. Waiver. The waiver by the Agency or TCAG of any breach by the other party of any term, covenant, or condition in this Agreement contained shall not be deemed to be a waiver of such term, covenant, or condition or any subsequent breach of the same or any other term, covenant, or condition herein contained. Any party's acceptance of any performance by the other party after the due date of such performance shall not be deemed to be a waiver by any party or any preceding breach by the other party of any term, covenant, or condition of this Agreement, regardless of such party's knowledge of such preceding breach at the time of acceptance. of such performance. 29. Counterparts. This Agreement may be executed and acknowledged in multiple counterparts, each of which shall be deemed an original, but all of which shall constitute one (1) Agreement, binding on the parties hereto. 6146314009241 vl 7 21 30. Memorandum of Agreement. A Memorandum of this Agreement in a form mutually agreeable to the parties shall be recorded in the ,records of the Orange County Recorder's Office after the Property is acquired by TCAG (directly or through an Affiliate). Following the termination of the Operating Period or the earlier termination of this Agreement in accordance with the terms thereof, the parties shall cooperate in removal of the Memorandum of Agreement from the records of the Orange County Recorder's Office. 31. Facsimile Signatures. Signatures delivered by facsimile shall be as binding as originals upon the parties so signing and delivering. 32. Business Days. As used in this Agreement, the term "business days" shall mean days other than Saturdays, Sundays and legal holidays and closures observed by the City and "days" shall mean calendar days. If the time for performance of an obligation under this Agreement falls on other than a business day, the time for performance shall be extended to the next business day. 33. Attorneys' Fees. In the event that suit is brought for the enforcement of this Agreement or as of the result of any alleged breach hereof, the prevailing party in such suit shall be entitled to recover their reasonable attorneys' fees from the losing party, and any judgment or decree rendered in such proceeding shall include an award thereof. Attorneys' fees under this Section shall include attorneys' fees on any appeal and, in addition, a party entitled to attorneys' fees shall be entitled to all other reasonable costs and expenses incurred in connection with such action.. In addition to the foregoing award of attorneys' fees to the prevailing party, the prevailing party in any lawsuit shall be entitled to its attorneys' fees incurred in any post- judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the merger of this Agreement into any judgment on this Agreement. 34. No Third Party Beneficiary. Except for the indemnities in favor of the City set forth in Section 2.3 above, this Agreement is not intended, nor shall it be construed, to create any third party beneficiary rights and any person who is not a party hereto, unless expressly provided otherwise. 35. Captions. The captions of this Agreement are inserted for convenience and are not part of this Agreement. 36. Agreement to Convey Capistrano Parcel to The Hogan Family Trust. 36.1 Commercially Reasonable Good Faith Efforts. TCAG shall use "commercially reasonable good faith efforts" to reach agreement with The Hogan Family Trust to convey the Capistrano Toyota Parcel to The Hogan Family Trust. TCAG shall be deemed to have exercised commercially reasonable good faith efforts to reach an agreement with The Hogan. Family Trust if TCAG has offered to convey the Capistrano Toyota Parcel to The Hogan Family Trust on a "pass through basis" (i.e., on substantially the same terms or better, and subject to the same rights and obligations, as those offered to TCAG pursuant to the TCAG/BDI Transaction). 36.2 Conveyance of the Capistrano Toyota Parcel to The Hogan Family Trust — Concurrent Closing. If TCAG reaches an agreement with The Hogan Family Trust 614631400924M7 v 17 22 whereby the Capistrano Toyota Parcel will be conveyed to The Hogan Family Trust concurrently with the closing of the TCAG/BDI Transaction, The Hogan Family Trust shall, prior to the closing of the TCAG/The Hogan Family Trust transaction, be required to deliver to the Escrow Holder (for delivery to the Agency upon closing) an indemnification agreement whereby The Hogan Family Trust provides the Agency with the same indemnities as are set forth in Section 2.3 above relating to the Capistrano Toyota Parcel (the "Indemnification Agreement"), in which case, as of the date a Grant Deed conveying the Capistrano Toyota Parcel to The Hogan Family Trust is recorded, TCAG shall be relieved of any and all obligations under this Agreement relating to the Capistrano Toyota Parcel. Under those circumstances the Agency shall look solely to The Hogan Family Trust with respect to the indemnities set forth in Section 2.3 above (relating to the Capistrano Toyota Parcel). In addition, in light of the fact The Hogan Family Trust will, under a concurrent closing, be taking title to the Capistrano Toyota Parcel directly from BDI, TCAG will never have held title, directly or indirectly, to the Capistrano Toyota Parcel; therefore, TCAG shall not, at any time, be deemed to have assumed, directly or indirectly, any obligation or liability with respect to the Covenants set forth in Section 2 or the "Additional Covenants of TCAG" set forth in Section 9 above, as they relate to the Capistrano Toyota Parcel. 36.3 Conveyance of the Capistrano Toyota Parcel to The Hogan Family Trust — Non -Concurrent Closing. If TCAG reaches an agreement with The Hogan Family Trust whereby the Capistrano Toyota Parcel will be conveyed to The Hogan Family Trust after the closing of the TCAG/BDI Transaction, The Hogan Family Trust shall, prior to the closing of the TCAG/The Hogan Family Trust transaction, be required to deliver to the Escrow Holder (for delivery to the Agency upon closing) an Indemnification Agreement whereby The Hogan Family Trust provides the Agency with the same indemnities as are set forth in Section 2.3 above (relating to the Capistrano Toyota Parcel), in which case TCAG shall, as of the date a Grant Deed conveying the Capistrano Toyota Parcel to The Hogan Family Trust is recorded, be relieved of any and all obligations under this Agreement relating to the Capistrano Toyota Parcel accruing after the date of the recording of the Grant Deed. 61463!400924M7 17 23 IN WITNESS WHEREOF, the parties hereto have executed this Agreement Regarding Operating Covenant and Restrictive Covenants as of the Bate of Agreement. AGENCY: SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic By. . r Laura Freese, Agency Chair ATTEST,:, Ma4%rN44, gency Sec et Thomas P. C)arktrison r. Stradling Ykcca & Rauth Agency Special Counsel TCAG: TCAG, INC., a California corporation By: Christopher B. Cotter President 5145314009241v37 24 TABLE OF CONTENTS 6146314009241v17 Page 1. Definitions ..............................................................................................................................2 2. Operating Covenant and Restrictive Covenants........................................................................6 3. Covenant Consideration............................................................................. .............................8 4. Conditions Precedent ................................. ...........................................................................11 5. Defaults and Remedies........................................................................................................1.1 6. Representations and Warranties of TCAG................................................. 7. Representations and Warranties of Agency.............................................................................14 8. Disclaimer of Representations and Warranties of Agency ......................................................15 9. Additional Covenants of TCAG..............................................................................................15 10. Assignment and Assumption...................................................................................................18 11. Sign Easement..................................................................................................................18 12. Notices.................................................................................................................................19 13. Miscellaneous.........................................................................................................................19 14. Brokerage Commissions......................................................................................................19 15. Construction.............................................................................................................................20 16. Police Power............................................................................................................................20 17. Force Majeure..........................................................................................................................20 18. Interpretation............................................................................................................................20 19. Time of the Essence.................................................................................................................20 20. Authority to Execute................................................................................................................20 21. Warranty Against Payment of Consideration for Agreement..................................................20 22. Release of Public Officials.......................................................................................................20 23. Headings................................................................................................................................21 6146314009241v17 24. Venue..................................................................................................................................21 25. Applicable Law........................................................................................................................21 26. Successors and Assigns .................................... .......... ............. -................................................ 21 27. No Joint Venture............................................:.........................................................................21 28.Waiver......................................................................................................................................21 29. Counterparts—........................................................................... .....................I.... , ............21 30. Memorandum of Agreement.....................................................................:.............................:22 31. Facsimile Signatures ...................... ,......................................—..........................................22 32. Business Days..........................................................................................................................22 33. Attorneys' Fees .......................—.......................................................................22 34. No Third Party Beneficiary ........................... 22 .......................:................................................... 35. Captions...................................................................................................................................22 35. Agreement to Convey Capistrano Parcel to The Hogan Family Trust....................................22 514531400924lvl7 1-6 LEGAL DESCREPTiON OF THE PROPERTY Real propyty in The City of San Juan CapJstra, County of Orange, State of Caldbmia, described as %flows: PARCEL A: THAT PORTION OF THE RANCHO BOCA, DE LA PLAYA, IN THE CITY OF SAN JUAN CAPISTRANQ, ON A MAP FILED IN BOOK 48, PAGE 10 OF RECORD OF SURVEYS (SHOWN ON RECORDED DOCUMENTS AS BOOK 48, PAGE 10 OF MMELLANEOUS MAPS), IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST WESTERLY CORNER OF LAND DESCRIBED AS PARCEL 1 IN THE DEED TO W. ED EDWARDS AND WIFE, RECORDED IN BOOK 972, PAGE 14.5, OFFICIAL RECORDS, BEING A POINT OF THE SOUTHEASTERLY RIGHT OF WAY LINE OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY AND BEING THE MOST WESTERLY CORNED OF THE 8.292 ACRE PARCEL OF SAID MAP, THENCE NORTH 320 33'00" EAST ALONG SAIL? SOUTHEASTERLY RIGHT OF WAY LINE A DISTANCE OF 440.00 FEET; THENCE SOUTH 80° 18'00" EAST 470.68 FEET TO THE NORTHWESTERLY LINE OF LAND DESCRIBED AS •PARCEL 1 IN A FINAL DECREE OF CONDEMNATION, A CERTIFIED COPY OF WHICH WAS RECORDED IN BOOK 5029, PAGE 398, OFFICIAL RECORDS; THENCE SOUTH 330 01' 30" WEST 390.06 FEET ALONG SAID NORTHWESTERLY LINE TO AN ANGLE POINT THEREIN; THENCE SOUTH 280 39' 10" WEST 50.00 FEET TO THE SOUTHERLY LINE OF SAID LAND OF W. ED EDWARDS; THENCE LEAVING SAID NORTHWESTT RLY LINE NORTH 80° 18'00" WEST 470.86 FEETTO THE POINT OF BEGINNING. PARCEL 8: PARCELS 1 AND 2, IN THE CITY OF SAN JUAN CAPISTitANO, COUNTY -OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON THE MAP ATTACHED TO THAT CERTAIN LOT LINE ADJUSTMENT NO. 91 -RS 4.8/10-105 RECORDED OCTOBER 07, 1993 AS INSTRUMENT NO. 93-0683804 OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. PARCEL Bl: AN EASEMENT FOR SLOPE PURPOSES OVER THAT PORTION OFTHE NORTHERLY 59-1/2 ACRES OF THAT PORTION OE THE PRYOR HOMESTEAD TRACT IN THE RANCHO BOCA DE LA PLAYA, WHICH WAS ALLOTTED TO ROSA A. DE PRYOR BY FINAL DECREE OF PARTITION IN CASE NO. 1210, SUPERIOR COURT OF ORANGE COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: A STRIP OF LAND 5.00 FEET" IN WIDTH, THE SOUTHEASTERLY LINE BEING DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST NORTHERLY CORNER OF PARCEL f DESCRIBED IN DEED RECORDED APRIL 18, 1986 AS INSTRUMENT NO. 86-153852 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY, THENCE SOUTHWESTERLY TO A POINT ON THE NORTHERLY LINE OF THE LAND DESCRIBED AS PARCEL 1 IN THE, DEED TO ERVIN L, WATKINS AND OTHERS, RECORDED ]UNE 03, 196:0 IN BOOK 5272, PAGE 92 OF SAID OFFICIAL RECORDS, SAID POINT BEING SOUTH 52° 5'4D' WEST f7rstAmex1han TideXnsuranxCompany 6146314009241x15 EJfX3IBIT A 1 100.00 FEET FROM THE MOST NORTHERLY CORNER OF SAID WATKINS PARCEL, THENCE ALONG THE NORTHERLY LINE OF SAID WATKINS PARCEL SOUTH 520 5'40" WEST 116:00 FEET, SOUTH 530 47 30" WEST 151.08 FEET AND SOUTH 880 50' 40" WEST"' 297,30 FEET TO THE NORTHWEST CORNER OF SAID WATKINS PARCEL, SAID POINT ALSO BEING IN THE SOUTHEAMRLY LINE OF THE RIGHT OF WAY OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY. PARCEL. C: PARCEL 2, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 70, PAGES 6 AND 7 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT ALL OIL AND MINERAL RIGHTS BELOW A DEPTH OF 500 FEET W MOUTTHE RIGHT OF SURFACE ENTRY, AS RESERVED IN THE DEED RECORDED JUNE 27, 1969 IN'BOOK 9005, PAGE 354 AND RE-RECORDED JULY 10, 1969 IN BOOK 9017, PAGE 191, OF OFFICIAL RECORDS, APN: 668-121-11 (Affects Parcel C), 121-240-50 (Affects Parcel A) and 668-121-14 (Aim Parcel B) P7rsfAfffiedan TI&h7suranoCompany 61463M09241v15 EXHIBIT A-2 14 Apt, f9 m}d ym Today's Date: 10/12/10 R CIP No. (if any): Project Manager's Last Name: Russell Council or CRA Meeting Date (if applicable): 011 C, / to APPROVING AUTHORITY; (check one) ® Mayor CRA Chair Ll City Manager Transmittal Routing (Check All That Apply) ❑ City Attorney ❑ City Manager ❑ City Clerk Phone Extension: 6301 Provide (1) executed original contract for each signing party, including the City. If the agreement is to be recorded — only (1) original will be recorded with certified copies going to other parties. Please provide the mailing address of any party to receive an agreement — unless the mailing address is included within the body of the agreement: Names Street City St Zi Attn: Christopher B. Cotter Tuttle -Click Automotive Group 40 Auto Center Drive Irvine CA 92618 Attn: Thomas P. Clark, Jr., Esq Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach CA 92660 A}+.1.. leig a 'ilv ..FFRSH, '-q. C , LP Rear- LC.�g- Com" OTHER INSTRUCTIONS: Form Date: 01-2004 D-7 32400 PASEO ADELANTO SAN JUAN CAPISTRANO, CA 92675 (949) 493-1171 (949) 493-1053 FAx www.Sann uancapisI rano. or g 1ffj7k �hi� ��=1 TO: Tuttle -Click Automotive Group Attn: Christopher B. Cotter 40 Auto Center Drive Irvine, CA 92618 DATE: October 29, 2010 FROM: Kristen Lewis, Administrative Specialist (949) 443-6308 MEMBERS OF THE CITY COUNCIL SAM ALLEVATO LAURA FREESE THOMAS W. HRIBAR MARK NIELSEN OR. LON®RES USO RE: Agreement Regarding Operating Covenant and Restrictive Covenants Thank you for maintaining documentation confirming compliance with the terms of the agreement related to insurance. Please keep in mind this documentation must remain current with our office during the term of this agreement. if you have questions related to insurance requirements, please call me at (949) 443-6308. If you have questions concerning the agreement, please contact Cindy Russell, at (949) 443- 6301. Two original agreements are enclosed for your records. Cc: Cindy Russell, at (949) 443-6301 San Juan. Capistrano: Preserving the Past to Enhance the Future Fronted on 100% recycled paper 32400 PASEO ADEL,ANTO SAN JUAN CAPISTRANO, CA 92675 (949) 493-9377 (949) 493-1053 FAX wi4,ii�sanjuancapastrano.o�g TRANSMITTAL Wei Stradling Yocca Carlson & Rauth Attn: Thomas P. Clark, Jr., Esq 660 Newport Center Drive, Ste 1600 Newport Beach, CA 92664 DATE:. October 29, 2010 �{ MEMBERS OF THE CITY COUNCk _ PtnsP�Rett9 SAM ALLEVATO n titaBilS�ti Ig6I LAURAFREESE THOMAS W. HRIBAR I 17716 ® MARK NIELSEN DR. LONDRES USO FROM: Kristen Lewis, Administrative Specialist (949) 443-6308 RE: Agreement Regarding Operating Covenant and Restrictive Covenants Thank you for maintaining documentation confirming compliance with the terms of the agreement related to insurance. Please keep in mind this documentation must remain current with our office during the term of this agreement. if you have questions related to insurance requirements, please call me at (949) 443-6308. If you have questions concerning the agreement, please contact Cindy Russell, at (949) 443- 6301. An original agreement is enclosed for your records Cc: Cindy Russell, at (949) 443-6309 San Juan Capistrano: Presei ving the .Past to 1 mhanee the Future Q* Printed on " CO% recycled page, CRA RESOLUTION NO. 10-10-19-01 A RESOLUTION OF THE SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY APPROVING AN AGREEMENT REGARDING OPERATING COVENANT AND RESTRICTIVE COVENANTS BETWEEN THE AGENCY AND TCAG, INC. AND MAKING CERTAIN OTHER FINDINGS IN CONNECTION THEREWITH WHEREAS, the San .Juan Capistrano Community Redevelopment Agency ("Agency") is a community redevelopment agency duly organized and existing under the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL"), and has been authorized to.transact business and exercise the power of a redevelopment agency pursuant to action of the City Council ("City Council") of the City of San Juan Capistrano ("City"); and WHEREAS, the existing Redevelopment Plan (the "Redevelopment Plan") and the boundaries of the Redevelopment Plan (the "Project Area") were duly established by ordinances of the City Council; and WHEREAS, Agency is vested with the power to implement the Redevelopment Plan and to carry out its goals and objectives of the San Juan Capistrano Community Redevelopment Agency; including without limitation the goals and objectives adopted by the Agency's implementation plan (the "Implementation Plan") pursuant to the CRL; and.................................................................... ............... . WHEREAS, the Agency is authorized and empowered by the CRL to enter into agreements for the acquisition, of real or personal property, to receive consideration for the provision by the Agency of redevelopment assistance and to make and execute contracts and other instruments necessary or convenient to the exercise of its powers; and WHEREAS, TCAG, Inc. ("TCAG") is a California corporation duly organized under the laws of the State of California and experienced in the operation of new car dealerships; and WHEREAS, Agency desires to enter into that certain Agreement Regarding Operating Covenant and Restrictive Covenants ("Agreement") with TCAG relating to the operation of a ford dealership ("Capistrano Ford") on that certain real property (the "Site") shown on the Site Map attached hereto as Exhibit A and incorporated herein; and WHEREAS, the Agency has adopted the Implementation Plan pursuant to CRL Section 33490, which sets forth the objective of eliminating blighting conditions including impaired investments with specific emphasis on the blighting conditions resulting from the significant downturn in the automotive industry; and 10-19-2010 WHEREAS, by providing for the operation of Capistrano Ford on the Site, the Agreement will assist the Agency in meeting the development policies and objectives set forth in the Redevelopment Plan and Implementation Plan, specifically the goal of reducing blighting economic conditions by encouraging new investment in the community through facilitating the use of underutilized and vacant buildings; and WHEREAS, pursuant to the CRI,, the Agency is authorized to acquire the "Covenants" as defined in the Agreement; and WHEREAS, on October 19, 2010, the Agency held a duly noticed hearing on the proposed Agreement, at which time the Agency reviewed and evaluated all of the information, testimony, and evidence presented during the hearing; and WHEREAS, all actions required by all applicable law with respect to the proposed Agreement have been taken in an appropriate and timely manner;; and WHEREAS, the City Council has previously determined, in its adoption of the ordinance approving the Redevelopment Plan, that the Site was blighted; and WHEREAS, the Agreement will assist in the elimination of blight by providing for the operation of Capistrano Ford on the Site; and WHEREAS, the Agreement will not result in physical impacts to the environment as it seeks to induce the continued operation of property for automobile sales and service, which has been the historical use of the property, and is otherwise exempt from the California Environmental Quality Act pursuant to CEQA Guideline 15060(c)(2) and 15061(b)(3) as the Agreement will not cause a significant effect on the environment, or is otherwise exempt under CEQA Guideline 15301 Class 1 (Operation, repair, maintenance, or minor alteration of existing structures), 15302 (replacement or reconstruction of existing structures or facilities), and/or 15304 (minor alteration to land); and WHEREAS, the Agency has duly considered all terms and conditions of the proposed Agreement and believes that the operation of Capistrano Ford on the Site is in the best interests of the City of San Juan Capistrano and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. NOW, THEREFORE, BE IT RESOLVED by the San Juan Capistrano Community Redevelopment Agency as follows: 1. Each of the foregoing recitals is true and correct. 2. The Agency hereby finds and determines that the operation of Capistrano Ford, pursuant to the Agreement will assist in the elimination of blight within the Project Area by providing for the proper reuse of a portion of the Project Area, which was previously declared blighted and encourage the redevelopment of nearby blighted properties. 2 10-19-2010 3. The Agency hereby finds and determines that the Agreement is consistent with the provisions and goals of the Redevelopment Plan and Implementation Plan. 4. The Agency hereby finds that the Agreement will not result in physical impacts to the environment as it seeks to induce the continued operation of property for automobile sales and service, which has been the historical use of the, property, and is otherwise exempt from the California Environmental Quality Act pursuant to CEQA Guideline 15060(c)(2) and 15061(b)(3) as the Agreement will not cause a significant effect on the environment, or is otherwise exempt under CEQA Guideline 15301 Class 1 (Operation, repair, maintenance, or minor alteration of existing structures), 15302 (replacement or reconstruction of existing structures or facilities), and/or 15304 (minor alteration to land) and therefore the Agency Secretary is hereby authorized and directed to file a Notice of Exemption with the County Clerk in accordance with the provisions of CEQA Guideline 15062. S. The Agency hereby approves the Agreement between the Agency and TCAG, in the form of the Agreement, which has been submitted herewith. 6. The Agency Executive Director and the Agency Secretary are hereby authorized to execute and attest the Agreement, including any related attachments, on behalf of the Agency. Copies of the final form of the Agreement, when duly executed and attested, shall be placed on file in the office of the City Clerk. 7. The Agency Executive Director (or his duly authorized representative) is further authorized to implement the Agreement and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the Agreement. The Agency Executive Director (or his duly authorized representative) is hereby authorized to the extent necessary during the implementation of the Agreement to make technical or minor changes thereto after execution, as necessary to properly implement and carry out the Agreement, provided the changes shall not in any manner materially affect the rights and obligations of the Agency. 8, The Agency Secretary shall certify to the adoption of this Resolution. 3 10-19-2010 PASSED AND ADOPTED this 19th day of October, 2010. f ATTEST: RIS; Agcy Secretary Stradling Y Agency Spa i'Carl on & Rauth I Cole I SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY LAURA FREESE, CHAIR 4 10-19-2010 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) 1, MARIA MORRIS, Secretary of the San Juan Capistrano Community Redevelopment Agency, hereby certify that the above and foregoing Resolution was duly and regularly adopted by the Agency at a regular meeting thereof held on the 19th day of October, 2010, and that it was so adopted by the following vote of the Agency: AYES: DIRECTORS: Nielsen, NOES I �1so ABSENT: -41 �IRECTORS: None 1 :j MARIA MOR`l.Agency SE Hribar, Allevato, and Chair Freese 5 10-19-2010 m /| \/ 5§4 CRA 1011912010 AGENDA REPORT TO: Joe Tait, Executive Director FROM: Cindy Russell, Finance Officer SUBJECT: Consideration of Agreement Regarding Operating Covenant and Restrictive Covenants for Tenanting of the Vacant Dealership located at 33375 & 33235 Camino Capistrano (formerly Capistrano Nissan and Capistrano Dodge/Jeep) (Tuttle -Click Automotive Group (TCAG, Inc.) RECOMMENDATION: By motion, a) Adopt the Resolution approving the Agreement Regarding Operating Covenant and Restrictive Covenants with Tuttle -Click Automotive Group (TCAG, Inc.) for the operation of the Capistrano Ford franchise at the vacant dealership located at 33375 & 33235 Camino Capistrano, and b) Direct the Agency Secretary to file the Notice of Exemption in accordance with the provisions of CEQA Guideline 15062. As identified in the 20102014 Implementation Plan for the San Juan Capistrano Redevelopment Agency adopted in January 2010, the downturn in the automotive industry, combined with obsolete facilities, has resulted in an approximate 40 percent loss in retail auto sales revenues to the City. In 2004, the City had 10 "new car' automotive dealerships in operation. Since that time five dealerships have closed. In November/December 2010, a sixth dealership, Capistrano Ford plans to close its doors as the result of the Costco store's onsite expansion. Closure of the franchise will result in a net loss of approximately $105,000 in current sales tax revenue per year that is retained by the City pursuant to the existing pass-through agreement. The current owner of the Capistrano Ford franchise has no plans to relocate or continue business in San Juan Capistrano. The Implementation Plan identified the Agency's plans to work with the remaining dealerships to ensure their continued viability into the future, including relocation and consolidation among the existing facilities. The Plan also indicated the Agency would be working with existing automobile dealerships to, among other things, consolidate and expand inadequate sized dealership sites to ensure the viability of the remaining dealerships. Additionally, the Implementation Plan identified automotive dealership Agenda Report Page 2 October 19, 2010 assistance as a potential project in the furtherance of the Agency's goals and objectives to be funded from the Agency's Tax Allocation bonds issued in May 2008. The City's Long -Term Vision/Strategic Business Plan (LTV/SBP), scheduled for final review and approval on October 20, 2010, has five strategic priorities for the City including, Fiscal Sustainability. The re -tenanting of the City's auto dealerships is one of the on-going initiatives under this priority to restore, strengthen and diversify the City's revenue portfolio. Tuttle -Click Automotive Group (TCAG) has obtained the exclusive right to purchase the Capistrano Ford franchise and intends to relocate to and operate the franchise at the vacant former Nissan and Dodge/Chrysler dealerships. TCAG has requested the Agency acquire a 27 -year operating covenant. In order to relocate and operate the franchise on the new site, TCAG plans to acquire the existing Capistrano Ford franchise, acquire the vacant property formerly occupied by the Capistrano Nissan and Capistrano Dodge/Jeep at 33375 & 33235 Camino Capistrano. TCAG will also sell approximately 2 acres of the property to the neighboring Capistrano Toyota dealership for their required expansion pursuant to Toyota Motor Co. specifications. If the franchise is not acquired at this time, this Ford sales point will close in San Juan Capistrano. The closure of another dealership will further weaken the competitiveness of San Juan Capistrano as an auto sales destination. Agency assistance will support the relocation of the Ford franchise to the row of auto dealers along Camino Capistrano reinforcing the City's auto dealers as a competitive destination. Additionally, the operation of a franchise in a vacant dealership site will eliminate .the current blighted condition. Additionally, the new agreement would allow the City to retain a 100% of the sales tax revenues generated to the City, projected to be approximately $17 million over the twenty-seven (27) year operating covenant period. The cost to the Agency is $5 million. Staff recommends the Agency Board of Directors adopt the Resolution approving the Agreement Regarding Operating Covenant and Restrictive Covenants with Tuttle -Click Automotive Group (TCAG, Inc.) for the operation of the Capistrano Ford franchise at the vacant dealership located at 33375 & 33235 Camino Capistrano. Current Capistrano Ford DealersFi During the mid -1990x, the Agency negotiated with the then Price Company (now Costco) to allow for an auto dealership to be opened on the Costco site. This negotiation allowed for Capistrano Ford to open on the site and a sharing of sales tax revenues between the City/Agency was approved in a second amendment to the Disposition and Development Agreement (DDA) with The Price Company. The amended DDA provided for the City to retain 30% of the sales tax generated by the auto dealership rather than pass thru the amount to Price. The resulting benefit to the City at the time was an operation on the site with a stronger sales tax base and approximately Agenda Report Page 3 October 19, 2010 15%-25% sales tax being retained by the City. Taxable auto sales from this location have resulted in sales tax payments to the City averaging approximately $425,000 annually with a ranged between $350,000 and $600,000. Currently, the City is retaining approximately $105,000 in sales tax revenue from taxable sales generated by Capistrano Ford. The most recent high taxable sales figures resulted in approximately $183,000 in sales tax being retained by the City in 2003. Tuttle -Click Automotive Group Capistrano Ford Dealership TCAG has obtained the exclusive right to purchase the Capistrano Ford franchise and intends to operate and relocate the franchise to the vacant former Nissan and Dodge/Chrysler dealership location on Camino Capistrano. These auto dealership locations have been vacant since 2008 and 2009, respectively. TCAG will be acquiring the entire vacant site along Camion Capistrano from the corner of Ave. Aeropuerto to the Capistrano Toyota dealership. The site totals approximately 9.16 total acres, with 5.97 acres usable land based upon the topography of the westerly facing slope, adjacent to an existing rail line. Of the 5.97 usable acres, the Tuftle-Click Automotive Group proposes to sell the southern 2 acres to Capistrano Toyota, located at 33395 Camino Capistrano, to expand the sales and inventory of the auto dealership pursuant to Toyota's franchise standards. Request for Agency Assistance/Terms of the Proposed Agreement On April 26, 2010, the Tuttle -Click Automotive Group submitted a petition to the Agency for assistance. After review of their request by staff, both Agency General Counsel and Special Counsel, and further negotiation, the Agreement for consideration by the Agency Board of Directors provides for the following; Tuffle Crick Obligations: Provide an operating covenant ("Operating Period") from TCAG to operate a Ford dealership (primarily selling new Ford automobiles and trucks) at the Site for a period of 27 years. ■ Provide approximately two (2) acres of the Site to Capistrano Toyota for their required expansion. ■ Use the name "Capistrano" or "San Juan Capistrano" in the name of the dealership(s). (TCAG, Inc. has identified the name, "Tuttle -Click's Capistrano Ford" as the name of the new dealership) w Agree to participate in a business improvement district Provide the option for the Agency to obtain, at no cost to the Agency, a sign or regional identification easement on the frontage property Agenda Report Page 4 Agency Obii ations: October 19, 2010 ® Operating Covenant Consideration as follows for be provided by the Agency: a) Three Million Dollars ($3,000,000) if a Ford Dealership opens on the Site payable within five (5) business days of the opening for business on the Site. This initial payment of consideration will be deposited into a joint escrow account within five (5) business days after the Conditions Precedent, subsections (a), (c), (d), (e) and (f) described below have been satisfied or waived and TCAG notifies the Agency in writing that TCAG's deposits under the agreement to acquire the Property have become non- refundable and except for "Normal Closing Contingencies" , all conditions precedent to the closing of the Property, including the "Due Diligence Contingencies", have been satisfied. b) If the Ford Dealership remains open and continues to operate, the Agency will provide additional operating covenant consideration in an amount equal to 50% of the sales tax generated by the Site annually until the earlier to occur of (i) receipt by Tuttle Click of the nominal amount of $2,000,000 or (ii) expiration of the Operating Period. However Tuttle Click shall not receive any additional operating covenant consideration until the City has first received $150,000 in sales tax from the Site and, thereafter, Tuttle Click will receive up to an amount equal to the next $150,000 received by the City and 50% of an amount equal to the balance of the sales tax received by the City from the Site, annually. For example, if in a given year there is $250,000 of sales tax received by the City from the Site, Tuttle Click would receive $100,000. Conditions Precedent: a) TCAG shall have acquired the Franchise rights of Capistrano Ford, with the approval of Ford Motor Company; b) TCAG shall have acquired the Property; c) TCAG shall have notified the Agency that TCAG has either (i) reached an agreement with Capistrano Toyota whereby the Capistrano Toyota Parcel will be conveyed to Capistrano Toyota or (ii) after exercising commercially reasonably good faith efforts to reach an agreement with Capistrano Toyota, TCAG has been unable to reach an agreement with Capistrano Toyota; d) TCAG shall be satisfied that all matters requiring the City entitlements, permits or approvals including, but not limited to, the approval of a lot line adjustment by the City whereby the Capistrano Toyota Parcel constitutes a legal loft, credits for building square footage and other development rights from the Capistrano Agenda Report Page 5 October 19, 2010 Toyota Parcel; the number, width and location of driveways; the design, location and construction of pylon and monument signs for the Ford dealership; the relocation of cell towers that are currently located on the Capistrano Toyota Parcel; and development fee credits, can, in TCAG's sole and absolute discretion, be obtained in a timely manner so that TCAG may, without delay, proceed with its full and complete Ford dealership operations of Tuttle Click's Capistrano Ford on the Property; e) Each party shall have reviewed and approved the financial condition of the other party; and, f) A lot line adjustment shall have been approved by the City whereby the Capistrano Toyota Parcel constitutes a separate legal lot. In no event shall TCAG be considered to be in breach or default of this Agreement as a result of the failure of any of the Conditions Precedent to be satisfied for any reason whatsoever. Why Tuttle -Glick Automotive Grou ? TCAG has 16 locations representing 13 makes in California and Arizona. The company has been established in Orange County since 1980 and currently has five locations in Irvine and Tustin. As a very successful privately -owned family business, TCAG brings the "Tuttle -Click" experience to our community. The experience and integrity of their dedicated Team Members, from owners to lot attendants, is the reason Tuttle -Click has been so successful through the years. The relocation of the franchise will retain approximately 100 jobs in our community TCAG also has a demonstrated history for community partnerships in their various locations and intends to become a part of the San Juan Capistrano community family through support and participation. Additionally, many of TCAG's corporate officers live in or near San Juan Capistrano. The TCAG President, Corporate Chief Financial Officer, and Dealership Financial Officer reside in the community, while the Vice President of Operations resides in an adjacent community. Attachment 4 to this report outlines their previous and continued commitment to the communities in which they have operated. 0 KIN�, .. The Agreement seeks to induce an operator to continue to use the property as an automobile dealer. The Agreement does not require a change of use of the property, nor does it require construction. As such, approval of the Agreement should not be considered a "project" under CEQA Guideline 15060(c) (2) because its approval will not result in a direct or reasonably foreseeable indirect physical change in the environment. CEQA Guideline 15061(b)(3) further provides that even if an action is deemed to be a "project", it is exempt from CEQA if the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect Agenda Report Page 6 October 19, 2010 on the environment. Again, the Agreement seeks to foster the historical use of the property as an automobile sales and servicing business. Additionally, even if the Agreement were considered a "project" under CEQA it is categorically exempt under CEQA Guideline 15301 Class 1 (Operation, repair, maintenance, or minor alteration of existing structures), 15302 (replacement or reconstruction of existing structures or facilities), and/or 15304 (minor alteration to land). COMMISSION/BOARD REVIEW AND RECOMMENDATIONS: No commissions or boards have reviewed the request for assistance. FINANCIAL CONSIDERATIONS: The City's economist Keyser Marston Associates, Inc. (KMA) has reviewed the sales projections and other financial information for the proposed TCAG dealership and prepared an Operating Covenant Valuation Report (Attachment 3). The purpose of the KMA analysis is to: ■ Estimate the value of TCAG's agreement to be bound by a 27 -year operating covenant; ■ Project the net present value (NPV) of the purchase price to be paid by the Agency to acquire the operating covenant; and, • Project the NPV of the local sales tax revenues anticipated to be generated by the Ford dealership. The KMA report identifies gross sales beginning at $45 million increasing to $144.8 million by the end of the operating period. Based on a projected taxable sales factor of 67%, total taxable sales during the operating period are projected at $1.7 billion, generating $17 million in sales tax revenue to the City. The City will retain all sales tax generated by the dealership as opposed to passing a portion through to the Agency for payments under the agreement. The Agency's Operating Covenant Purchase Price is $3,000,000 upon the opening of the TCAG dealership at the Site and $2,000,000 made in annual payments based on taxable sales generated from the operation. The Agency will fund the initial $3 million from bond proceeds under business retention/economic development as identified in the Agency Board approved allocation of bond proceeds, FY 09/10 and 10/11 budget and 2010-214 Implementation Plan adopted in January 2010. The $2,000,000 obligation is considered a debt of the Agency and will be funded annually from tax increment proceeds. The breakeven point of the Agreement based on the projected sales taxes revenue and payment calculations occurs in Year 12. Keyser Marston has calculated the net present value (NPV) of sales tax generated over twenty-seven (27) years to be retained by the City to be $6,129,000. The NPV of the sales tax received by the City, net of the Agenda Report Page 7 October 19, 2010 payments made by the Agency is $4,718,000. The NPV of the Agency's payments to TCAG is $4,411,000. The breakeven point on the Agency's investment from a net present value standpoint occurs in Year 26. MAC J, I & I :121107111 Im . By motion, a) Adopt the Resolution approving the Agreement Regarding Operating Covenant and Restrictive Covenants with Tuttle -Click Automotive Group (TCAG, Inc.) for the operation of the Capistrano Ford franchise at the vacant dealership located at 33375 & 33235 Camino Capistrano, and b) Direct the Agency Secretary to file the Notice of Exemption in accordance with the provisions of CEQA Guideline 15062. Respectfully submitted, Cindy Rulell, Finance Officer Attachments: 1. Resolution 2. Agreement 3. Keyser -Marston Report of Operating Covenant Valuation 4. Community partnership information RESOLUTION NO. 10-10-19- A RESOLUTION OF THE SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY APPROVING AN AGREEMENT REGARDING OPERATING COVENANT AND RESTRICTIVE COVENANTS BETWEEN THE AGENCY AND TCAG, INC. AND MAKING CERTAIN OTHER FINDINGS IN CONNECTION THEREWITH WHEREAS, the San Juan Capistrano Community Redevelopment Agency ("Agency") is a community redevelopment agency duly organized and existing`under the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL"), and has been authorized to transact business and exercise the power of a redevelopment agency pursuant to action of the City Council ("City Council") of the City of San Juan Capistrano ("City„); and WHEREAS, the existing Redevelopment Plan (the "Redevelopment Plan") and the boundaries of the Redevelopment Plan (the "Project Area") were duly established by ordinances of the City Council; and WHEREAS, Agency is vested with the power to implement the Redevelopment Pian and to carry out its goals and objectives of the San Juan Capistrano Community Redevelopment Agency, including without limitation the goals and objectives adopted by the Agency's implementation plan (the "Implementation Plan") pursuant to the CRL; and WHEREAS, the Agency is authorized and empowered by the CRL to enter into agreements for the acquisition, of real or personal property, to receive consideration for the provision by the Agency of redevelopment assistance and to mace and execute contracts and other instruments necessary or convenient to the exercise of its powers; and WHEREAS, TCAG, Inc. ("TCAG") is a California corporation duly organized under the laws of the State of California and experienced in the operation of new car dealerships; and WHEREAS, Agency desires to enter into that certain Agreement Regarding Operating Covenant and Restrictive Covenants ("Agreement") with TCAG relating to the operation of a Ford dealership ("Capistrano Ford") on that certain real property (the "Site") shown on the Site Map attached hereto as Exhibit A and incorporated herein; and WHEREAS, the Agency has adopted the Implementation Plan pursuant to CRL Section 33490, which sets forth the objective of eliminating blighting conditions including impaired investments with specific emphasis on the blighting conditions resulting from the significant downturn in the automotive industry; and 61463W181194 1 ATTACHMENT 1 WHEREAS, by providing for the operation of Capistrano Ford on the Site, the Agreement will assist the Agency in meeting the development policies and objectives set forth in the Redevelopment Plan and Implementation Plan, specifically the goal of reducing blighting economic conditions by encouraging new investment in the community through facilitating the use, of underutilized and vacant buildings; and WHEREAS, pursuant to the CRL, the Agency is authorized to acquire the "Covenants" as defined in the Agreement; and WHEREAS, on October 19, 2010, the Agency held a duly noticed hearing on the proposed Agreement, at which time the Agency reviewed and evaluated "all of the information, testimony, and evidence presented during the hearing; and , WHEREAS, all actions required by all applicable law with respect to the proposed Agreement have been taken in an appropriate and timely man6er;.6nd WHEREAS, the City Council ha's previously determined, in its adoption of the ordinance approving the Redevelopment Plan, that the Site was blighted; and WHEREAS, the Agreement will assist in the elimination of blight by providing for the operation of Capistrano Ford on the Site; and WHEREAS, the Agreement will not result in physical impacts to the environment as it seeks to induce the continued operation of property for automobile sales and service, which has been the historical use of the property, and is otherwise exempt from the California Environmental Quality Act pursuant to CEQA Guideline 15060(c)(2) and 15061(b)(3) as the Agreement will not cause a significant effect on the environment, or is otherwise exempt under CEQA Guideline 15301 Class 1 (Operation, repair, maintenance, or minor alteration of existing structures), 15302 (replacement or reconstruction of existing structures or facilities), and/or 15304 (minor alteration to land); and WHEREAS, the Agency has duly considered all terms and conditions of the proposed Agreement and believes that the operation of Capistrano Ford on the Site is in the best interests of the City of San Juan Capistrano and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. NOW, THEREFORE, BE IT RESOLVED by the San Juan Capistrano Community Redevelopment Agency as follows: 1. Each of the foregoing recitals is true and correct. 2. The. Agency hereby finds and determines that the operation of Capistrano Ford, pursuant to the Agreement will assist in the elimination of blight within the Project Area by providing for the proper reuse of a portion of the Project Area, which was previously declared blighted and encourage the redevelopment of nearby blighted properties. 6146314018119x6 3. The Agency hereby finds and determines that the Agreement is consistent with the provisions and goals of the Redevelopment Pian and Implementation Plan. 4. The Agency hereby finds that the Agreement will not result in physical impacts to the environment as it seeks to induce the continued operation of property for automobile sales and service, which has been the historical use of the property, and is otherwise exempt from the California Environmental Quality Act pursuant to CEQA Guideline 15060(c)(2) and 15061(b)(3) as the Agreement will not cause a significant effect on the environment, or is otherwise exempt under CEQA Guideline 15301 Class 1 (Operation, repair, maintenance, or minor alteration of existing structures), 15302 (replacement or reconstruction of existing structures or facilities), and/or 15304 (minor alteration to land) and therefore the Agency Secretary is hereby authorized and directed to file a Notice of Exemption with the County Clerk in accordance with the provisions of CEQA Guideline 15062. S. The Agency hereby approves the Agreement between the Agency and TCAG, in the form of the Agreement, which has been submitted herewith. 6. The Agency Executive Director and the Agency Secretary are hereby authorized to execute and attest the Agreement, including any related attachments, on behalf of the Agency. Copies of the final form of the Agreement, when duly executed and attested, shall be placed on file in the office of the City Clerk. 7. The Agency Executive Director (or his duly authorized representative) is further authorized to implement the Agreement and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the Agreement. The Agency Executive Director (or his duly authorized representative) is hereby authorized to the extent necessary during the implementation of the Agreement to make technical or minor changes thereto after execution, as necessary to properly implement and carry out the Agreement, provided the changes shall not in any manner materially affect the rights and obligations of the Agency. 8. The Agency Secretary shall certify to the adoption of this Resolution. 614631401811 M 3 PASSED AND ADOPTED this 19th day of October, 2010, SAN JUAN. CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY Agency Executive Director ATTEST: Agency Secretary APPROVED AS TO Stradling YoccCarl on & Rauth Agency Sped I Co sel STATE OF CALIFORNIA ) )ss' COUNTY OF ORANGE ) I, , Secretary of the San Juan Capistrano Community Redevelopment Agency, hereby certify that the above and foregoing Resolution was duly and regularly adopted by the Agency at a regular meeting thereof held on the 19th day of October, 2010, and that it was so adopted by the following vote of the Agency: AYES: NOES: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and seal this _ of , 2010. Agency Secretary 6146314018119v6 day AGREEMENT REGARDING OPERATING COVENANT AND RESTRICTIVE COVENANTS This AGREEMENT REGARDING OPERATING COVENANT AND RESTRICTIVE COVENANTS (the "Agreement") is entered into this day of , 2010 (the "Date or Agreement"), by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency") and TCAG, INC., a California corporation ("TCAG"), with reference to the following facts: A. The automobile dealership operating as Capistrano Ford undgr a Ford Motor Company ftanchise (the "Capistrano Ford Franchise") has been operating at its present location at 33949 Camino Capistrano in the City of San Juan Capistrano (the "Capistrano Ford Parcel") for a number of years. The Capistrano Ford Parcel is currently schedilkd`Io be sold to Costco Wholesale Corporation .("Costco") on or about December 1, 2010. Costco proposes to lease the Capistrano Ford Parcel back to the owner of the Capistrano Ford Franchise for a period of months. The sale of the Capistrano Ford Parcel to Costco and the termination of the leaseback to the owner of the Capistrano Ford Franchise will result in the closure of Capistrano Ford if Capistrano Ford's Franchise rights are not acquired and relocated as contemplated herein. B. TCAG is attempting to acquire from Borrego Development, Inc. ("BDI") that certain real property located at 33375 and 33235 Camino Capistrano (the "Property") together with those certain automobile dealership improvements ("Automobile Dealership Improvements") located on the Property for the purpose of relocating the Capistrano Ford Franchise thereto (the "TCAG/BBI Transaction"). The Property is more particularly described in Exhibit A attached hereto and incorporated herein by this reference and shown on the Site Map reflected on Exhibit B attached hereto and incorporated herein by this reference. C. The Agency has found that it would benefit the Redevelopment Project Area, specifically, and the City, generally, to (i) induce TCAG to acquire both the Capistrano Ford Franchise and the Property and to relocate the Capistrano Ford Franchise to the Property for the operation of a Ford Dealership under the name "Tuttle -Click's Capistrano Forel" and (ii) cause a portion of the Property consisting of approximately two (2) acres of the Property to be conveyed to The Hogan Family Trust to be operated as part of Capistrano Toyota, D. TCAG is willing to be bound by the terms of the Covenants contained herein in return for which the Agency will pay to TCAG the Covenant Consideration also described herein. E. ' The purpose and intention of the Agency entering into this Agreement with TCAG is to (i) assist in the elimination of blight, (ii) enhance local employment, and (iii) expand the Agency's and City's revenue base. NOW, THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth, the parties hereto agree -as follows: 6146314009241v17 1 ATTAni- mizmT .7 I., Definitions. 1.1 "Additional Covenants of TCAG" is defined in' Section 9. 1.2 "Affiliate? 'means any persozi, directly or indirectly, in control of, controlled by, or under common control with, a Party. A Party shall be deemed to control another person if such Party possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other person., whether through the ownership of voting securities, by contract or otherwise. 1.3 "Agency" means the San Juan Capistrano Community Redevelopment Agency, a public body, corporate and politic, exercising governmental functions,=andapowers and organized and existing under Chapter 2 of the Community Redevelopment Law, and any assignee of or successor to its rights, powers and responsibilities. 1.4 "Agreement" means this Agreement Regarding Operating Covenant and Restrictive Covenants. 1.5 "Automobile Dealership Improvements" is defined in Recital B. 1.6 "Business bays" and "Days" are defined in. Section 32. 1.7 "BDI" means Borrego Development, Inc., the seller of the Property pursuant to the TCAG/BDI Transaction. - 1.8 "Capistrano Ford" means the Ford Dealership operating as "Capistrano Ford" currently located at 33949 Camino Capistrano, San Juan Capistrano, CA 92675. 1.9 "Capistrano Ford Franchise" is defined in Recital A. 1.10 "Capistrano Ford Parcel" is defined in Recital A. 1.11 "Capistrano Toyota" means the Toyota automobile dealership located at 33395 Camino Capistrano, San Juan Capistrano,.CA 92675 and operating as Capistrano Toyota. 1.12 "Capistrano Toyota Parcel" means the approximately two (2) acres of the Property to be conveyed to The Hogan Family Trust as shown on the Site Map. 1.13 "City" means the City of San Juan Capistrano, a California municipal corporation. 1.14 "Conditions Precedent" is defined in Section 4. 1.1.5 "Costco" is defined in Recital A. 1..16 "Covenant Consideration" is defined in Section 3.1. 1.1.7 "Covenants" is defined in Section 2.4. b 1.4531400924 M 7 2 1.18 "Date of Agreement" is defined in the Preamble. 1.19 "Escrow Account" is defined in Section 3.5. 1.20 "Escrow Holder" shall mean First American Title Insurance Company, located at 777 South Figueroa Street, 4th Floor, Los Angeles, CA 90017, Attn: Carolyn Marcial, Senior Escrow Officer. 1.21 "Environmental Claim" shall mean any claim, action, suit, or proceeding for personal injury (including sickness, disease or death), or for tangible or intangible injury or damage to property or natural resources or the environment, including, without .limitation, compensation for lost profits, wages, business income, or other economic loss, consequential damages, diminution of property value or Ioss of use of property, nuisance, or for any violation or alleged violation of, or noncompliance with, the requirements of any Environmental Law. 1.22 "Environmental Cleanup Liability" shall mean any cost or expense incurred to investigate, monitor, remove, remediate, treat, clean up, abate or otherwise respond, to any Release or threatened Release of Hazardous Materials, including, without limitation, the cost of obtaining site closure from applicable governmental agencies and the cost of restoring the affected property upon completion of responsive action, all to the extent necessary in consideration of the commercial use of the Property. 1.23 "Environmental Compliance Costs" shall mean any cost or expense necessary to enable the real property impacted by the presence of Hazardous Materials to comply with all applicable Environmental Laws. 1.24 "Environmental Law" shall mean any applicable federal, California, regional or local law, statute, ordinance, rule, regulation or order for the protection of human health or the environment, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601, et seq.); the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.); the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.); the Clean Air Act (42 U.S.C. § 7401 et seq.); the Safe Drinking Water Act (42 U.S.C. § 300f et seq.); the Emergency Planning and Community Right To Know Act of 1986 (42 U.S.C. § 11001 et seq.); the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.); the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.); the Hazardous Materials Transportation Act (49 U.S.C. - § 5101 et seq.); the Carpenter Presley Tanner Hazardous Substance Account Act (Health and Safety Code § 25300 et seq.),-'the Hazardous Waste Control Law (Health and Safety Code § 25100 et seq.); the Hazardous Waste Disposal Land Use law (Health and Safety Code § 25220 et seq.); .the Porter Cologne Water Quality Control Act (Water Code § 13000 et seq.); Hazardous Materials Release Response Plans and Inventory (Health and Safety Code §,25500 et seq.); Underground Storage of Hazardous Substances (Health and Safety § 25280 et seq.); The Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65) (Health and Safety Code § 25249.5 25249.13); the Asbestos Notification Law (Health and Safety Code § 25915 et seq.); the California Occupational Safety and Health Act (Labor Code § 6300 et seq.); Chapters 10 and 11, Division 4.5, Title 22, California Code of Regulations; and any law or regulation implementing, amending 61463\4009241v17 or succeeding any of the foregoing, and any similar laws or regulations at any time in effect having any of the purposes designated above. 1.25 "Event of Default" is defined in Section 5. 1.26 "Force Majeure" is defined in Section 17. 1.27 "Ford Dealership" means a dealership operating pursuant to a franchise agreement with Ford Motor Company. 1.28 "Franchise(s)" means. the Ford Dealership which will operate under the name "Tuttle -Click's Capistrano Ford" on the Property and any other auton)pbile dealership permitted to operate on the Property hereunder. 1.29 "Governmental Requirement(s)" means all valid and .enforceable laws, ordinances, statutes, codes, rales, regulations, orders and decrees of the United States, the State, the County, the City or any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over Agency, Developer or the Property, including, without limitation, all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation (to the extent applicable), Labor Code Sections 1770 et seq., the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. 1.30 "Hazardous Materials" shall mean any pollutant, contaminant, hazardous or toxic substance, material or waste which is or becomes identified, listed or regulated as such under any Environmental Law by the United States government, the State of California or any regional or local governmental authority having jurisdiction over the Property. 1.31 "Indemnitees" is defined in Section 2.3. 1.32 "Indemnification Agreement" is defined in Section 36.2 1.33 "Initial Payment" shall be an amount equal to Three Million Dollars ($3,000,000), except that if, despite TCAG's good faith efforts to enter into an agreement with The Hogan Family Trust to convey the Capistrano Toyota Parcel to The Hogan Family Trust, TCAG is unable to reach an agreement with The Hogan Family Trust in accordance with the provisions of Section 4(c) below, the Initial Payment shall be an arpount equal to Two Million Dollars ($2,000,000). 1.34 "Initial Payment Bate" is defined in Section 3.1. 1.35 "Liquidated Damages Amount" is defined in Section 5.4. 1.36 "bion. -Intended Prevailing Wage Requirement" is defined in Sectio. 9.2. 614631400924107 1.37 "Normal Closing Contingencies" is defined in Section 3.5 1.38 "Opening for Business" or "Open(ed) for Business" is defined in Section 2.1. 1.39 "Operate" or "Operation" is defined in Section 2.1. 1.40 "Operating Period" is defined in Section 2.1. 1.41 "Operator(s)" is defined in Section 10. 1.42 "Permitted Assignee" is defined in Section 10. 1.43 "Person" or "Party" is defined in Section 18. 1.44 "Property" is defined in Recital B. 1.45 "Redevelopment Project Area" means the geographical boundaries of the redevelopment plan ("Redevelopment Plan") approved and adopted by the City Council of the City on July 12, 1983 by Ordinance No. 488, as the same has been amended from time to time. 1.46 "Release" shall mean the release, as defined in Health and Safety Code §§ 25320 and 25321, of a Hazardous Material or Hazardous Materials. 1.47 "Sales and Use Tax Law" is defined in Section 1.48. 1.48 "Sales Tax Revenues" means that portion of tax revenues derived and received by the City from the imposition of the Bradley Burns Uniform Local Sales and Use Tax Law, commencing with Section 7200 of the Revenue and Taxation Code of the State of California, as amended, or its equivalent (the "Sales and Use Tax Law"), that the State Board of Equalization ("SBOE") determines are generated by the Ford Dealership and any additional Franchises on the Property, conducted from the earlier to occur of (a) the Opening for Business of the Franchise(s) on the Property, or (b) the date that TCAG opens and commences operation of its Ford Dealership on the Capistrano Ford Parcel prior to Opening for Business on the Property, until the expiration or earlier termination of the Operating Period, in accordance herewith (the "Sales Tax Revenue Accrual Period"); provided that if the Sales Tax Revenue Accrual Period commences in accordance with (b), the Semi -Annual Payments shall not be first paid unless and until the Initial_ Payment Date occurs and the accrual of such Sales Tax Revenues for purposes of computing the Semi -Annual Payments shall be for a period of not to exceed one hundred eighty (180) days. 1n addition, the Sales Tax Revenue Accrual Period shall not commence in accordance with clause (b) above unless and until the Agency has been relieved of its obligation to make payments of "Auto Tax Revenues" as described in that certain Second Amendment to Disposition and Development Agreement between Agency and The Price Company dated June 20, 1994 which was assigned to the Price Family Charitable Trust, which relief shall be requested by the Agency but'the Agency shall be under no obligation to secure such relief. Sales Tax Revenues shall be based upon the total Sales Tax. Revenues received by the City (less any State Board of Equalization adjustments that would have modified previous G 14631400924 M 7 payments to TCAG) during the applicable preceding semi-annual period (for the February 1 st payment, Sales -Tax Revenues received during the preceding months of April through September, and for the August 1st payment, Sales Tax Revenues received during the preceding months of October through March) as confin-ned.by the report furnished by the City's sales tax consultant as provided by the State Board of Equalization, and the sales tax returns as filed by TCAG, and any verifiable reporting as it relates -to sales and leasing activities generated by TCAG and use taxes assessed and collected thereon by a third party leasing or financing company. TCAG shall provide documentation supporting thecalculation of Sales Tax Revenues to the Agency, In the event that the first payment measured by Sales Tax Revenues hereunder (i.e., other than the Initial Payment) or the last such payment due hereunder covers less than a full semiannual period, the amount of Sales Tax Revenues for said partial semi-annual period shall be calculated by multiplying the total Sales Revenues for the entire semi-annual period (assufffinj that TCAG was entitled to receive Covenant Consideration for the semi-annual period) by a fraction in which the numerator equals the number of days in such semi-annual period inpluded within the period of Agency's payment obligation and in which the denominator equals thAotal number of days in the semi-annual period. 1.49 "Sales Tax Revenue Accrual Period" is defined in Section 1.48. 1.50 "SBOE" is defined in Section 1.48. 1.51 "Semi -Annual Payments" is defined in Section 3.1. 1.52 "Sign Easement" is defined in Section 11. 1.53 "Sign Easement Parcel" is defined in Section I l and shown on the Site Map. 1.54 "Site Map" means that map attached hereto as Exhibit B and incorporated herein by reference showing the Property, the Capistrano Toyota Parcel, and the Sign Easement Parcel. BDI to TCAG. 1.55 "TCAG" means TCAG, Inc., a California corporation. 1.56 "TCAG/BDI Transaction" means the conveyance of the Property from 1.57 "The Hagan Family Trust" means the owner of Capistrano Toyota. 1.55 "Tuttle -Click's Capistrano Ford" means the name under which TCAG will operate the lord Dealership on the Property. 2. Operating Covenant and Restrictive Covenants. 2.1 Operating Covenant. Subject to the Conditions Precedent described in Section 4 hereof, TCAG hereby covenants and agrees that it shall open, or cause to be opened, for business to the general public ("Opening for Business" or "Open(ed) for Business") and continuously operate, or cause to be operated, an automobile dealership during normal business 61463N400924107 hours under the name "Tuttle -Click's Capistrano Ford" on the Property ,primarily for the sale and lease of all makes and models of Ford Motor Company vehicles, and secondarily, the sale and lease of used vehicles, and other ancillary automotive uses commonly associated with such uses from time to time, including without limitation the servicing and repair of vehicles, and vehicle parts sales ("Operate" or "Operation") for a period of twenty-seven (27) years from the date of Opening for Business (the "Operating Period"). Such continuous Operation shall be subject to the Force Majeure provisions of Section 17 hereof, and temporary interruptions for casualty losses, repairs, and the like. In addition, notwithstanding the provisions of the preceding sentence, TCAG shall have the right to Operate under a different name than "Tuttle -Click's Capistrano Ford" so long as any other name under which TCAG Operates includes the name "Capistrano." 2.2 Restrictive Covenants. During the Operating Period, TCAG shall do or cause to be done the following: (1) designate the Property as the point of sale for sales tax purposes in all retail sales and lease contracts for vehicles whose sales and leases'or�gmate from the Property; and (2) at no cost to Agency, keep and maintain the Property and the Automobile Dealership Improvements thereon and all facilities appurtenant thereto, consistent with first class automobile dealerships, in good order and repair and safe condition, and the whole of the Property, the Automobile Dealership Improvements, and landscaping in a clean, sanitary, and orderly condition free from debris, graffiti and waste materials. In addition, during such Operating Period and subject to TCAG's right to contest same, TCAG shall observe and comply with all Governmental Requirements, 2.3 Indemnities/Release. TCAG agrees to indemnify, protect; defend, reimburse and hold the Agency and City and their elected and appointed officials, employees, representatives, agents, consultants, attorneys, volunteers, successors and assigns, each of them jointly and severally (collectively, the "Indemnitees"), harmless from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs or expenses, proceedings, lawsuits, orders, judgments, fines, obligations, encumbrances, liens, expenses (including without limitation all costs and expenses reasonably incurred to investigate and defend claims, whether or not any such claire is ultimately defeated, and costs and expenses reasonably incurred for consultants, court fees, administrative fees, expert witness fees, and attorneys' fees and remedial and response costs) of whatever kind or nature, contingent or otherwise, matured or not matured, foreseeable or unforeseeable, at law or in equity, any of which are suffered or incurred by said Indemnitees, or assessed, levied or asserted by any person or entity (whether governmental or private) against said Indemnitees, relating to, resulting from, arising out of or based upon, in whole or in part, the following: (i) any act, omission or negligence of TCAG or any lessee of TCAG, or their respective contractors, licensees, invitees, agents, sublessees, servants , or employees, wheresoever on or adjacent to the Property that the same may occur, (ii) any use of the Property, or any accident, injury, death or damage to any person or property occurring in, on or about the Property or any part thereof, or from the conduct of TCAG's business or from any activity, work or thing done, permitted or suffered by TCAG or its sublessees, contractors, employees, or invitees, in, on, or about -the Property, (iii) TCAG's failure to comply with Governmental Requirements, (iv) the presence, release, use, generation, discharge, storage, disposal, removal or remediation: of any Hazardous Materials on, id, under, or emanating from the Property, '(v) the violation, or alleged violation, or compliance with the requirements'of any Environmental Law, 61463\4009241v 17 or any other statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials to, from, on, in, under, about or around the Property, or (vi) any Environmental Cleanup Liability or Environmental Compliance Costs related to the Property. This indemnity shall include, without limitation, any liabilities arising from or out of or relating in any manner to any Environmental Claim or any nuisance, contamination, leak, spill; release or other adverse effect on the environment caused by or resulting from any Hazardous .Material, or toxic substances or waste existing on, under, or emanating from the Property. Notwithstanding the foregoing, the indemnities described in (i) and (ii) above shall not apply to the extent of the, sole negligence or willful misconduct of the Indemnitees. ` TCAG, on behalf of itself and its successors, Affiliates, parti'ers,'and assigns hereby fully and entirely releases and discharges the Agency and City (including their elected and appointed officials, employees, representatives, agents, consultants, attorneys, volunteers, successors and assigns)., and of each of them alone, of and from any and allAabilities, suits, actions, claims, .demands;, penalties; damages. (including, without limitation, penalties, fines and monetary sanctions), losses, costs or expenses, proceedings, lawsuits, orders, judgments, fines, obligations, encumbrances, or liens, of whatever kind or nature, matured or not matured; anticipated or'unanticipated, known or unknown, at law or in equity, on account of the presence of any Hazardous Materials (i) in, on, under, or emanating from the Property, or (ii) in connection with, or in any way related to, the Property, or (iii) for or on account of the physical condition of the Property. This release constitutes an explicit waiver by TCAG of each and all of the provisions of California Civil Code Section 1542, which states as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." TCAG hereby declares and represents that it is effecting and executing this release of the Agency after having read all of this release and with full understanding of its meaning and effect and after having received 'full legal advice as to its rights from an attorney. 2.4 Covenants. The foregoing sub -Sections 2.1, 2.2 and 2.3 are collectively hereinafter referred to as the "Covenants." 2.5 Additional Franchise(s). Subject to compliance with applicable laws related thereto, 'including, without limitation, the provisions of Health and Safety Code Section: 33426.7, TCAG, or any Affiliate of TCAG, shall have the right to Operate additional Franchise(s) on the Property without the prior' written approval of the Agency; provided however, TCAG shall notify the Executive Director of the Agency of TCAG's intent to open an additional Franchise on the Property. 3. Covenant Consideration. 3.1 Payment of Consideration. In consideration for TCAG's agreement to be bound by the Covenants, Agency agrees to pay to TCAG (i) the all cash sum in the amount of 61463i4009241vi7 8 the Initial Payment within five (5) business days from the date of Opening for Business (the "Initial Payment Date") plus (ii) an amount equal to (x) one hundred percent (100%) of the Sales Tax Revenues each year (i.e., from April 1st through March 31st) during the Sales Tax Revenue Accrual Period in excess of One Hundred Fifty Thousand Dollars ($150,000) (but not to exceed Three Hundred Thousand Dollars ($300,000)) of Sales Tax Revenues in such year and (y) fifty percent (50%) of all Sales Tax Revenues in excess of Three Hundred Thousand Dollars ($300,000) in Sales Tax Revenues in each.such year generated during the Sales Tax Revenue Accrual Period, which payments shall be made until the earlier of (a) receipt by TCAG of an amount equal to Two Million Dollars ($2,000,000); or (b) expiration of or earlier termination of the Sales Tax Revenue Accrual. Period (payments described in clause (ii) are referred to herein as the "Segni-Annual Payments," and together with the Initial Payment are collectively'referred to herein as the "Covenant Consideration"). TCAG shall notify the Agency heh the Initial Payment is due; provided, however, in no event shall the Initial Payment or the first Semi -Annual Payment be due earlier then five (5) business days following the Agency's receipt of notice from TCAG that the Initial Payment Date has occurred. TCAG , and Agency acknowledge and agree that the definition of Sales Tax Revenues as used herein is used strictly as a measure of the amount of payment due hereunder and as a means of computing the Semi - Annual Payments. Semi -Annual Payments shall be made semi annually, on or before February 1st and August 1st of each year during the Sales Tax Revenue Accrual Period, consistent with the procedure described in the definition of "Sales Tax Revenues" above. The Agency, prior to making each such Semi -Annual Payment, shall work with the City to determine the total Sales Tax Revenues actually paid to the City during the prior semi-annual period. Based on the data provided by the SBOE to City, and based upon such determination and the formula described above, the Agency shall determine the amount of the applicable Semi -Annual Payment. 3.2 Cap on Consideration. Notwithstanding anything else herein contained, in no event shall the Semi -Annual Payments paid to TCAG pursuant to Section 3.1 exceed the sum of Two Million. Dollars ($2,000,000). 3.3 No Acceleration. It is acknowledged by the parties that any payments by the Agency provided for herein may only be paid in those periods in which TCAG is in compliance with the Covenants provided for herein. Therefore, the failure of the Agency to make any payments as and when provided for in Section 3.1 shall not cause the acceleration of any future payments by the Agency to TCAG beyond the date of TCAG's uncured default. 3.4 Character of Consideration. All payments made by the Agency to TCAG pursuant to this Section: 3 are intended by TCAG to be, and shall be characterized by TCAG as, contributions to capital pursuant to Section 118 of the,lnternal Revenue code of 1986, as amended, and' the Treasury Regulations promulgated thereunder. Notwithstanding the foregoing, neither ,Agency nor City shall' be liable for and TCAG ,shall indemnify, defend and hold harmless Agency and City., their elected and appointed- officials, employees; agents, representatives, consultants, attorneys, volunteers and assigns from and against any loss, cost, expense, claim, action, cause of action, liability, penalty, fine, damages or fees (including accountant, consultant and attorneys' fees) suffered by TCAG and/or Agency and/or City due to such characterization of such payments. 61463140.09241vll 9 3.5 Initial Payment to Escrow. Within five (5) business days after TCAG notifies the Agency in writing that the Conditions Precedent described in subsections (a), (c), (d), (e) and (f of Section 4 have been satisfied or waived and TCAG's deposits under the agreement to acquire the Property have become non-refundable and except for "Normal Closing Contingencies" (as hereinafter defined), , all conditions, precedent to the closing of the Property have been satisfied, the Agency shall deposit cash in the amount of the Initial Payment into a joint escrow account for the benefit of Agency and TCAG ("Escrow Account") with Escrow Holder, which funds shall remain in the Escrow Account until the earlier to occur of (a) the date the Initial Payment is required to be made to TCAG in accordance with Section 3.1 above, at which time such funds shall be disbursed by Escrow Halder to TCAG, or (b) the date that this Agreement is terminated as provided herein at which time such funds shall be disbursed by Escrow Holder to Agency. Except for accrued interest (which shall be and 0m&n the sole property of the Agency and shall be disbursed by Escrow Holder to the Agency from time to time as requested by the Agency without the requirement of the joint signature of. TCAG) and except following termination hereunder, no disbursements or withdrawals may be`ade from the Escrow Account without the joint signature of an authorized representative of the Agency and an authorized representative of TCAG. Agency and TCAG shall each cooperate to open the Escrow Account and deliver to Escrow Agent a commercially reasonable agreement and/or instructions that Escrow Agent may reasonably request in order to hold and manage the Initial Payment funds. As used in this Agreement, the term "Normal Closing Contingencies" shall mean the contingencies that, following the end of the due diligence period under the agreement to acquire the Property, must, in the ordinary course of business, be satisfied prior to the closing of the transaction specifically including only that there are no adverse changes in title (following TCAG's approval of title during the due diligence period), there are no Releases, no material damage or destruction having occurred to buildings, furniture, fixtures or equipment on the Property, all representations and warranties of the parties continue to be true and correct, no Force Majeure event has occurred, and a Grant Deed, a Non -Foreign (FIRPTA) Affidavit and a California Franchise Tax Board Form 593-C have been signed and placed in escrow by the seller, certified copies of any corporate resolutions authorizing the transaction have been placed in escrow, any assignment and assumption agreements required by the transaction have been. executed by the seller and TCAG and placed in escrow, escrow closing statements have been executed by the seller and TCAG, all closing costs have been placed in escrow, the purchase price has been placed into escrow by TCAG and the title company is prepared to issue appropriate forms of title insurance. 3.6 Delayed Closing with The Mogan Family 'T'rust. If, having reached an agreement with The Hogan Family Trust, TCAG Opens for Business on the Property but has not yet conveyed the Capistrano Toyota Parcel to The Hogan Family Trust, TCAG shall notify the Agency of that fact and in that case Two Million Dollars ($2,000,000) of the Initial Payment shall be paid to TCAG in accordance with the provisions of Section 3:1 above; and the remaining One Million Dollars ($1,000,000) of the Initial Payment shall be paid by the Escrow Holder to TCAG concurrently with the close of escrow of the conveyance by TCAG of the Capistrano Toyota Parcel to The Hogan Family Trust. If the TCAG/The Hogan Family Trust transaction fails to close within twelve (12) months of the date TCAG Opens for Business on the Property or is earlier terminated by the parties thereto, the remaining. One Million Dollars ($1,000,000) of the Initial Payment shall be returned by the Escrow Holder to the Agency. 61463140(39241 X17 10 4. Conditions Precedent. The following are the Conditions Precedent to the parties' obligations hereunder: (a) TCAG (directly or through an Affiliate) shall have acquired the Franchise rights of Capistrano Ford, with the approval of Ford Motor Company; (b) TCAG (directly or through an Affiliate) shall have acquired the Property (or the balance of the Property if the Capistrano Toyota Parcel is conveyed to The Hogan Family Trust concurrently with the closing of the TCAG/BDI Transaction); (c) TCAG shall have notified the Agency that TCAG has either (i) reached an agreement with The Hogan Family Trust whereby the Capistrano T0-:yota Parcel will be conveyed to The Hogan Family Trust, in which case the provisions of either Section 36.2 or 36.3 shall apply, or (ii) after exercising commercially reasonable good faith efforts to reach an. agreement with The Hogan Family Trust (as described in Section 36.1 below),".TCAG has been unable to reach an agreement with The Hogan Family Trust; (d) TCAG shall be satisfied that all matters requiring the City entitlements, permits or approvals including, but not limited to, credits for building square footage and other development rights from the Capistrano Toyota Parcel; the number, width and location of driveways; the design, location and construction of pylon and monument signs for the Ford Dealership; the relocation of cell towers that are currently located on the Capistrano Toyota Parcel; and development fee credits, can, in TCAG's sole and absolute discretion, be obtained in a timely manner so that TCAG may, without delay, proceed with its full and complete Ford Dealership Operation of Tuttle Click's Capistrano Ford on the Property; (e) Each party shall have reviewed and approved the financial condition of the other party; and (f) A lot line adjustment shall have been approved by the City whereby the Capistrano Toyota Parcel constitutes a separate legal lot. The foregoing Conditions Precedent (other than the Condition Precedent described in subsection (d) above) are for the mutual benefit of TCAG and the Agency, and each of TCAG and the Agency shall have the unilateral right but not the obligation, in such party's sole and absolute discretion, to waive any one or more of such Conditions Precedent as it applies to such party's obligations hereunder. The foregoing Condition Precedent described in subsection (d) above is for TCAG's benefit and TCAG shall have the unilateral right, but not the obligation, in TCAG's sole and absolute discretion, to waive such Condition Precedent. In no event shall TCAG be considered to be in breach or default of this Agreement as a result of the failure of any of the Conditions Precedent to be satisfied for any reason whatsoever. 5. Defaults and Remedies. Occurrence of any or all of the following shall constitute a default by TCAG under this Agreement: 5.1 TCAG's failure to fully and completely comply with the Covenants as and when such compliance is required. 6146314009241v17 11 5.2 The filing of a petition in bankruptcy by.or against TCAG or appointment of a receiver or trustee of any property of TCAG, or an assignment by TCAG for the benefit of creditors, or adjudication that TCAG is insolvent by a court, and a failure of TCAG to cause such petition, appointment or assignment to be removed or discharged within sixty (60) days. 5.3 The failure by TCAG to comply with any other provision of this Agreement. In the event of any default under the terms of this Agreement, the nondefaulting party shall give written notice to the defaulting party. The defaulting party shall commence and diligently thereafter pursue the curing of said default within thirty (30) days aftef receipt of notice of such default; provided, however, if such a cure cannot reasonably beeff6cted within such thirty (30) day period, such failure shall not be a default so long as the defaulting party promptly commences a cure within said thirty (30) day period ,and thereafter diligently prosecutes such cure to completion. Failure to cure, as specified above, sh'41constitute an "Event of Default" hereunder. 5.4 Liquidated Damages. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, IF THERE IS AN EVENT OF DEFAULT BY TCAG HEREUNDER AFTER THE DATE THAT THE INITIAL PAYMENT IS RELEASED TO TCAG IN ACCORDANCE WITH SECTION 3, THEN AGENCY'S SOLE AND EXCLUSIVE REMEDY FOR SUCH EVENT OF DEFAULT SHALL BE TO TERMINATE THIS AGREEMENT AND RECEIVE FROM TCAG AS LIQUIDATED DAMAGES. AN AMOUNT EQUAL TO TWO MILLION DOLLARS ($2,000,000) MINUS FIFTY PERCENT (50%) OF THE DIFFERENCE BETWEEN THE TOTAL AMOUNT OF SALES TAX REVENUES (AS DEFINED ABOVE) GENERATED AS OF THE DATE OF SUCH TERMINATION AND THE TOTAL AMOUNT OF SEMI-ANNUAL PAYMENTS RECEIVED BY TCAG AS OF THE DATE OF SUCH TERMINATION (THE "LIQUIDATED DAMAGES AMOUNT"). THE PARTIES HAVE AGREED THAT AGENCY'S ACTUAL. DAMAGES, IN THE EVENT OF SUCH AN EVENT OF DEFAULT BY TCAG, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGES AMOUNT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT AGENCY WOULD INCUR IN SUCH EVENT. BY PLACING THEIR INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. THE PARTIES ACKNOWLEDGE THAT SUCH PAYMENT OF THE DEPOSIT IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO AGENCY UNDER CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677. Initials: Agency TCAG 61463%4009241v17 12 In the Event of Default by TCAG, and without seeking judicial relief, the following shall automatically and immediately occur: (i) TCAG's right to receive Covenant Consideration during the period that the Franchise is not in compliance with the Covenants shall be suspended and the term of the payment period described in Section 2 herein shall not be extended; and (ii) subject to the provisions of Section 17 below, in the event the Franchise is closed for a continuous period of one (1) year, TCAG's right to receive payments from Agency pursuant to this Agreement shall be permanently terminated' and the terms of this Agreement shall be of no further force or effect, except for the provisions of Sections 2.3, 5, 9, 11, 14 and 22 hereof which shall survive termination as set forth herein. 6. Representations and Warranties of TCAG. TCAG hereby, repfesents and warrants as follows, each of which representations and warranties is made of of'ihe Date of Agreement: 6.1 TCAG is a California corporation, duly organized, validieisting and in good standing under the laws of the State of California, with corporate and/or partnership powers adequate for the making and performing of this Agreement and for carrying on the business now conducted or proposed to be conducted by it. TCAG has taken all corporate action required to execute, deliver and perforin this Agreement and to make all of the provisions of this Agreement the valid and enforceable obligations they purport to be and has caused this Agreement to be executed by a duly authorized partner or officer. Such corporate action is evidenced by a Resolution of the Board of Directors of TCAG which resolution shall be delivered to Agency concurrently with TCAG's delivery to Agency of an executed copy of this Agreement. 6.2 The execution and delivery of this Agreement and all related documents and the performance of its obligations hereunder by TCAG do not conflict with any provision of any law or regulation to which TCAG is subject, conflict with or result in a breach of or constitute a default under any of the terms, conditions or provisions of any agreement or instrument to which TCAG is a party or by which TCAG is bound, or any order or decree applicable to TCAG, or result in the creation or imposition of any lien on any of TCAG's assets or property which would materially and adversely affect the Agreement; and TCAG has obtained all consents, approvals, authorizations or orders of any court or governmental agency or body, if any, required for the execution, delivery, and performance by TCAG of its obligations under this Agreement. 6.3 There are no judgments, orders or decrees of any kind of record against TCAG which are unpaid or unsatisfied,- nor are there any other legal or administrative proceedings pending, threatened or reasonably anticipated which could be filed before any court or administrative agency which has or is likely to have any material adverse effect on (a) the business or assets or the condition, financial or otherwise, of TCAG, or (b) the ability of TCAG to perform its obligations under this Agreement. 6.4 TCAG has not filed any petition seeking or acquiescing in any reorganization, arrangement, composi'ti'on, readjustment, liquidation, dissolution or similar relief under any law relating to bankruptcy or insolvency, nor has any such pe'tition'been filed against TCAG. No general assignment of TCAG's property has been made for the benefit of creditors, and no receiver, master, liquidator, or trustee has been appointed for TCAG or any of its 61463\400924107 13, property. TCAG is not insolvent and the consummation of the transactions contemplated by this Agreement shall not render TCAG insolvent. TCAG has now and will have throughout the term of this Agreement, sufficient capital or net worth to meet its current obligations, including all obligations under this Agreement. 6.5 TCAG is a sophisticated investor and its decision to enter into this Agreement is based upon its own independent investigations, evaluations, and assessments. TCAG has not relied in entering into this Agreement upon any oral or written information from Agency or its employees, agents, consultants, advisors, or representatives, other than the express representations and warranties of Agency specifically set forth herein. TCAG acknowledges no employee, agent, consultant, advisor or representative of Agency has been authorizdd to make, and TCAG has not relied upon, any statements or 'representations made thereby",46thdr than those specifically contained in this Agreement. 6.6 The information provided to Agency by TCAG was, is; `and .sha11 remain true and correct and accurate and complete in all material respects throughout the term of this Agreement. 7. Representations and Warranties of Agency. Agency represents and warrants as follows, each of which representations and warranties is made as of the Date of Agreement: 7.1 The execution of this Agreement and the performance by Agency of its obligations hereunder have been duly authorized and approved. The terra of the Redevelopment Plan expires on July 12, 2028. 7.2 The execution and delivery of this Agreement and all related documents and the performance of Agency's obligations hereunder by Agency do not conflict with or result in. a breach of or constitute a default under any of the terms, conditions or provisions of any agreement or instrument to which Agency is a party or by which Agency is bound, or any order or decree applicable to Agency, or result in the creation or imposition of any lien on any of Agency's assets or property which would materially and adversely affect the Agreement; and Agency has obtained all consents, approvals, authorizations or orders of any court or governmental agency or body, if any, required for the execution, delivery, and performance by Agency of its obligations under this Agreement. 7.3 There are no judgments, orders or decrees of any kind of record against Agency which are unpaid or unsatisfied, nor are there any other legal or administrative proceedings pending, threatened or reasonably anticipated which could be filed before any court or administrative agency which bas or is likely to have any material adverse effect on (a) the business or assets or the condition, financial or otherwise, of Agency, or (b) the ability of Agency to perform its obligations under this Agreement. 7.4 Agency has . not filed any petition seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any law relating to bankruptcy or insolvency, nor has any such petition been filed against Agency. No general assignment of Agency's property has been made for the benefit of creditors, and no receiver, master, liquidator, or' trustee has been appointed for Agency or any of its 61463\400924107 17 . 14 property. Agency is not insolvent and the consummation of the transactions contemplated by this Agreement shall not render Agency insolvent. 7.5 The information provided to TCAG by Agency was, is, and shall remain true and correct and accurate and complete in all material respects throughout the term of this Agreement. 8. Disclaimer of Representations and Warranties of Agency. 8.1 There are no representations, agreements, arrangements, or circumstances, oral or written, between the parties hereto relating to the subject matter contained in this Agreement that are not fully expressed herein, and Agency has not made and doffs not make any :representation or warranty concerning any matter or thing affecting or relating to the Capistrano Ford Franchise and/or the Property. 8.2 Agency has made no representations or warranties with regard to zoning and subdivision laws, ordinances, resolutions and regulations of governmental authorities having jurisdiction over the Property, and the use and improvement of the Property. 9. Additional Covenants of TCAG. The following are referred to herein as "Additional Covenants of TCAG." 9.1 Nondiscrimination Covenants. TCAG herein covenants by and for itself, and its successors and assigns, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall the TCAG or any person claiming under or through TCAG, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. The foregoing covenants shall run with the Property. Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the immediately preceding paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing, for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph. Any deeds, leases or contracts for, the sale, lease, sublease or other transfer of any portion of the real property consisting of the Property'shall contain the following language: (a) In deeds: The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group 61463\400924107 15 of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) cif Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect w familial status, nothing in the immediately preceding paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for, senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisiMs' (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph. (b) In leases: The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased. Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the immediately preceding paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11; and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 -and Section 1360 of the `Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph. (c) In contracts: There shall be no discrimination against- or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, 6146314009241v17 16 tenure, or enjoyment of the premises which. are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish.or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the. premises herein conveyed. The foregoing covenants shall run with the land. The Agency shall be a third -party beneficiary of such provisions in each such deed, lease or contract. 9.2 Compliance with Governmental Requirements. Subject to TCAG's right to contest same, TCAG shall, at all times, comply with all applicable laws; -ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the Slate 6f California, the County of Orange, the Agency or any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, TCAG, or the Property, including all applicable federal,= sta c and local occupation, safety and health laws, rules, regulations and standards, applicable state and labor standards, applicable prevailing wage requirements, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City of San Juan Capistrano and its Municipal Code, and all applicable disabled and handicapped access requirements, including, without the limitation, the Americans With Disabilities Act, 42 U.S.C. §12101 et seq., Government. Code §4450 et seq., and the Unruh Civil Rights Act, Civil Code §51 et seq. ("Governmental Requirements"). Nothing in this Agreement is intended by the parties to in any way require, or be construed to require, TCAG to pay prevailing wages with respect to any work of construction or improvement within the Property (a "Non -Intended Prevailing Wage Requirement"). But for the understanding of the parties as reflected in the immediately preceding sentence, the parties would not have entered into this Agreement based upon the terms and conditions set forth herein. TCAG and Agency have made every effort in reaching this Agreement to ensure that its terms and conditions will not result in a Non -Intended Prevailing Wage Requirement. These efforts have been conducted in the absence of any existing judicial interpretation of the recent amendments to the California prevailing wage law. If, despite such efforts, any provision of this Agreement shall be determined by any court of competent jurisdiction to result in a Non -Intended Prevailing Wage Requirement, such determination shall not invalidate or render unenforceable any provision hereof; provided, however, that the parties hereby agree that, in such event, the parties, each acting in their sole and absolute discretion, shall attempt to reform this Agreement such that each provision of this Agreement that results in the Non -Intended Prevailing Wage Requirement may be removed from this Agreement as though such provisions were never a part of the Agreement, and, in lieu of such provision(s), replacement provisions including, without limitation, the provisions of Section 2 and this Section. 9.2, may be included that are legal, valid and enforceable but without resulting in the Non - Intended Prevailing Wage Requirement. 9.3 Participation in Business Improvement District. Subject to commercially reasonable standards and conditions, TCAG agrees to participate in, and actively support, a business improvement district or similar type association of automobile dealers the purpose of which is to promote sales of automobiles in San Juan Capistrano. 61463\4009241v17 17 10. Assignment and Assumption. Subject to the provisions of Sections 36.2 and 36.3 below, the terms, covenants, and obligations of TCAG pursuant to this Agreement shall rule with the Property and be binding upon TCAG's lessees, successors and assigns to the Property or any portion thereof It is understood that it is possible that the identity of the fee owner of the Property may be different from TCAG and different from the operator of the Franchise(s) (the "Operator(s)"). Wherever the term TCAG is used in this Agreement, such term shall be deemed to refer to TCAG and/or any other owner of all or a portion of the Property and/or the Operators and any authorized successor or assign of same, as provided herein. Except as to a transfer described in the last paragraph of this Section 10, notwithstanding any transfer by TCAG of the Property or any portion thereof or any rights therein or any assignment by TCAG of any obligations under this Agreement to an Affiliate or any other person or entity, TCAG shall remain fully liable. for all obligations and requirements set forth in this Agreenf t! During the Operating Period, TCAG shall include reference to this Agreement in any lease or operating agreement respecting the Property, and each lessee or Operators must, in such Wase,or operating agreement, acknowledge and agree (i) that its interests, rights and obligations '4` ' bjeet to this Agreement, and (ii) that it must comply, or enable TCAG to comply, with all terms and provisions of this Agreement applicable and in force and effect following the effective date of such lease or operating agreement. The rights of TCAG under this Agreement shall not be subject to assignment by attachment, execution or proceedings under any provision of the Bankruptcy Act, and any such assignment or transfer shall be wholly void and of no force and effect unless written consent thereto is first obtained from the Agency. TCAG may transfer its interests in all or any portion of the Property and/or Franchise(s) being operated on the Property, including its rights and obligations under this Agreement, without the approval or consent from the Agency, to any entity approved by the Ford Motor Company or, if more. than one Franchise is being operated on the Property, to any entity approved by the automobile manufacturer issuing the Franchise that is the subject of TCAG's proposed transfer (a "Permitted Assignee"); provided that in any such event, TCAG shall remain liable hereunder. If TCAG elects to request the Agency's consent to an assignment by TCAG of its interests in the Property and/or a Franchise, including its rights and obligations under this Agreement, the Agency, acting in its sole and absolute discretion, shall have the right to approve TCAG's proposed assignee; provided, however, that Agency shall not withhold such consent if the proposed assignee has financial capability and operating experience at least equal to TCAG's and the proposed assignee expressly assumes the obligations of TCAG hereunder. If the Agency approves TCAG's proposed assignee, TCAG shall, following the date of such assignment, be relieved of any and all obligations including, without limitation, the Covenants set forth in Section 2 and the "Additional Covenants of TCAG" set forth in Section 9 above, accruing after the date of such assignment. 11. Sign Easement. Subject to the acquisition by TCAG of the Property, during the Operating Period TCAG hereby grants to Agency an option to acquire an easement, for consideration equal to One Dollar ($1.00), for purposes of erecting and maintaining a sign ("Sign Easement") over that certain portion of the property shown on the Site. Map as "Sign Easement Parcel;" provided, however, that such option must be exercised and the Sign Easement acquired by Agency, if at all, no later than one hundred eighty (180) days after the date that TCAG 6146314009241v17 18 provides written notice to Agency triggering said one hundred eighty (180) day period, which TCAG shall have the right, in TCAG's sole and absolute discretion, to deliver to Agency at any time following the second anniversary of the Opening for Business. If Agency fails to exercise the option and acquire the Sign Easement within such one hundred eighty (180) day period, the option shall from and after such date irrevocably lapse and terminate and be of no further force or effect. The terms of the Sign Easement document shall be subject to the reasonable approval of TCAG. 12. Notices. All notices under this Agreement shall be given in writing by personal delivery, or by certified mail or registered United States Mail, return receipt requested, postage prepaid, or by overnight delivery, or by facsimile and shall be deemed communzddted when received if given by personal delivery or upon receipt or rejection if mailed as prdvidbd above or upon the delivery date or attempted delivery date shown on the air bill or facsimile on a business day during business hours in the location where received, and if not then on the next business day, as the case may be. Mailed notices shall be addressed as set forth below; itit either party may change its address by giving written notice thereof to the other in accordance with the provisions of this article: To Agency: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attention: Agency Executive Director With a copy to: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660 Attention: Thomas P. Clark, Jr., Esq. To TCAG: Tuttle -Click Automotive Group 41 Auto Center Drive Irvine, CA 92618 Attention: Christopher B. Cotter With a copy to: Cox, Castle & Nicholson, LLP 2049 Century Park East, 28th Floor Los Angeles, CA 90067 Attention: Ronald I. Silverman, Esq. 13. Miscellaneous. This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements and understandings written and oral. This Agreement may not be modified or amended except in a writing signed by all parties hereto. 14. Brokerage Commissions. Agency and TCAG shall each indemnify, defend and hold the other party harmless from and against any and all costs, liabilities, losses, damages, claims, causes of action or proceedings which may result from the Indemitor's dealing with any 6146314009241y17 19 broker, agency or finder, Iicense or otherwise in connection with the transaction covered by this Agreement. 15. Construction. The parties agree that each party and its counsel have reviewed: and revised this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement or any amendments or exhibits to this Agreement. 16. Police Power. Nothing contained in this Agreement shall be deemed to limit, restrict, amend or modify, or to constitute a waiver or release of, any ordinances, notices, orders, rules, regulations or requirements (now or hereafter enacted or adopted and/or as amended from time to time) of the City and Agency, or their departments, commission, agenciewbandl boards and the officers of the City and Agency, including without limitation, any redevelopment or general plan or any zoning ordinances, or any of their duties, obligations, rights or remedies thereunder or pursuant thereto or the general policy powers, rights, privileges and 6§cf&tion in the furtherance of the public health, welfare and safety of the inhabitants of the City of San Juan Capistrano, provided, however, that neither shall take any action to frustrate or hinder the intent or effect of this Agreement. 17. Force Majeure. Time for performance hereunder shall be extended by any period of delay caused by circumstances beyond the reasonable control of the party claiming the delay despite the party's diligent efforts, other than financial ability, provided the party claiming the delay provides written notice to the other party within a reasonable period following commencement of any such circumstances which circumstances shall include, without limitation, fire/casualty losses; dealer protests; strikes; litigation; unusually severe weather; inability to secure necessary labor, materials, or tools; environmental remediation; including governmental review and processing of environmental remediation; delays of any contractor, subcontractor, or supplier; delay caused by the other party; and acts of God (collectively, "Farce Majeure"). 18. Interpretation. In this Agreement the neuter gender includes the feminine and masculine, and singular number includes the plural, and the words "person." and "Party" include corporation, partnership, firm, trust, or association where the context so requires. 19. Time of the Essence. Time is of the essence of this Agreement and all parties' obligations under this Agreement. 20. Authority to Execute. The person or persons executing this Agreement on behalf of TCAG warrant and represent that they have the authority to execute this Agreement on behalf of their corporation, partnership or business entity and warrant and represent that they have the authority to bind TCAG to the performance of its obligations hereunder. 21. Warranty Against Payment of Consideration for Agreement. TCAG warrants that it has not paid or given, and will not pay or give, to any third person, any money or other consideration for obtaining this Agreement, other than normal costs of conducting business and costs of professional services such as architects, engineers and attorneys. 22. release of Public Officials. No member, official, agent, employee, or attorney of the City or Agency shall be personally liable to TCAG, or any successor in interest of TCAG, 6146314009241v17 20 in the event of any default or breach by the Agency or for any amount which may become due to TCAG or its successors, or on any obligations under the terms of this Agreement. TCAG hereby waives and releases any claim it may have personally against the members, officials, agents, employees, consultants, or attorneys of the City and Agency with respect to any default or breach by them or for any amount which may become due to TCAG or its successors, or on any obligations under the terms of this Agreement. TCAG makes such release with full knowledge of Civil Code Section 1542, and hereby waives any and all rights thereunder to the extent of this release, if such Section 1542 is applicable California Civil Code Section 1542 provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." 23. Readings. The headings to the Sections of this Agreement have been inserted for convenience reference only and shall not to any extent have the effect of modifying, amending or changing the expressed terms and provisions of this Agreement. 24. Venue. 1n the event of any litigation under this Agreement, all such actions shall be instituted in the Superior Court of the County of Orange, State of California, or in an appropriate municipal court in the County of Orange, State of California. 25. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 26. Successors and Assigns. The provisions of this Agreement shall be binding upon, and inure to the benefit of, the Agency and TCAG and their successors and assigns as the case or context may require. 27. No Joint Venture. Nothing contained in this Agreement shall be construed to render the Agency in any way or for any purpose a partner or joint venturer, or in any manner associated in any relationship with TCAG, nor shall this Agreement be construed to authorize any party to act as agent for the other. 28. ''Waiver. The waiver by the Agency or TCAG of any breach by the other party of any term, covenant, or condition in this Agreement contained shall not be deemed to be a waiver of such term, covenant, or condition or any subsequent breach of the same or any other term, covenant, or condition herein contained. Any party's acceptance of any performance by the other party after the due date of such performance shall not be deemed to be a waiver by any party or any preceding breach by the other party of any term, covenant, or condition of this Agreement, regardless of such party's knowledge of such preceding breach at the time of acceptance of such performance. 29. Counterparts. This Agreement -may be executed and acknowledged in multiple counterparts, each of which shall be deemed an original, but all of which shall constitute one (1) Agreement, binding on the parties hereto. 6146314009241v17 21 30. Memorandum of Agreement. A Memorandum of this Agreement in a form mutually agreeable to the parties shall be recorded in the records of the Orange County Recorder's Office after the Property is acquired by TCAG (directly or through an Affiliate). Following the termination of the Operating Period or the earlier termination of this Agreement in accordance with the terms thereof, the parties shall cooperate in removal of the Memorandum of Agreement from the records of the Orange County Recorder's Office. 31. . Facsimile Signatures. Signatures delivered by facsimile shall be as binding as originals upon the parties so signing and delivering. 32. business Days. As used in this Agreement, the term "business days' -shall mean days other than Saturdays, Sundays and legal holidays and closures observed, -,by the City and "days" shall mean calendar days. If the time for performance of an obligation under this Agreement falls on other than a business day, the time for performance shall be extended to the next business day._�� 33. Attorneys' Fees. In the event that suit is brought for the enforcement of this Agreement or as of the result of any alleged breach hereof, the prevailing party in such suit shall be entitled to recover their reasonable attorneys' fees from the losing party, and any judgment or decree rendered in such proceeding shall include an award thereof. Attorneys' fees under this Section shall include attorneys' fees on any appeal and, in addition, a party entitled to attorneys' fees shall be entitled to all other reasonable costs and expenses incurred in connection with such action. In addition to the foregoing award of attorneys' fees to the prevailing party, the prevailing party in any lawsuit shall be entitled to its attorneys' fees incurred in any post- judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the merger of this Agreement into any judgment on this Agreement. 34. No Third Party Beneficiary. Except for the indemnities in favor of the City set forth in Section 2.3 above, this Agreement is not intended, nor shall it be construed, to create any third party beneficiary rights and any person who is not a party hereto, unless expressly provided otherwise. 35. Captions. The captions of this Agreement are inserted for convenience and are not part of this Agreement. 36. Agreement to Convey Capistrano Parcel to The Hogan Family Trust. 36.1 Commercially Reasonable Good Faith Efforts. TCAG shall use "commercially reasonable good faith efforts" to reach agreement with The Hogan Family Trust to convey the Capistrano Toyota Parcel to The Hogan Family Trust. TCAG shall be deemed to have exercised commercially reasonable good faith efforts to reach an agreement with The Hogan Family Trust if TCAG has offered to convey the Capistrano Toyota Parcel to The Hogan Family Trust on a "pass through basis" (i.e., on substantially the same terms or better, and subject to the same rights and obligations, as those offered to TCAG pursuant to the TCAG/BDI Transaction). 36.2 Conveyance of the Capistrano Toyota Parcel to The Hogan Family Trust — Concurrent Closing. If TCAG reaches an agreement with The Hogan Family Trust 61463\4009241v17 22 whereby the Capistrano Toyota Parcel will be conveyed to The Hogan Family Trust concurrently with the closing of the TCAG/BDI Transaction, The Hogan Family Trust shall, prior to the closing of the TCAG/The Hogan Family Trust transaction, be required to deliver to the Escrow Holder (for delivery to the Agency upon closing) an indemnification agreement whereby .The Hogan Family Trust provides the Agency with the same indemnities as are set forth in Section 2.3 above relating to the. Capistrano Toyota Parcel (the "Indemnification Agreement"), in which case, as of the date a Grant Deed conveying the Capistrano Toyota Parcel to The Hogan Family Trust is recorded, TCAG shall be relieved of any and all obligations under this Agreement relating to the Capistrano Toyota Parcel. Under those circumstances the Agency shall look solely to The Hogan Family Trust with respect to the indemnities set forth in Section 2.3 above (relating to the Capistrano Toyota Parcel). In addition, in light Of'the fact The Hogan Family Trust will, under a concurrent closing, be taking title to the Coistano Toyota Parcel directly from BDI, TCAG will never have held title, directly or indirectly, to the Capistrano Toyota Parcel; therefore, TCAG shall not, at any time, be deemed to have assumed, directly or indirectly, any obligation or liability with respect to the Coveiiai s set forth in Section 2 or the "Additional Covenants of TCAG" set forth in Section 9 above, as they relate to the Capistrano Toyota Parcel. 36.3 Conveyance of the Capistrano Toyota Parcel to The Hogan Family Trust — Non -Concurrent Closing. If TCAG reaches an agreement with The Hogan Family Trust whereby the Capistrano Toyota Parcel will be conveyed to The Hogan Family Trust after the closing of the TCAG/BDI Transaction, The Hogan Family Trust shall, prior to the closing of the TCAG/The Hogan Family Trust transaction, be required to deliver to the Escrow Holder (for delivery to the Agency upon closing) an Indemnification Agreement whereby The Mogan Family Trust provides the Agency with the same indemnities as are set forth in Section 2.3 above (relating to the Capistrano Toyota Parcel), in which case TCAG shall, as of the date a Grant Deed conveying the Capistrano Toyota Parcel to The Hogan Family Trust is recorded, be relieved of any and all obligations under this Agreement relating to the Capistrano Toyota Parcel accruing after the date of the recording of the Grant Deed. 614631400924 M 7 . 23 IN WITNESS WHEREOF, the parties hereto have executed this Agreement Regarding Operating Covenant and Restrictive Covenants as of the Date of Agreement. AGENCY: SAN .YUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic By: Executive Director 0 ATTEST: Maria Morris, Agency Secretary Thomas P. Cl , Jr. Stradling Yo. ca C son & Rauth Agency Specza Counsel TCAG: TCAG, INC., a California corporation Christopher B. Cotter President 61463\4009241v17 24 IN WITNESS WHEREOF, the parties hereto have executed this Agreement Regarding Operating Covenantand Restrictive Covenants as of the Bate of Agreement, AGENCY - SAN JUAN CAPIS'J('R ANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic By= Lxecietive Director ATTEST: EST: Maria Morris, Agency Secretary APPROVED AS TO FORM., Thomas r'. Clark, Jr. Stradling Yocca Carlson. & Rauth Agency Special Coansel TCAG: TCAG, INC., a California corporation By: Christopher B. Cotter President 61461W)09241, H ?d. TABLE OF CONTENTS Page 1. Definitions..................................................................................................................................2 2. Operating Covenant and Restrictive Covenants.........................................................................6 3. Covenant Consideration.............................................................................................................8 4. Conditions Precedent...............................................................................................................11 5. Defaults and Remedies............................................................................................................11. 6. Representations and Warranties of TCAG..............................................................................13 7. Representations and Warranties of Agency ............................. 8. Disclaimer of Representations and Warranties of Agency......................................................15 9. Additional Covenants of TCAG..............................................................................................15 10. Assignment and Assumption...................................................................................................18 ............... 1.1. Sign Easement.................................................................................................... .......18 12. Notices.....................................................................................................................................19 13. Miscellaneous..........................................................................................................................19 14. Brokerage Commissions...........................................................................................................19 15. Construction.............................................................................................................................20 16. Police Power.................................................................................................................. 17. Force Majeure..........................................................................................................................20 18. Interpretation ............................................................................................................................20 19. Time of the Essence.................................................................................................................20 20. Authority to Execute........................................................................................... ..................... 20 21. Warranty Against Payment of Consideration for Agreement..................................................20 22. Release of Public Officials.......................................................................................................20 23. Headings..................................................................................................................................21 614631400924707 24. Venue............................................................. ................................................................... .......21 25. Applicable Law ........................................................................................................................21 26. Successors and Assigns............................................................................................................21 27. No Joint Venture......................................................................................................................21 28. Waiver......................................................................................................................................21. 29. Counterparts.........................................................................................................................21 30. Memorandum of Agreement....................................................................................................22 31. facsimile Signatures................................................................................................................22 32. Business Days........................................................................................................... ....22 33. Attorneys' Fees........................................................................................................................22 34. No Third Party Beneficiary....................................................................................... ..22 35. Captions...................................................................................................................................22 36. Agreement to Convey Capistrano Parcel to The Hogan family Trust....................................22 61463\4009244v17 1a'q M11 31110 Real ImpertY in the City of San Juan Capistra, County of Orange, State of Caftmla, described as (allows: PARCEL A: . THAT PORTION OF THE RANCHO BOCA-DE LA MAYA, IN THE CITY OF SAN JUAN CAPISTRANO, ON A MAP FILED IN BOOK 48, PAGE 10 OF RECORD OF SURVEYS (SHOWN ON RECORDED DOCUMENTS AS BOOK 48, PAGE 10 OF MISCELLANEOUS MAPS), IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST WESTERLY CORNER OF LAND DESCRIBED AS PARCEL 1 IN TF#E DEED TO W. ED EDWARDS AND WIFE, RECORDED IN BOOK. 972, PAGE 145, OFFICIAL RECORDS, BEING A POINT OF THE SOUTHEASTERLY RIGHT OF WAY LINE OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY AND BEING THE MOST WESTERLY CORNER PF THE 8.292 ACRE PARCEL OF SAID MAP, THENCE NORTH 320 33'0(r EAST ALONG SAID SOUTHEASTERLY RIGHT OF WAY LINE A DISTANCE OF 440.00 FEET; THENCE SOUTH 80° 18'00" EAST 470.68 FEET' TO THE NORTHWESTERLY LINE OF LAND DESCRIBED AS -PARCEL 1 IN A FINAL DECREE OF CONDEMNATION, A CERTIFIED COPY OF WHICH WAS RECORDED IN BOOK 5024, PAGE 398, OFFICIAL RECORDS, THENCE SOUTH 330 01'3W WEST 390.06 FEET ALONG SAID NORTHWESTERLY LINE TO AN ANGLE POINT THEREIN; THENCE SOUTH 280 39'10" WEST 50.00 FEET TO THE SOUTHERLY LINE OF SAID LAND OF W. ED EDWARDS; THENCE LEAVING SAID NORTHWESTERLY LINE NORTH 80" 18'00H WEST 470.36 FEET TO THE POINT OF BEGINNING. PARCEL B: PARCELS 1 AND 2, IN THE CITY OF SAN JUAN CAPISC'#%ANO, COUNTY•OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON THE MAP ATTACHED TO THAT CERTAIN LOT LINE ADJUST ENT NO. 91 -RS 48/10-105 RECORDED OCTOBER 07, 1993 AS INSTRUMENT NO. 93-0683804 OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. PARCEL Bl: AN EASEMENT" FOR SLOPE PURPOSES OVER THAT PORTION OF THE NORTHERLY 59-1/2 ACRES OF THAT PORTION OF THE PRYOR HOMESTEAD TRACT IN THE RANCHO BCCA DE LA PLAYA, WHICH WAS ALLOTTED TO ROSA A. DE PRYOR BY FINAL DECREE OF PARTITION IN CASE NO. 1210, SUPERIOR COURT OF ORANGE COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: A STRIP OF LAND 5.00 FEET IN WIDTH, THE SOUTHEASTERLY LINE BEING DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST NORTHERLY CORNER OF. PARCEL. I DESCRIBED IN DEED RECORD® APRIL 18, 1986 AS INSTRUMENT NO. 85-153852 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY; THENCE SOUTHWESTERLY TO A POINT ON THE NORTHERLY LINE OF THE SAND DESCRIBED AS PARCEL 1 IN THE, DEED TO ERVIN L. WATKINS AND OTHERS, RECORDED IUNE 03, 1960 IN BOOK 5272, PAGE 92 OF SAID OFFICIAL RECORDS, SAID POINT BEING SOUTH 52° 540" WEST FrrstAmffkan 77de Insumnce Company 61463\400924lv15 E.XMr i A-1 100.00 FEEL` FROM THE MOST NORTHERLY CORNER OF SAID WATKINS PARCEL, THENCE ALONG THE NORTHERLY LINE OF SAID WATKINS PARCEL SOUTH 520 5'40" WEST 116.00 FEET, SOUTH 530 47 30" WEST 151.08 FEETATPD SOUTH 88° 50'40" WEST 297.30 FEETTO 7HE NORTHWEST CORNER OF SAID WATKINS PARCEL, SAID POINT ALSO BEING IN THE SOUTHEASTERLY LINE OF THE RIGHT OF WAY OF THE ATCHISON, 'TOPEKA AND SANTA FE RAILWAY. PARCEL C; PARCEL 2, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 70, PAGES 6 AND 7 OF PARCEL MAPS IN THE,,., OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT ALL OIL AND MINERAL RIGHTS BELOW A DEPTH OF 500 FEET WITHOUT -THE RIGHT OF SURFACE ENTRY, AS RESERVED IN THE DEED RECORDED JUNE 27, 1969 IN BOOK 9005, PAGE 354 AND RE-RECORDED JULY 10, 1969 IN BOOK 9017, PAGE 191, OF OFFICIAL RECORDS. e� x APN: 666-121-11 (Affects Parcel C), 121-240-50 (Affects Parcel A) and 66B-121-14 (Affects Parcel e) 17fstAmertun Me Insurarxe Company 61463140097111v15 IBXHMIT A-2 M 1; LAP Q u 6 ............ zT` R LAi1',N1 f tIITiC§RDABU, lf(A)1 INGE �'C:c.iti4.iR 3L LSIVq..OP'LalN'f' I,,1 . A.il.rIw KrvMA 1fhlo) HYC.KLLn KAU FAIM I' NK #:5il IY. M. Kf�Rra 1,1f[) 1. K.MvasLnRA KAT MAE'<fl, IICA!' 1AntE%A. Lt:�r§_ Pm.rr. C:, ftr:M'.16oN1 4 i5EY olky D. <(X) Ii0l) KiVIK, r:. LNtis'i'Rs:)m 10 if L_6(omile ADvfso RS IN HIAI /PRIVAIJ RFA1_ ES1'A!'1� €)F,VI-J0'MFNT MEMORANDUM To: Cindy Russell, Chief Financial Officer / City Treasurer City of San Juan Capistrano From: James Rabe Date: October 6, 2010 Subject: Tuttle - Click's Capistrano Ford; Operating Covenant Valuation At your request, Keyser Marston Associates, Inc. (KMA) reviewed the proposed Agreement Regarding Operating Covenant and Restrictive Covenants (Agreement) by and between the San Juan Capistrano Community Redevelopment Agency (Agency) and TCAG, Inc. (Developer). The Agreement calls for the Developer to operate anew automobile dealership located at 33375 and 33235 Camino Capistrano (Property) for at least a 27 -year period. The Property is proposed to be used as a relocation site for the existing Capistrano Ford Franchise; the relocated facility will operate under the name "Tuttle — Click's Capistrano Ford (Ford). In addition, the Developer is proposing to sell approximately two acres of the Property to the adjacent Capistrano Toyota dealership to allow for an expansion of the Toyota dealership. The purposes of the KMA analysis are: 1. To estimate the value of the Developer's agreement to be bound by a 27 -year operating covenant; 2. To project the net present value (NPV) of the purchase price to be paid by the Agency to acquire the operating covenant; and 3. To project the NPV of the local sales tax revenues anticipated to be generated by the Ford dealership. 500SOUTH GRAND AVENUL.SIA] L1480 �, IOSANGELES.CALIFORNIA9oa77 PHONL21:36228095 * FAx: 213622 5204 wwWKINSE MARSTON.COM ATTACHMENT 3 To, Cindy Russell, City of San Juan Capistrano October 6, 2010 Subject: Tuttle - Click's Capistrano Ford: Operating Covenant Val uation Page 2 EXECUTIVE SUMMARY The Agreement requires the Agency to purchase the operating covenant with a $3,000,000 initial payment, plus semi-annual payments calculated based on the local sales tax generated by the Ford dealership.' KMA projects that these payments have a NPV of $4,410,000. The NPV of the local sales tax revenue to be generated by the Ford dealership Is projected to be approximately $4,718,000. The net benefit to the City and°Agency is approximately $300,000. In addition, significant opportunity exists for additional sales tax revenues if the expanded Capistrano Toyota dealership's taxable sales volumes increase by at least $4,400,000 per year, and/or the Ford dealership rem aihs in business after the 27 -year operating covenant ends, BACKGROUND STATEMENT Operating Covenants Operating covenants are used by municipal governments and private parties as a mechanism to ensure that important companies will remain open for business for a minimum specified time period. In exchange for the operating covenant in a private transaction, the business typically receives a contribution from the private property owner toward the capital costs incurred for the project. In public transactions the business typically receives consideration based on the public revenues of the project. In this case, the Agency is proposing to enter into the Agreement with the Developer to achieve the following objectives: To assist in eliminating blight in the redevelopment project area; 2. To enhance local employment; and 1 To expand the Agency's and the City of San Juan Capistrano's (City) revenue base. ' This payment will be reduced to $2 million if the Developer does not convey two acres of the Property to Capistrano Toyota, 1010005.SJG:JAR:gbd 19065.001.03£3 To: Cindy Russell, City of San Juan Capistrano October S, 2010 Subject: Tuttle - Click's Capistrano Ford: Operating Covenant Val uation Page 3 Proposed Covenant Consideration Payment Package To ensure that the Developer will operate the Ford dealership in San Juan Capistrano for at least a 27 -year period, the Agency is proposing to purchase an operating covenant. Under the proposed Agreem ent, the Agency will purchase the operating covenant in return for the following payments: A $3,000,000 initial payment; and 2. Semi-annual payments measured by the sales tax revenues received by the City from the l=ord dealership each y ear. The payments will be made by the Agency based on the following calculation methodology: No payments are triggered by the first $150,000 of local sales tax revenues. The local sales tax revenues are equal to 1% of the taxable sales generated by the Ford dealership. b. The Developer will receive an amount equal to 100% of the local sales tax revenues generated by the Ford dealership between $150,000 and $300,000 per year. C. The Developer will also receive 50% of the local sales tax revenues generated by the Ford dealership in excess of $300,000 per year. The semi-annual pay ments'to the Developer are capped at a cumulative total of $2,000,000. During the 27 -year operating covenant, the Developer is required to: Designate the Property as the Point of Sale for sales tax purposes. Maintain the Property and the Automobile Dealership Improvements in a first class condition. 3. Observe and comply with all Governmental Requirements. 4. Participate in, and actively support, a business improvement district of automobile dealers in San Juan Capistrano. Grants an option to the Agency to acquire a sign easement on the Property. 1010005.SJC:JAR:gbd 19085.001.030 To: Cindy Russell, City of San Juan Capistrano October 6, 2010 Subject: Tuttle - Click's Capistrano Ford: Operating Covenant Val uation Page 4 Projected Covenant Consideration Payment The Covenant Consideration package includes a $3,000,000 initial payment, plus annual payments tied to the Ford dealership's taxable sales volumes. The annual payments are projected in Table 1, based on the following assumptions: 1. The Year 1 gross sales are projected at $45 million. 2. The gross sales are projected to increase by 10.0% annually in Years 2 and 3; and then at an average rate of 5.0% annually through Year 17 and 3.0% annually thereafter. 3. Taxable sales are projected to equal approximately 67% of the gross sales. 4. The City will receive 1% of the taxable sales generated by the Ford dealership. As can be seen in Table 1, the NPV of the revenues to be received by the Developer is projected at $1,411,000. When the $3,000,000 in itial payment is included, the resulting total Covenant Consideration payment package is estimated to have a NPV of $4,411,000. LOCAL SALES TAX REVENUES PROJECTIONS The Agency payments to the Developer are calculated based on the sales tax revenue received by the City from the Ford dealership. The calculations are presented in Table 1, and the results can be summarized as follows: 1. The first $150,000 per year in local,taxable sales revenue is not allocated to the Developer. This threshold is projected to be achieved in each year of the 27 - year projection period. 2. An amount equal to 100% of the local taxable sales revenue between $150,000 and $300,000 is allocated to the Developer each year. This threshold is also projected to be achieved in each year of the projection period. 3. The Developer will also receive an amount equal to 50% of the local taxable sales revenue received each year in excess of $300,000. Small payments are projected to be generated under this provision i n Years 1 and 2, with significant payment obligations projected to be generated each year thereafter. 4. The $2,000,000 payment cap is projected to be reached in Year 10. 1014045.5JC:JWgbd 19085.041,030 To: Cindy Russell, City of San Juan Capistrano October 6, 2010 Subject: Tuttle - Click's Capistrano Ford: Operating Covenant Val cation Page 5 As shown in Table 1, the NPV of the local taxable sales revenues is projected to total $4,718,000. When this is reduced by the $1,411,000 in NPV payments to the Developer, the NPV of the revenue to be received by the City/Agency is projected at $3,307,000. As discussed previously, the Agreement requires the Agency to make a $3,000,000 initial payment to Developer. This net value of the revenues received by the City/Agency is approximately $307,000 greater than the NPV of the payments made to the Developer over the 27 -year operating covenant period. In addition, the City/Agency can potentially receive additional net revenue under the following circumstances: The taxable sales at the expanded Capistrano T oyota dealership increase by at least $4.4 million per year; and/or 2. The Ford dealership remains open for business after the 27 -year covenant period ends. Attachments 1010005.SJC:JAR:gbd 19085.001.030 TABLE 1 OPERATING AGREEMENT REVENUES KMA PROJECTIONS TUTTLE - CLICKS CAPISTRANO FORD SAN JUAN CAPISTRAN©, CALIFORNIA 1 The Year 1 sales are projected at $45 million. The sales are projected to increase at 101% annually in Years 2 and 3, and then at 5% through Year 17 and 3% each year therafter. z The Agreement measures the Agency assistance based on the sales tax received by the City. The methodology allocates the first $150,000 in sales tax revenues per year to the City; plus 50% of the sales tax revenues above $300,000 per year. 100% of the sales tax revenue generated after the cumulative assistance cap is reached is allocated to the City. 8 Ford receives 100% of the sales tax revenues between $150,000 and $300,000 per year; and 500/0 of the sales tax revenues above $300,000 per year. The assistance is capped at $2.0 million. Prepared by: Kayser Marston Associates, Inc. File name: TC Ford 10-1; KMA Serpi-Annual Sales Tax Spill Taxable Sates Local Sates cumulative Year Period Gross Sales 1 67% Tax @ 1% City 2 l=ord 8 Assistance _-_- 1 1 $45,000,000 $30,150,0€)0 $301,500 $150,750 $150,750 $150,750 2 1 49,500,000 33,165,000 331,650 165,825 165,825 316,575 3 1 54,450,000 36,481,500 384,815 182,408 982,4688 498,983 4 1 57,173,000 38,305,910 383,059 191,530 191,530 690,512 5 1 60,032,000 40,221,440 402,214 201,107 201,107 891,619 6 1 63,034,000 42,232,780 422,328 211,164 °'21 t,.I84 1,102,783 7 1 66,186,000 44,344,620 4433,446 221,723 221,723 1,324,606 8 1 69,495,000 46,561,650 465,617 232,808 232,808 1,557,315 9 1 72,970,000 48,889,900 488,899 244,450 244,450 1,801,764 10 1 76,619,000 51,334,730 513,347 315,111 198,236 2,000,000 11 1 60,450,000 53,901,500 539,015 539,015 0 2,000,000 12 1 84,473,000 56,596,910 865,969 565,969 0 2,000,000 13 1 88,697,000 59,426,990 594,2.70 594,270 0 2,000,000 14 1 93,132,000 62,398,440 623,984 623,964 0 2,000,000 15 1 97,789,000 65,518,630 655,186 655,186 0 2,000,000 1B 1 902,678,000 68,794,260 687,943 687,943 0 2,000,000 17 1 107,812,000 72,234,040 722,340 722,340 0 2,000,000 18 1 111,046,000 74,400,820 744,006 744,008 0 2,000,000 19 1 114,377,000 76,632,690 766,326 766,326 0 2,000,000 20 1 117,808,000 78,931,360 789,314 789,314 0 2,000,000 21 1 121,342,000 81,299,140 812,991. 812,991 0 2,000,000 22 1 124,982,000 83,737,940 837,379 837,379 0 2,000,000 23 1 128,731,000 86,2.49,770 862,498 862,498 0 2,000,000 24 1 132,593,000 88,837,310 888,373 888,373 0 2,000,000 25 1 136,571,000 91,502,570 915,026 915,026 0 2,000,000 26 1 140,668,000 94,247,560 542,476 942,476 0 2,000,000 27 1 144,888,000 97,074,960 970,750 970,750 0 2,000,000 NPV @ 8% Discount Rate Years 1 -15 $4,061,000 $2,650,000 $1,411,000 Years 1 - 27 $6,129,000 $4,718,000 $1,411,000 1 The Year 1 sales are projected at $45 million. The sales are projected to increase at 101% annually in Years 2 and 3, and then at 5% through Year 17 and 3% each year therafter. z The Agreement measures the Agency assistance based on the sales tax received by the City. The methodology allocates the first $150,000 in sales tax revenues per year to the City; plus 50% of the sales tax revenues above $300,000 per year. 100% of the sales tax revenue generated after the cumulative assistance cap is reached is allocated to the City. 8 Ford receives 100% of the sales tax revenues between $150,000 and $300,000 per year; and 500/0 of the sales tax revenues above $300,000 per year. The assistance is capped at $2.0 million. Prepared by: Kayser Marston Associates, Inc. File name: TC Ford 10-1; KMA MIS-SION STATEMENT Personal and professional ethics and integrity are the .cornerstones by which we do ,business. We view those we employ as rnernhers of a team and are committed to treating them with fairness, respect, understanding and dignity: We are further committed to customer satisfaction and expect all Team Members to regard the needs, concerns and opinions of our custorners as their highest prioni5, ATTACHMENT 4 INTRODUCTION TO AUTOMOTIVE BACKGROUND ON DEALER Although Holmes P. Tuttle was a pioneer in the automotive industry, his entrance into the business was far from glamorous. After an adventurous journey from Oklahoma to California in 1923 that included everything from train rides to hitchhiking and more than a few "bumps" along the way, he began working in the Parts Department of a ford Dealership in Los Angeles. Twenty-three years later, he opened his first dealership. By the mid -1.960s, he owned multiple dealerships and both his son, Robert (Bob) Tuttle, and grand -nephew, James (Jinn) Click, Jr., were members of his Sales Team. The two competed fiercely, propelling both of them to success. In 1977, Bob and Jim decided to harness their competitive natures and comphmeKtary personalities to create Tuttle -Click Automotive Group, Today, Tuttle -Click Automotive Group has 15 dealerships representing nine manufacturers and 13 makes in California and Arizona. ,Although Tuttle -Click Automotive Group has grown significantly over the years, we are proud to have main#wined our privately - owned family business status. We attribute the success of our organization to the experience and integrity of our dedicated Team Members, from lot attendants to owners. Included in this section are brief introductions to our top three executives James H. Click, Jr., Robert H. Tuttle, and Christopher B. Cotter. James H. Click, Jr.: Chairman of the Board/Cd-Owner Born in Paul's Valley, Oklahoma, in 1944, Jim Click. is a third -generation car dealer with a dynamic personality. He earned his Bachelor of Science Degree in Business from Oklahoma State University in 1966, where he was a Scholastic All-American football player, received the Big 8 Medallion Award, was captain of Oklahoma State University's Cowboy football team, a member of Sigma Nu Fraternity,and made the Dean's Honor Roll every semester. In 1985, Jim received the Distinguished Alumni Award and was inducted into Oklahoma State University's Hall of Fame. After graduation, Jim went to work for his great untie, Holmes Tuttle, selling Fords in Los Angeles. Within two years, he was the Top Salesperson, which led to his promotions to Sales Manager, then General Manager. In 1971, Jim moved to Tucson and purchased his first dealership, Pueblo Ford, where he doubled the dealership's sales volume. Today, Jim Click is Chairman of the Board of Tuttle - Click Automotive Group, one of the nation's largest automotive groups according to Ward's Dealer Business.. In 1978, Jim and his cousin, Bob Tuttle, purchased a controlling interest in Arizona Bank's predecessor, Union Bank of Tucson. As Chairman of the Board, Jim led Arizona Bank to become the largest independent bank in the State of Arizona. In December 1998, Compass Bank purchased Arizona Bank, and Jim serves on its Board of Directors. Just to name of few of Jim's prestigious awards and recognitions: Tucson Metropolitan Chamber of Commerce - Man of the Year, President's Award presented by President Clinton for the Presidents Committee on Employment of People with Disabilities; Arizona Business - Hall of Fame Laureate. Robert H. Tuttle: Vice President/Co-Owner s. F age of 2 x After earning his Bachelor's Degree from Stanford University in 1965 and Master's of Business Administration from the University of Southern California in 1968, Bob Tuttle went to work with his dad, automotive industry pioneer, Holmes Tuttle, selling Fords in Los Angeles. In 1977, Bois joined forces with his cousin, Jim Click, Jr., and created Tuttle -Click Automotive Group, which is now one of the largest automotive dealer groups in the nation according to Ward's Dealer Business Magazine. After almost 20 years in the automotive industry, he accepted a position in the White House as Special Assistant to the President in 1982, then as Director of Presidential Personnel from 19135-1989. In 1989, when President Reagan's term ended, Bob returned to Los Angeles and resumed his Co -Managing Director position with Tuttle -Click Automotive Group. In 2005, Bob was appointed as United States Ambassador to the Court of St. James' by President George W. Bush. Prior to his Ambassadorship, Bob served on the board of directors of the Los Angeles Motor Car Dealers Association for three years and on the board of directors of the,Orange County Automobile Dealers Association for eight years, serving terms as Treasurer and. Vide President and two terms as President. For three years, Bob served as President of the Irvine Auto Center Association, and for two consecutive years, he chaired the Orange County Auto Show. In addition, Bob has sat on the boards of directors of numerous civic and cherifbble institutions, including, by Presidential Appointment, on the Woodrow Wilson International Center for Scholars; the USC Annenberg School for Communication; the Los Angeles Museum of Contemporary Art, where he served as Chairman from 2001 to 2004; and on the board of fellows of the Claremont University Center and Graduate School. Among the many prestigious awards earned by Bob Tuttle and the Orange County Tuttle -Click dealerships are: Orange County TIME Magazine Quality Dealer Award; United Way's Campaign Excellence Award for Most Improved Employee Program; and the Northwood University Automobile Dealer Education Award. Christopher B. Cotter: President/Authorized Representative Christopher B. Cotter, President of Tuttle -Click Automotive Group, is a Southern California native, who was born in San Diego, California, and currently resides in South Orange .County. After earning his Bachelor Degree in Business Administration in 1971, he spent seven years as a certified public accountant with KPMG, fie was invited to join the '['utile -Click Team in 1977 as the Business Manager of the Los Angeles Operation, which included three dealerships and a leasing and finance company. In 1990, Chris was promoted to Chief financial Officer, where he continued to expand Tuttle -Click Automotive Group's diversified business foundation. 'Through the years, Chris has implemented a variety of cutting edge programs to reduce expenses and increase profitability for the dealerships, as well as create additional non -dealership income sources for the entire organization. Some of these programs include self insurance, a warranty company, a finance company and various other business efficiencies of scale. In 2006, Chris was promoted to President of Tuttle -Click Automotive Group, and he continues to seek new ways to set Tuttle -Click Automotive Group apart from other automotive groups and other businesses, in general. Decisiveness and objectivity make Chris a great Businessman, while integrity, honesty and genuine humility make him a well respected leader. Chris' financial ingenuity has not been used exclusively for the benefit of Tuttle -Click Automotive Group. Through the years, he has spent a significant amount of time creating processes to help local schools and churches maximize the use of their available funds and create budgets to allow them to set reasonable, yet ambitious, goals. Page 30.0 Wl0IfR11 U We would also like to introduce you to our 'Teams and boast about them for a moment. Tuttle -Click Automotive Group has dealerships in Orange County, California, and Pima County, Arizona. We refer to our California dealerships as the "Tuttle -Click Team" and the Arizona dealerships as the "Jim Click Team," however, when we do not specify "Tuttle -Click" or "Jim Click," we are referring to a combination of both Teams. Although our individual 'Team Members, and our Team as a whole, have many positive attributes, most of them are difficult to present as quantifiable statistics. However, there are a few statistics we can spell out. For example, we are proud to have 375 Team Members who have been with us for over 10 years! Below is a summary of our tenured Team Members: r 254 over 10 years; 102 over 20 years; ® 12 over 30 years; o five over 40 years; and m two over 50 years. In addition to longevity, our Team Members strive to be the best in their field. ® All of our F&I Team Members, Sales Managers, and General Managers are certified by the Association of Finance and Insurance Professionals. ® Of our 240 Technicians: o S1 are Certified; 0 77 are Master Certified; and a 25 are Senior Master Certified. AWARDS AND RECOGNI`l'IONS Y Ford Motor Company President's Award o 2008 Awarded to Jinn Click Ford Lincoln Mercury o 2000 Awarded to Tuttle -Click Ford 0 2008 OC Business Journal Top Private Companies, Ranked 13 » 2007 F&I Technology Magazine's Dealer of the. Year ® 2007 Automotive Youth Education Systems Dealer of the Year ® 2002 Ford Motor Company Salute to Dealer Award ® Ranked in the top 50 of Ward's Dealer Business Magazine's Mega Dealer 100 for the last five years. • Received several Pacesetter and Dodge Challenger awards through Chrysler. O All of our Chrysler, Jeep and Dodge dealerships maintain Five Star Certification. a All of our Ford, Lincoln, and Mercury dealerships maintain Blue Oval Certification. & Orange County TIME: Magazine Quality Dealer Award ® [United Way's Campaign Excellence Award for Most Improved Employee Program ® Mr. Click received the President's Award presented by president Clinton for the Presidents Committee on Employment of People with Disabilities. Com munity and Charitable Involvement With the understanding that one company cannot Eneet the multitude of needs each community faces, it is our mission to strengthen organizations and programs that are located where our customers and employees live, work and care for their families. BOYS & GIRLS CLUB The mission of the Boys & Girls Club is to provide building -centered programs, professional staff, and a safe environment to assist youth in developing self-esteem, values, and skills. The Boys & Girls Club is facility -based, employs youth development professionals supplemented by part-time staff and volunteers, and offers daily access to a broad range of programs in five core program areas: o Character & Leadership Development o Education & Career Development * health & Life Skills a The Arts * Sports, Fitness, & Recreation IITED WAY The United Way was built on the belief that together, we can accomplish more than any individual or organization can alone, We are working to Advance the Common Good by focusing on Education, Income and Health; the building blocks of a good life, With these blocks as the foundation, we can have a healthy duality of life, strong workforce and brighter economic future. We're bringing together the hearts, hands and minds of our community to make it the best place it can be for our children and families. We invite you to be a part of it ---all you need is an open heart, a willingness to make a difference and the courage to take action. UNITED, there's nothing we can't do. SAN MiCUFL� HIGH ScdDa San Miguel High School is a private high school in 'Tucson that the Jim. Click. Automotive Team helped to establish. San Miguel is a Catholic, LaSallian learning community that empowers youth from: underserved families, nurtures a Christian spirit and integrates rigorous academics with practical experience, thereby preparing students for college and career. At San Miguel, students take a full college preparatory course load while simultaneously holding internships, working in corporations and earning nearly sixty percent of their school tuition. The Corporate Internship Program (CIP) at San Miguel gives students the opportunity to 'form new identities as citizens and professionals who have a bright future. 1, l N ICAG E's LINKAGES is the liaison between area businesses with employment openings and participating rehabilitation providers with 'qualified people ready to work. Knowing that employment makes life meaningful, LINKAGES seeks to ensure all people are given the opportunity to perform and be valued. Participating service agencies are ultimately committed to this philosophy and provide job training at all levels. They also extend continuing support to workers and the businesses that employ them, ensuring successful experiences for all involved. LINKAGES is the bridge between businesses and people with disabilities Beacon Croup is committed to providing employment related opportunities to people with disabilities. They provide training, development and access to real work For a segment of our community that traditionally bears a 70% unemployment rate. They help people go from tax -supported to tax -payers. In 2003, Beacon Foundation and Tetra Corporation merged to become the Beacon Group, which now serves over 1,600 disabled persons a year by providing a variety of employment related programs; as well as the education and socialization necessary for clients to lead meaningful, productive lives. Workshops offer local businesses assembly, packaging, collating and document shredding services Beacon Croup also employs offsite work crews that perforin grounds keeping, clerical, assembly, automobile detailing, Food service and custodial maintenance. TUCSON {'.ONEN1t1N1TY FOOD BAMS „Through education, advocacy, and the acquisition, storage, and distribut'60 bf food, we will anticipate and meet the food needs of the hungry in our community." Although we highlighted a few of the organizations we support, here is a list of some of the other great organizations we are proud to support. Alliance for Peacebuilding Friends of Sabino Canyon San Xavier District of the Tohono Od America -Israel Friendship League American Parkinsons Disease Assoc Angel Charity for Children Inc. Ara Parseghian Medical Research Foundation Arizona Aerospace Foundation Arizona Cancer Center Arizona Children's Foundation Arizona Deaf & Mind Children's Foundation Arizona Opera League Arizona Project Challenge Foundation Arizona Theatre Company Assistance League of Tucson AZ Blind and Deaf Children's Foundation AZ Cancer Center Bobbi Olson Memorial Fund Big Brothers Big Sisters Blake Foundation Blood & Marrow Program/UMC Gilder Lehrman Institute of American History Girl Scout Council Inc., Sahuaro Goldwater Institute Goodwill Industries of S. Arizona Gospel Rescue Mission Greater Green Valley Community Foundation Green Valley Assistance Services Green Valley Community Fund Handi-Dogs, Inc. Handmaker Jewish Set -vices Heritage Foundation Hurnane Society of Southern Arizona Jewish Family & Children's. Service of Southern Arizona, Inc, Joe l=oss Institute Junior Achievement of Arizona, Inc. La Frontera La Paloma Family Services Foundation Landmark College Cancer Support Foundation of Southern AZLas Vegas Youth Foundation Casa de los Ninos Life Directions Catholic Community Services Foundation Little League Baseball Inc. Chicanos Por La Causa, Inc. Muscular Dystrophy Association Children's Hospital Foundation National Multiple Sclerosis Society Community Foundation for Southern Oklahoma State University Foundation Arizona Old P bl A ,h. l C Compass Health Care, Inc. C -Path Institute Cristo Rey Network Cultural Exchange Council of Tucson, Inc. Davis Monthan 50 (DM -SO) Desert Survivors Direct CareGiver Association Disability Resource Center El Pueblo Health Center El Rio Foundation Employee Support of the Guard & Reserve Father's Day Council Tucson Fellowship of Christian Athletes Fox Tucson Theater Foundation ue o rc aea ogy enter Pat Tillman Foundation Paws Chicago Pepperdirre University Pima Community Coliege Foundation Pima Council on Aging Primavera Foundation, Inc. Roman Catholic Church Diocese of Tucson Ronald McDonald House Ronald Reagan Presidential Foundation Saint Augustine Catholic High School Sisters of the Immaculate Heart of Mary Southern Arizona AIDS Foundation Southern Arizona Center Against- SACASA Southern Arizona Community Diaper Bank Southern Arizona Rescue Association Southern Arizon ``VA Realth Care System St. Vincent de Paul Charities of Tucson Steve M. Gootter Foundation Stregnth Buid 1 iitgYmrtners Sunstone Cancer Support Center Teen Challenge International Terry Fox Foundation The First Tee Program of Tucson The harry Smith Foundation. Therapeutic Riding of Tucson TMM Family Sercives, Inc. Toys for Tots of Tucson, AZ Tucson Botanical Gardens Tucson Centers for Women and Children Tucson Children's Charity Foundation Tucson Conquistadores Tucson Medical Center Foundation Tucson Medical Center Hospice Tucson Museum of Art Tucson Pima Arts Council Tucson Pima Library Foundation Tucson Regional Economic Opportunities Tucson Urban league, Inc. U of AZ Foundation "Sonoran UCtOl)" UA Foundation - Eller College of Mgint UA Foundation/DRC UA Hispanic Alumni/UAF UApresents UMC Foundation University of Arizona/fiance Program Up With People Vangaurd Preparatory School Vets for Freedom Saint Gregory College Preparatory School VolunYMCAteerCenterofTucson Salpointe Catholic Education Foundation Salvation Army Young Life Youth on Their Own