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Home My WebLink About00399C - VIP MOTOR CARS FDH ENTERPRISES DDA LEASE DOC # 2006--0324533 Recorrl�-,rj 11' 7uented By G 35/34/2006 08:00R Fee:NC CHICA.GO i ~ COMPANY '}\ Page t of a Doc T Tax Paid O Recorded in official Racords �( County of Riverside FREE RECORDING UQUESTED BY Larry W. Ward AND WHEN RECORDED MAIL T°: Assessor, co ! rIlounty Clerk 4 I IIII Nfllll lI 1Nll I f Illl der If INNI Community Redevelopment Agency _ of the City of Palm Springs 3200 E. Tahquirz Canyon Way M 5 0 PAGE 512E CA PCO NCcoR GMF MiSc, Palm Springs, CA 92262 - Atkin: Executive Director f J F R L Wll LONG A—INC NC"G [-ytAm (Space Above This Line for Recorder's ofGcc tise only) ,/�1-911 ��/-G7p ' /� (Exempt from Rccordinp Fcuper Gov CCode§6103) ' I�J LA Y GRANT DEED FOR A VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OP PALM SPRINGS, a public body, corporate and politic ("Grantor") acting under the Community Redcvclopment Law of the State of California, hereby grants to PARTNERS LAND DEVELOPMENT, LLC, an Arkansas limited liability corporation ("Grantee"), the real property,hereinafter referred to as the "Site," in the City of Palm Springs, County of Riverside, State of California, as more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference. As conditions of tivs conveyance, Grantee covenants by and for itself and any successors- in-interest .Cox the benefit of Grantor and the City of Palm Springs, a municipal corporation, as follows: 1. Governing Documents. The Site is being conveyed: (i)pursuant to a Disposition and Development Agreement ("DDA") entered into by and between Grantor and Grantcc dated October 27, 2005; and (ii) subject to the terns of the DDA, this Deed, the CC&R.s, and the Redevelopment Plan, as those terns are defined in the DDA. The DDA and the Redevelopment Plan are public records on file in the office of the City Clerk of the City of Palm Springs, locared at-3200 E. Tahquitz Canyon Way, Palm Springs, California 92262, and arc incorporated herein by this reference. Any capitalized terms not defined herein shall have the meanings ascribed to them in the DDA. Grantee covenants and agrees for itself and its successors and assigns to develop the Site in accordance with the DDA.and thereafter to use, operate and maintain the Site in accordance with the Redevelopment Plan, this Deed, and the CC&Rs. The Site is also conveyed subject to easements and rights-of-way of record and other matters of record. In the event of any conflict between this Deed and the DDA, the provisions of the DDA shall control. 2. Uses. Grantee on an interim basis, prior to the commencement of construction of Phase I of the Project, Developer may use the Site for parking purposes. After commencement of construction of Phrase 1,pursuant to Lhe Schedule of Performance,Developer may only use the Site for automobile, truck, or other vehicle franchise purposes as part of a regional auto dealer, consistent with the terms, covenants and conditions as set forth in the DDA and the CC&Rs; provided that with Grantor's approval, which approval shall not be unreasonably withheld, Grantee may change the use of the Site. In considering whether to grant approval, Grantor may consider those factors set forth in Section 303 of the DDA. The fleet sales and vehicle leases of VIP MOTOR CARS, LTD, a California corporation, wholly owned by VIP MOTOR CARS ACQUISITION, INC., a California corporation (collectively "Dealer") shall be made from the Site to maximize sales tax return to the City of Palm Springs (but this shall not require payment of sales or use taxes on out-of-state business if not required by State law). In addition, Grantee and Dealer shall use the Site only for those uses as permitted in the DDA_ Grantec shall have no right to subdivide, separate, or partition the Site, except upon prior written consent of Grantor, which consent shall not be unreasonably withheld. Breach of the terms, covenants, conditions, and provisions of the DDA and CC&Rs shall be a material breach of this Deed. In general, Grantee, via Dealer, shall operate the business conducted by Dealer on the Site in a prudent manner, exercising customary business practices and hours of operation, to maximize sales and enhance the rcTatation and attractiveness of the business. 3. Term of Restriction. Grantee hereby covenants and agrees for itself, its successors, its assigns, and every successor-in-interest to the Site that Grantee, such successors and such assigns, shall not develop, operate,maintain cruse the Site in violadon of the terms and conditions of the DDA, this Deed and the Redevelopment Plan (unless expressly waived in writing by Grantor) for the term of the Redevelopment Plan; provided that, however, the covenants contained in Sections 7 and 8 shall remain in effect in perpetuity_ 4. Riaht of Re-Entry Prior to Completion. Grantee covenants by and for itself and any successors-in-interest that Grantor shall have the right, at its option, to reenter and take possession of the Site hereby conveyed, with all improvements thereon, and re-vest in Grantor the estate conveyed to the Grantee, if after Closing and prior to recordation of the Certificate of Completion, Grantee or successor-in-interest shall commit a material default as described in Section 705 of the DDA. Pursuant to Section 705 of the DDA, Grantor's right to re-enter, repossess, terminate, and re-vest shall be subordinate to and subject to and be limited by, and shall not defeat, render invalid, or limit(1) any mortgage, deed of trust, or other security interests permitted by the DDA, or (2) any rights or interest provided in the DDA for the protection of holders of such mortgages, deeds of trust,or other security interests. 5. Reservation of Existing Streets. Grantor excepts and reserves any existing street, proposed street, or portion of any street or proposed street lying outside the boundaries of the Site which might otherwise pass with a conveyance of the Site. 6. Transfer Restrictions. Grantee covenants that prior to the recordation of the Certificate of Completion, Grantee shall not transfer the DDA, the Site or any of its interests therein except as provided in Section 303 of the DDA. 7. Non-Discrimination. Grantee covenants that there shall be no discrimination against, or segregation of, any persons, or group of persons, on account of race, color, creed, religion, sex, marital status, age, ancestry, or national origin in the rental, sale, lease, sublease, transfer, use, occupancy, or enjoyment of the Site, or any portion thereof, nor shall Grantee, or any person claiming under or through Grantee, 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, subtenants, sublessees, or vendees of the Site or any portion thereof. The nondiscrimination and non-segregation covenants contained herein shall remain in effect in perpetuity. S. form of Nondiscrimination Clauses in Agreements. Grantee shall refrain from restricting the rental, sale, or lease oC any portion of the Site on the basis of race, color, creed, religion, sex, marital status, age, ancestry, gender or national origin of any persou. All such deeds, leases, or contracts shall contain or be subject to substantially the following nondiscrimination or non segregation clauses: (a) Deeds: In deeds the followmg language shall appear_ "The grantee herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any Pelson or group of persons on account of race, color, creed, religion, sex, marital status, age, ancestry, gender or national origin in the sale, lease, zental, sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the grantee itself, or any persons claiming under or through it, 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, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) Leases: In leases the following language shall appear: "The lessee herein covenants by and for itself, its heirs, executors, administrators, successors and assigns, and all persons claiming under or through them, 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 race, color, creed, religion, sex, marital status, age, ancestry, gender or national origin in the leasing, subleasing, renting, transferring, use, occupancy, tenure, or enjoyment of the land herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, munber. use. or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased_" (c) Co. acts: In contracts pertaining to conveyance of realty the following language shall appear: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, ancestry, gender or national origin in the sale, lease, rental, sublease, transfer, use, occupancy, tenure, or enjoyment of the land, nor shall the transferee itself, or any person claiming under or through it, 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, subtenants, sublessees, or vendees of the land." The foregoing covenants shall remain in effect in perpetuity. 9. Mortgage Protection. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Deed shall defeat or rendar invalid or in any way impair the lien, or charge of any mortgage, daad of Host or other financing or security instrument permitted by and approved by Grantor pursuant to the DDA;provided,however, that any successor of Grantee to the Site shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such successor's title was acquired by foreclosure, deed in lieu of foreclosure,trustee's sale or otherwise. The foregoing shall limit any rights of holders of any mortgage, deed of trust, or other financing or security instrument set forth in the DDA. 10_ Covenants to Run With the Land. The covenants contained in this Deed shall be construed as covenants running with the land and not as conditions which might result in forfeiture of title, and shall be binding upon Grantee, its heirs, successors and assigns to the Site, whether their interest shall be fee, casement, leasehold, beneficial or otherwise. IN WITNESS WHEREOF, Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers or agents hereunto as of the date .first above written- "GRANTOR": COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS Data: _ d t r b Z 1 ZC'CG t — David H.Ready,] xecuti rrecior ATTEST: AK*0 tW E3v JPv r ; LUe;�1fY t3t:��'9, es Thompson,Assistant Secretary !tar' -=y P.%T mEs, PPROVED A5 TO FORM; WOODRUFF, LIN&SMART By: Dougla. . Holland,Agency Counsel By its acceptance of this Deed, Grantee hereby agrees as follows: l_ Grantee expressly understands and agrees that the terms of this Deed shall be deemed to be covenants running with the land and shall apply to all of the Grantee's successors and assigns (except as specifically set forth in the Deed). 2. The provisions of Us Deed are hereby approved and accepted. "GRANTEE" PARTNERS LAND DEVELOPMENT, LLC n By: Date: ��(�� f, �G T l ✓l STATE OF CALIFORNIA ) ss. COUNTY OF RrVERSIDE ) On . / a2_06 ,pefore me, _ cr1c�� /v /,/ s ,v� Notary Public, personally appeared _ 7,5_y, / /�„ �_y personally known to uxe {ter-prated to me ez> , ' iaerteej-to be the persono whose name�S)i /are subscribed to the wit r instrument and acknowledged to me thaChZjshe/they executed the same in &zer/their authorized capacity(*, and that by i her/their signature on the instrument the person(A or the entity upon behalf of which the person(O acted, executed the instrument. Witness my hand and official seal. Notary Public � [SEAT..] ELAINE L WEDWINP COMry b 1399015 N0fofory Public,Ccll(Om1a ' vr, Rlvonlde Co�nly � My Comm,Expires Feb 8.2007 f STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ss, df 7 / F, On � �vo 5— before me, &-1-1 l/. "m4fl'-0 Y''fa/'c � � � � �ur personally known to me personally appeared l' i-t#ie has t€satisl"aetalT /T� J ackriowle g t the that (ram whose nam fs i are subscribed to the within instrument and and tinned hi to me at he/sh the executed the same in his/her t6tr utbosized capacit ie;� and that by his/he ihei signaturesi on the instrumcnt the persot or the entity upon behalf of which the persot Os acted, executed the instrument. Witness my hand and official seal. c Notary Public [SEAL] LOWS qe3 5911dx3 RW Aunoz)ANSIONH v plLmnwo-zIlqnd AmlaN + "s 4L066E1#u0792lwiva-) , STATE OF CALIFORNIA ) OMIN343M'13N1Yi3 COUNTY OF RrVERSIDE On before me, personally appeared personally s of satisCactory evidence) to be the person(s) whose names) is/aree snbscnbed toroved to thewithin on the linstrument and acknowledged to me that he/slidthey executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument -he person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness mY haLtd and official seal. Notary Public (SEAL] 9 LEGAL DESCUPTION OF SITE EXmrr"A" ALL THAT POItT10N THE%EST ONE HALF OF TEE SO?i7'LiE 2 S"C ONE QUARTER Or THE NOR-11 WEST ONE QUARTER OF SECTION 30,TMVNSM?4 SOUTH;RANGE 5 EAST,SAD+ BERNARDINO B A.SF,ALSO KNOWN AS ALLOTMENT 55 OF THE AGUA CALMN-1-13 BAND OF CA VI LAINI)TANS AS RECORDED)NTM BUREMOF MIAN AFFAMS,DESCRIBED AS FOLLOWS. BEGINNING AT THE 90=VEST CORNER O7 z SAID WEST ON-513ALF,THENCE NORTH 00° 05'-46"WEV ALONG THE WEST LINE OF SAID WEST ONS RAT F AbISTANCE OF 6SI.17 FEET TOAPOINTONTHESOUTECRLYLINEOF=CO M'fMG21WAY,NOWKNOWNASEAST PALM CANYON DRPlE,AS ACOI-VLED)3Y ThfE BO".D OF SUPERVTSOM OF Bn,MSME COUNTY,CAl.TFODMA BYM=TE 80OK 27 AT PAGE la,SAID POBNT BEING 40.00 FEET MEASURr17 AT B1GHT ANGLES FZOM THE CENTERMM OF SAID EAST PALtiS CANYON DRIVE; THENCE SOUGH 730-00'-OV EAST AM PARALLEL TO SAM CENTER U. T;A DISTANCE OF 690.45 FEED T'O TEI-=ILNE 0-5 SAID WEST ONE HAT T; THENCE SOUTH OV-63'-21"EAST ALONG SAID EAST LUT, X DSITANCE OF 477,50 FEET TO THE SOUTHEAST CORNER OF 5 MI)SVEST ONE HALF; 79ENCE SOUTH 390-52'4I"WEST ALONG THE SOUTR LINT OF SAID IVEST ONE 8ALF.A DISTANCE OF 659.6E FEET TO THE POW OF BEGINW NCY COMrAINING 2:59 ACRES SUBJECT TO ANY EASEMENT OF RECORD IP ANY. STATEMENT OF DOCUMENTARY TRANSFER TAX DUE IN ACCORDANCE WITH PROVISIONS OF SECTION 11932 OF THE REVENUE AND TAXATION CODE,1, THE UNDERSIGNED,REQUEST THAT THE DECLARATION OF DOCUMENTARY TRANSFER TAX BE MADE ON THIS FORM WHJCH WILL NOT BE MADE A PART OF THE PERMANENT RECORD AND WILL BE AFFIXED TO AND RETURNED WITH THE CONVEYING DOCUAIE,NT AFTER THE PERMANENT RECORD IS MADE. COMMUNITY REDEVELOPMENT AGENCY 02 TUZ CITY OF PALM SPRINGS (NA.ME OF GRANTOR) AND _rARTNERS LAND DEVELOPMENT _LLC (NAME OF GRANTEE) THE UNDERSIGNED DECLARES THAT TIIE DOCUMENTARY TRANSFER TAX IS S 3,036.00 AND IS COMPUTED ON THE FULL VALUE OF THE INTEREST OR PROPERTY CONVEYED, OR IS COMPUTED ON THE FULL VALUE LESS THE VALUE OF LIENS OR EMCUMBRANCES REMAINING THEREON AT T14B TIME OF SALE TIME LAND,TENEMENTS OR REALTY IS LOCATED IN _AN UNINCORPOR�TED AREA IN TIME COUNTY, OR x THE CITY OF i G(J NA OF DECLARANT OR IGNATiVp OF DECLARANTS AGENT) Doc a# 200G---032L4-533 05/04/2000 Larry W Ward County n Riverside Rsaeaaor, County Clcrk & Reccrder FIRST AMENDMENT TO LEASE AGREEMENT THIS FIRST AMENDMENT TO LEASE AGREEMENT ("Amended Lease") is entered into as of 2005 ("Effective Date") by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), and FDH ENTERPRISES, INC., an Arkansas corporation ("Lessor"). RECITALS A. On January 15, 2000, the Agency approved a lease pursuant to which the Agency agreed to lease that real property located in the City of Palm Springs, State of California, commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, and more particularly described in the legal description attached hereto and incorporated herein as Exhibit "A" ("Site") from Lessor("Lease Agreement"). E. The Lease Agreement has a twelve (12) year term. C. At this time, Developer intends to relocate one of the three automobile dealerships located on the Site off site to an adjacent newly acquired parcel. It is currently intended that this will be the BMW dealership. D. At this time, the parties desire to execuie this First Amendment to Lease Agreement to extend the term ("Amended Lease")- NOW, THEREFORE, the parties hereto agree as follows: The foregoing Recitals are incorporated herein by reference and the Lease Agreement is hereby amended as follows: I. Article 4 "Teri" is amended to read as follows: "This Amended Lease shall commence on the Effective Date of the First Amendment, and shall terminate on the date that is the earlier of (i) December 29, 2028; (ii) Lessor's or VIP's breach of any provision in the DDA, the First Amendment to the DDA, the Sublease or Amended Sublease, after the expiration of the time to cure, as set forth in the DDA, First Amendment, Sublease or Amended Sublease, respectively, or (iii) expiration of the term of the Amended Sublease; or (iv) Lessor's breach of any provision of the Lease or this Amended Lease, after the expiration of the time to cure, as set forth herein. Notwithstanding anything herein to the contrary, all of the terms, covenants, agreements, or conditions set forth in the Lease and this Amended Lease shall extend for the duration of this Amended Lease, except as applicable to the interpretation and enforcement of particular matters, which terms, covenants, and conditions shall survive as stated with reference to those matters." 2. Section 15(d) "Notices" is amended to read as follows: "Formal notices, demands, and communications between Agency and Developer shall be sufficiently given if: (i) personally delivered; (ii) delivered by overnight courier (acknowledged by receipt); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: Agency: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director A copy to: Commtnity Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Agency Counsel Lessor: FDH ENTERPRISES, INC. Jerry G. Johnson 1300 Rodney Parham Road, Suite 300 Little Rock, Arkansas 72212 All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States Postal System in the manner described in this Section." 3. It is the intent of the parties that obligations and rights of the parties which are set forth in the Lease which relate to the Disposition and Development Agreement shall now relate to the First Amendment to Disposition and Development Agreement. 4. Except as expressly provided herein, all outer terms and conditions of the Lease shall remain in full force and effect. 2 IN WITNESS WHEREOF, the parties hereto have executed this Amended Lease to be effective as of the date first written above. "AGENCY" ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body corporate and politic g�ncy Secretary assis�a, � ,FF„ /v/// . APPROVED AS TO FORM: App—,JOVED GU b%K7, >'IM-rGM717 -F Lbw � acwmv wy UE5. 1318 a David . eshire, Special Counsel "LESSOR" FDH ENTERPRISES, INC., an Arkansas corporation I3 t2 Title: �• Lc.� By: q J N-- Title: ifcIPIC 'D 3 STATE OF CALIFORNIA ) COUNTY OF �L re On � �.�-••��S before me, �i.,:]ir✓� � (.-f.y��f�i..,� personally appeared personally known to me to be the persono whose nameV)G/are subscribed to the within instrument and acknowledged me tha he/she/they executed the same i @Aer/their authorized capacity(i*, and that b hisjier/their signature' on the instrument the person(A or the entity upon behalf of which the person( acted, executed the instrument. Witness my hand and official seal. EIAINE t.WEDEKIND �- _*my Commission# 1399015 Cl/ (� Notary Public-CaliforniaRiverside county NotaryPublic [SEA Comm.Expires Feb 8,2007� ' STATE OFF A ) ss. COUNTY of PuCA:5-r-e On as- [)tk coo before me, C, ii,j c y }l y�D� , personally appeared e- (A-) personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. `\\\\\1111111IIIll//r//p t`,. NG.Y P L/4' Witness my hand and offiAkleal. C a1'1'�rr� i -No rgR�.m�- moo' .,. of Public .0 d SEAL 'hnnilill ��\u\ FIRST AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT This FIRST AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT ("First Amendment") is made and entered into as of , 2005 ("Effective Date"), by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), and VIP MOTOR CARS, LTD, a California corporation., wholly owned by VIP MOTOR CARS ACQUISITION, INC., a California corporation (collectively "Developer") and FDH ENTERPRISES, INC. an Arkansas corporation ("Owner"). All attachments and exhibits hereto are incorporated herein by reference. RECITALS A. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California(Health and Safety Code Section 33000, et. seg.). B. On January 15, 2000 the Agency approved a Disposition and Development Agreement ("Agreement") with Owner pursuant to which Owner agreed to lease certain real property designated as the "Site" to Agency, and Agency agreed to sublease the Site to Developer under the terms of the Lease and Sublease attached to the Agreement (hereinafter referred to as the "Lease" and "Sublease," respectively). As part of the Agreement, the Agency also agreed to provide financial assistance to Developer through a land write-down of the sublease payments to facilitate Developer's construction of renovations to the automobile dealership facilities on the Site. C. The Site is within the Agency's Merged Project Area No. 1 ("Project Area"), D. From the date of execution of the Agreement through December 31, 2004, Developer's operation of automobile dealerships on the Site has generated over in tax increment revenue to the Agency and over$1,725,000 in sales tax revenue to the City. E. The improvement of the Site by the Developer has been a significant benefit to the Project Area and Agency would like to induce Developer to make a longer commitment to remain within the Project Area. In addition, Developer will be relocating one of the current automobile franchises to an adjacent parcel. F_ At this time, the Agency desires to execute this First Amendment to extend the term of the Agreement, Lease and Sublease pursuant to the terns of the "Amended Lease" and "Amended Sublease," attached hereto and incorporated herein, in exchange for a covenant from Developer that Developer will continue to operate the existing automobile dealership facilities on the Site for the duration of the extended term of this First Amendment. The Amended Sublease shall allow the Agency to continue the implementation of the Redevelopment Plan for the Project Area, 1 01003/01?V33394 06 AGREEMENT The foregoing Recitals are incorporated herein by reference and the Agreement is hereby amended as follows: 1. Section 8.4 "Notices, Demands, and Communications Between The Parties" is amended to read as follows: "Formal notices, demands, and communications between Agency and Developer shall be sufficiently given if: (i) personally delivered; (ii) delivered by overnight courier (acknowledged by receipt); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: Agency: Conununity Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attu: Executive Director A copy to: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Agency Counsel Developer: VIP MOTOR CARS, LTD. Jerry G. Johnson 11300 Rodney Parham Rd_, Suite 300 Little Rock, AR 72212 All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours alter depositing in the United States Postal System in the manner described in this Section." 2_ The Lease is amended by approving the "First Amendment to Lease Agreement," attached as Exhibit B, which amends Section 4 thereof", entitled "Term" to extend the tern of the Lease. 3. The Sublease is amended and replaced with the "First Amendment to Sublease Agreement" attached as Exhibit C. 4. It is the intent of the parties that obligations and rights of the parties which are set forth in the Agreement which relate to the Lease shall relate to the Lease as amended by the First Amendment to Lease Agreement, and that obligations and rights of the parties which are set forth in the Agreement which relate to the 2 01003/0012/33394.06 Sublease shall now relate to the Sublease as amended by the First Amendment to Sublease Agreement. 5- The First Amendment to the Sublease provides a new formula Fox rent assistance for the Project. This new formula shall only apply after the relocation of one of the current automobile franchises, presumed to be BMW, off of the Site, which date shall be referred to herein as the"Trigger Date," as described herein. 6. Except as expressly provided herein, all other terms and conditions of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to be effective as of the date first written above. Agency ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body corporate and politics gency Secretary At�1 p e ' eetor APP OVED A TO FORM: AK',20VL?E� nY 'Ul �([� 4L&IMiIFT' iS >ivS) Davi leshire, Special Counsel �O �G "Developer" VIP MOTOR CARS, LTD, a California corporation, wholly owned by VIP MOTOR CARS ACQUISITION, INC., a California corporation Title: y: O Title: 3 01003/0012/33394.06 CALIFORNIA D' S ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA ) COUNTYOF River-;ide On before me, ELATNE L w x D DATE NAME,TITLE OF OFFICER-E.G.,'JANE DOE,NOTARY PUBLIC" personally appeared, Ron Oden and James Thompson —_________ personally known tome(sr-pravedto-me-o ►-thebasis-ofsatisfaGW"vidowce)to be the person(s) whose name(s) iji/are subscribed to the within instrument and acknowledged to me thatbelshek they executed the same in taisA3&/their authorized capacity(ies), and that by kWwr/their signature(s�on the instrument the person(sj,or the entity upon behalf of which the Person(s)acted, executed the instrument. WITNESS my hand and official seal. EwNE L.WEDEKIND Commission# 1399015 lky 7. Notary Public.California Riverside County SEA( Comm.Expires Feb8,2007 ) J ( NOTARY PUBLIC SIGNATU E a � OPTIONAL INFORMATION TITLE OR TYPE OF DOCUMENT DATE OF DOCUMENT NUMBER OF PAGES SIGNER(S)OTHER THAN NAMED ABOVE STATE OF CALIFORNIA ) COUNTY OF �G.�'IL.� ) 7, On C_ 'C•G before me, ersonally appeared y6 , �/. .�[!2F�i !/17 personally known to me (or proved to me on the basis o satisfactory evidence) to be the persons whose names) is arjsubscribed to the within instrument and acknowledged to me that he/sh6zt executed the same in his/he their authorized capaci is and that by his/he iheivsignature(6) on the instrument the person(& or the entity upon behalf of which the persona) acted, executed the instrument- Witness my hand and official seal. J r,o@My ELPJNE L.WEDEKIND _ _L!CL-G�,�-fJ �_ 7'.. ( G.CCam[/ -;,e eCommission# 13990I s Notary Public [SEAL,a Notary Public-Califomla Riverside County Comm.Expires Feb 8.2007 q 2I�,a-Nsq s STATE OF-G71a4FpR ) ss. COUNTY OF PO CA-sl-! ) On -�S- c-t- aDDK� before me, G I nJ n3 E''� N M PE-2.�-y , personally appeared [�ejC- l 41b >i=NNvu, T�r personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed Are same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. \� „ P u 0,i Witness my hand and of seat '_ �O AIRY qs N 'Public [SEAL] Jr/'' irC,�ii„�P``\ . "Owner" FDH Enterprises, Inc. an Arkansas corporation Title: ,,eve �� u By: (f HI l.J L%ai u, f Title: E V P j C-r© 4 01003/0012/33394 06 EXHIBIT "B" FIRST AMENDMENT TO LEASE AGREEMENT THIS FIRST AMENDMENT TO LEASE AGREEMENT ("Amended Lease") is entered into as of , 2005 ("Effective Date") by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), and FDH ENTERPRISES, INC., an Arkansas corporation ("Lessor"). RECITALS A. On January 15, 2000, the Agency approved a lease pursuant to which the Agency agreed to lease that real property located in the City of Palm Springs, State of California, commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, and more particularly described in the legal description attached hereto and incorporated herein as Exhibit "A" ("Site") from Lessor("Lease Agreement"). B. The Lease Agreement has a twelve (12) year term. C. At this time, Developer intends to relocate one of its automobile franchises located on the Site off site to an adjacent parcel. It is currently intended that this will be the BMW franchise. D. At this time, the parties desire to execute this First Amendment to Lease Agreement to extend the tern("Amended Lease")- NOW, THEREFORE, the parties hereto agree as follows: The foregoing Recitals are incorporated herein by reference and the Lease Agreement is hereby amended as follows: 1. Article 4 "Term" is amended to read as follows: "This Amended Lease shall commence on the Effective Date of the First Amendment, and shall terminate on the date that is the earlier of (i) December 29, 2028; (ii) Lessor's or VIP's breach of any provision in the DDA, the First Amendment to the DDA, the Sublease or Amended Sublease, after the expiration of the time to cure, as set forth in the DDA, First Amendment, Sublease or Amended Sublease, respectively, or (iii) expiration of the term of the Amended Sublease; or (iv) Lessor's breach of any provision of the Lease or this Amended Lease, after the expiration of the time to cure, as set forth herein. Notwithstanding anything herein to the contrary, all of the terns, covenants, agreements, or conditions set forth in the Lease and this Amended Lease shall extend for the duration of this Amended Lease, except as applicable to the interpretation and enforcement of particular matters, which terms, covenants, and conditions shall survive as stated with reference to those matters." 13-1 01003/0012/33394 06 2. Section 15(d) "Notices" is amended to read as follows: "Formal notices, demands, and communications between Agency and Developer shall be sufficiently given if: (i) personally delivered; (ii) delivered by overnight courier (acknowledged by receipt); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: Agency: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director A copy to: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Agency Counsel Lessor: FDH ENTERPRISES, INC. Jerry G. Johnson 1300 Rodney Parham Road, Suite 300 Little Rock, AR 72212 All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States Postal System in the manner described in this Section." 3. It is the intent of the parties that obligations and rights of the parties which are set forth in the Lease which relate to the Disposition and Development Agreement shall now relate to the First Amendment to Disposition and Development Agreement, 4. Except as expressly provided herein, all other terms and conditions of the Lease shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amended Lease to be effective as of the date first written above. "AGENCY" ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body corporate and politic Agency Secretary B--2 01003/0012/33394 06 Executive Director APPROVED AS TO FORM: David J. Aleshire, Special Counsel f'USSOR" FDH ENTERPRISES, INC., an Arkansas corporation By: Title: By: Title: 1B-3 01003/0012/33394.06 EXHIBIT "C" FIRST AMENDMENT TO SUBLEASE AGREEMENT RECORDING REQUESTED BY AND WHEN RECORDED, MAIL TO: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director (Space above this line For recorder's use only) This Document is recorded at die request of the R2 dcvclopment Agency of the City of Palm Springs and is therefore exempt kom the payment of recording rces pursuant ro Govcmmenr Code Section 6103 FIRST AMENDMENT TO SUBLEASE AGREEMENT THIS FIRST AMENDMENT TO LEASE AGREEMENT ("Amended Sublease") is entered into as of , 2005 by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), and VIP MOTOR CARS, LTD, a California corporation, wholly owned by VIP MOTOR CARS ACQUISITION, INC. (collectively "VIP"). RECITALS A. On January 15, 2000, the Agency and VIP entered into a sublease pursuant to which VIP agreed to sublet that real property located in the City of Palm Springs, State of California, commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, and more particularly described in the legal description attached hereto and incorporated herein as Exhibit "A" ("Site") from Agency ("Sublease Agreement"). B. The Sublease Agreement has a twelve (12) year term. C. Developer is intending to relocate one of its automobile franchises now on the Site, intended to be BMW, to an adjacent property and from the time of such relocation, BMW would not be included in the rent assistance formula. D. At this time, the parties desire to execute this First Amendment to Sublease Agreement to extend the term ("Aruended Sublease") and the armount of rent assistance provided to VIP, and also making the adjustment in the rent assistance formula required by the relocation of BMW. NOW, THEREFORE, the parties hereto agree as follows: 01003/0012/33394 06 The foregoing Recitals are incorporated herein by reference and the Sublease Agreement is hereby amended as follows: I. Trigger Date. The following revisions to the rent assistance provided in the Sublease (Agreement shall only apply after the "Trigger Date." Until the Trigger Date, all the existing provisions of the Sublease shall continue in full force and effect. Moreover, all existing provisions of the Sublease not specifically modified herein shall continue in full force and effect even after the Trigger Date until termination of the Sublease. The Trigger Date shall be January 1, 2006 provided that on or before February 15, 2007 Developer completes relocation of the BMW dealership off of the Site and has commenced reporting sales from the new location. If this deadline for relocation of BMW is not met, the formula fox rent assistance shall be suspended until the January 1 following completion of such relocation, and shall then proceed thereafter for each full calendar year as per Exhibit BI 2. Section 1.6 "Cumulative Increment Rent Assistance" is amended to read as follows: "Cumulative Increment Rent Assistance" shall mean the total Annual Increment Rent Assistance provided by Agency to VIP throughout the Sublease Term, which amount shall in no event exceed Two Million Nine Hundred Thousand Dollars ($2,900,000.00) in actual dollars paid in the aggregate (no interest or present value adjustment, as more specifically provided at Section 4.3(d) herein) during the Sublease Term and the Amended Sublease Tenn combined." 3. Section 2.3 "Sublease Tenn" is amended to read as follows_ "This Amended Sublease shall commence on the Effective Date of this Amended Sublease and shall terminate on the date that is the earlier of(i) June 30, 2018; (ii) Owner's or VIP's breach of any provision in the DDA, Amended DDA, Lease or Amended Lease, after the expiration of the time to cure, as set forth in the DDA, Amended DDA, Lease or Amended Lease, respectively, (iii) the date that the Cumulative Increment Rent Assistance equals Two Million Nine Hundred Thousand Dollars ($2,900,000.00); or (iv) VIP's material breach of any provision in the Sublease or tlus Amended Sublease, after the expiration of the time to cure, as set forth herein ("Amended Sublease Term"). Notwithstanding anything herein to the contrary, all of the terms, covenants, agreements, or conditions set forth in the Sublease and this Amended Sublease shall extend for the duration of this Amended Sublease, except as specifically stated elsewhere in this Amended Sublease, including but not limited to the duration of the Use Covenants at Section 3, and as applicable to the interpretation and enforcement of particular matters, which terms, covenants, and conditions shall survive as stated with reference to those matters." -C--2 01003/0012/33394 06 4. Section 4.2 "Determination of Increment Rent Assistance" is amended to read as follows: "Commencing with the first full sales tax reporting period following the Trigger Date and ending at the close of business on the day prior to the one (1) year amrivers t y of the Trigger Date, and for each year thereafter for the entire Amended Sublease Term, Agency shall pay to VIP the Annual Increment Rent Assistance, which shall be a rebate of a portion of the Base Rent. The "Annual Increment Rent Assistance" shall be measured by the Sales Tax Revenue as defined in this Section 4.2 below, generated at the Site over the Base Year Revenue, as defined at Section 4.2 below, for each given year of the Amended Sublease Term pursuant to the Financial Assistance Schedule in Exhibit "B1," which Annual Increment Rent Assistance shall be calculated in accordance with Exhibit "B1" for each given year of the Amended Sublease Term. (Exhibit B1 is a sample, and actual data shall be utilized to calculate Annual Increment Rent Assistance actually paid). The Annual Increment Rent Assistance shall be payable by Agency to VIP pursuant to Section 4.3 below_ The payment date shall be each February 15 following the anniversary date. At the time of commencement of payments of Annual Increment Rent Assistance pursuant to Exhibit B1, the prior schedule for Annual Increment Rent Assistance pursuant to Exhibit E shall be entirely superseded and replaced. The following terms and provisions shall apply with respect to the foregoing obligation: (a) As used herein, the term "Sales Tax Revenue" shall mean the sales and use taxes paid or payable by the State Board of Equalization to the City that are generated from sales from the Site upon which sales or use taxes are imposed pursuant to applicable California law, including but not limited to California Revenue and Taxation Code Section 6000, et. seq., and shall include the sales or use taxes imposed on the leasing of vehicles (including but not limited to the sales or use taxes paid for the capitalized cost reduction on vehicle leases) which are included in VIP's quarterly sales tax filings to the State Board of Equalization. Sales tax data for VIP's BMW dealership will be excluded after their relocation, and the Base Revenue will also be adjusted accordingly. Developer shall provide auditable sales tax information to show effect of BMW adjustment. All calculations hereunder shall be as of the first full year of sales tax reporting following the Trigger Date. (b) As used herein, the "Base Revenue" shall mean the amount set forth at the 4th column, column (d) of Exhibit "B1" (entitled "Projected Sales Tax Base (1998) Plus 3%, Grow at 4%/Year after Trigger Date") for each given year of the Amended Sublease Tenn. The Base Revenue shall be the projected sales taxes from 1998 escalated by three percent (3%). The Base Revenue shall remain constant for three (3) years following the Trigger Date. The fourth (4"') year following the Trigger -C--3 01003/0012/33394.06 Date the Base Revenue shall be escalated by ten percent (10%)_ The Base Revenue shall then be escalated by four percent (4%) each year thereafter for the remainder of the Amended Sublease Term. (c) VIP shall timely report all sales and use taxes from the Site to the State Board of Equalization in accordance with the laws, rules, and regulations applicable to such reporting. (d) If due to a change in state law, the City loses Sales Tax Revenue so that it is not receiving an amount equal to the Base Revenue (shown in column (d) of Exhibit "B I"), the Annual Increment Rent Assistance shall be reduced or eliminated to the extent necessary to assure the City receipt of such Base Revenue. (e) The parties hereto acknowledge that the State Board of Equalization makes payments to the City based on both actual and anticipated sales and use tax revenues and that the State Board of Equalization makes periodic reconciliations. The determination of Sales Tax Revenue for any annual, quarterly, or other period shall be subject to the timing and reconciliation process related to the processing by the State Board of Equalization of payment of such Sales Tax Revenue to the City. Any adjustments resulting from any interim or estimated determination of Sales Tax Revenue for any annual, quarterly or other period shall be reconciled by the parties as soon as practicable without inclusion of, or any obligation to pay, interest- (f) Sales Tax Revenue shall be determined based on actual amounts received by the City based only on the City's share of the State sales and use tax applicable to the Site (which, as of the Effective Date, is 1% of the taxable amount)_ Sales Tax Revenue shall not include amounts paid to the City by the State Board of Equalization derived from any sales tax overrides or special tax amounts received by the City, nor shall include any administrative fees or charges imposed by the State Board of Equalization that reduce the actual amounts of sale sand use taxes received by the City. (g) VIP shall keep at its office in the City of Palm Springs, full and accurate books of account, records, and other pertinent data showing all gross income earned upon the Site that is reportable for California sales and use tax purposes, including all documents required to be maintained by VIP by the State of California for sales and use tax purposes. (h) VIP shall furnish to Agency true and correct photocopies of its quarterly Cali fomia sales and use tax returns at the time each is filed with the State of California, together with a copy of all checks or wire transfers or other forms of transfer of funds sent by VIP for such payment of sales and use taxes. C-4 01003/0012/33394 06 (i) Agency shall be entitled, during the Amended Sublease Term and for two (2) years following expiration of the Amended Sublease Tenn, to inspect and examine all of VIP's books of account, records, and other pertinent data so that Agency can ascertain VIP's gross sales upon which California sales and use tax is payable." 5. Section 4.3 (d), regarding Agency payment of Annual Increment Rent Assistance, is amended to read as follows: "Notwithstanding anything in the Amended Sublease to the contrary, in no event shall Agency owe any funds to VIP, in the event that VIP generates in any year of the Amended Sublease Tenn or cumulatively, Sales Tax Revenue from the Site that is greater than the Annual Increment Rent Assistance for any given year of the Amended Sublease Term, nor shall Agency owe any additional funds or rent assistance to VIP after the Cumulative Increment Rent Assistance equals Two Million in-Q Hundred Thousand Dollars ($2,M,000.00) in actual dollars paid in the aggregate from the commencement of the original Sublease (no interest or present value adjustment). Moreover, in no event shall the Annual Increment Rent Assistance exceed one hundred twenty percent (120%) of the Base Revenue in any given year of the Amended Sublease Term ("Rent Assistance Cap"), Any sales tax exceeding such 120% shall not be used to calculate the Rent Assistance Cap and shall go to City. Nothing herein shall prevent or preclude VIP from challenging the Annual Increment Rent Assistance stated in any Agency invoice or the calculation thereof. VIP and the Agency's Executive Director shall promptly meet and confer in an attempt to resolve any differences concerning the calculation. The Agency's Executive Director shall make a final determination concerning the Annual increment Rent Assistance. The Agency's Executive Director's determination shall be given to VIP in writing. If VIP is not satisfied with the Agency's Executive Director's determination, VTP may, in writing, appeal such determination to the Agency's Board within ten (10) days of receipt of the Agency's Executive Director's written determination_" 6. Section 4.4 "Time Limit on Assistance" is amended to read as follows: "Agency's goal is to encourage the retention of VIP on the Site. Therefore, Agency's obligation to provide Financial Assistance through payment of the Annual Increment Rent Assistance shall terminate if VIP fails to_continue to onrie two (2) luxury_au� oUile franchises on the Site or otherwise cease using the Site for the sale and leasing of vehicles on or before December 29, 2028_" 7_ Section 11.5 "Notices, Demands, And Communications Between The Parties" is amended to read as follows: C-5 01003/0012/33394,06 "Formal notices, demands, and communications between Agency and Developer shall be sufficiently given if: (i) personally delivered; (ii) delivered by overnight courier (acknowledged by receipt); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: Agency: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director A copy to_ Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Agency Counsel Developer: VIP MOTOR CARS, LTD. Jerry G. Johnson 11300 Rodney Parham Rd., Suite 300 Little Rock, AR 72212 All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States Postal System in the manner described in this Section." 8. Exhibit "B" to the Sublease, the "Financial Assistance Schedule" is amended by adding the attached Exhibit "B1" as the "Amended Rental Assistance Schedule," which new schedule will apply after the Trigger Date. [SIGNATURES ON NEXT PAGE] C-6 01003/0012/33394.06 IN WITNESS WHEREOF, the parties hereto have executed this Amended Sublease to be effective as of the date first written above. "AGENCY,, ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body corporate and politic Agency Secretary Executive Director APPROVED AS TO FORM: David J. Aleshire, Special Counsel „"P11 VIP MOTOR CARS, LTD, a California corporation wholly owned by VIP MOTOR CARS ACQUISITION, INC. EY _ _ Title: By: Title: C�7 01003/0012/3 94 06 STATE OF CALIFORNIA ) ) ss. COUNTY OF RIVERSIDE ) On I before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that be/she/they executed the same in his/her/their authorized capacity(ies), and that by bis/ber/their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument_ Witness my hand and official seal. Notary Public [SEAL] STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On , before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) Ware subscribed to the within instrument and acknowledged to me that hc/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s) or the entity upon behalf of wbich the person(s) acted, executed the instrument_ Witness my hand and official seal. Notary Public [SEAL] C-9 01003/0012/33394.06 STATE OF CALIFORNIA ) ) SS COUNTY OF RIVERSIDE ) On , before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) Ware subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ics), and that by his/her/their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] C-10 01003/0012/33394.06 EXHIBIT "BI" TO THE AMENDED SUBLEASE AMENDED RENTAL ASSISTANCE SCHEDULE (a] (U) {c} (d) (e) {f} (9) (h) (i) Projected Projected Projecled Sales Projected/ Cumulative City Snare of Sales Tax Tax Base(1998) Actual Almmum Under Under Paid to City Sales Tax (Adjusted) plus 3%,grow Incremental Amount Under Basic Maximum Basic Deal Maximum Deal {Assuming Fiscal (Adjusted) Minus BIvRV 4°/Wyear after Sales Tax Cap (120%) CumuIat ve Cumulative Annual Annual 120% Year w1 3% erowth w/3% rg okah Trieeer Date Paid to VIP Paid to VIP Paid to VIP Paid to VIP "Paid" to City "Paid" to City Can Applies) 1999-00 $ 231,893 $231,893 S 222,314 2000-01 5 302,606 $302,606 $ 226,156 2001-02 $ 377,856 $377,856 $ 229,548 S 148,308 S 148,308 S 148,308 S 148,308 $ 229,549 S 229.548 2002-03 S 391,434 $391,434 $ 232,991 $ 158,443 $ 158,443 $ 306,750 S 306,751 $ 232,991 S 232,991 2003-04 S 451,756 5451,756 $ 236,486 $ 215,270 S 215,270 S 552,020 S 522,021 $ 236,486 S 236,486 2004-05 S 504,735 S504,735 $ 240,034 $ 264,701 $ 264,701 $ 786,721 $ 786,722 $ 240,034 $ 240,034 2005-06 S 519.877 S519-877 $ 247 235 8 213.27 3 2I3 279 1,000.000 $ 1.000000 SS306,599 S306,598 1 01003M012+33344.06 Trieeer Date expected to be rim 1. 2006 2006-07 S 535,473 $348,058 $1b0.703 S142.178 S170,61 $393,295 $364.859 2007-08 S 551,538 $358,499 $160.703 1$4f 624 Sly 1 28 80 1 345 363 4 5 914 376 789 2008-09 S 568,084 $369,254 $160.703 S149.173 "17� 9.00 $418,911 SH9 776 2009-10 S 585,126 $380,332 $176.773 $155,561 S186.673 1592537 1711045 29565 39 2010-11 S 602,680 $391,742 S183.944 S160,528 S192,63 $442,152 414 046 2011-12 S 620,760 $403,494 191.198 . 16565 S198.788 1918.722 21024b 455103 4219 2 2012-13 S 639,383 $415,599 $198.946 S170.951 $205.1 $2,089.674 2 0 b 8 468 4 2 434 241 2013-14 S 658,565 $428,067 S206,799 175 6 418 9211.7 S,2 2b6.092 2 519 310 4 2 1 446 863 2014-15 S 618,322 $440,909 $215.071 S182.0 2 3218.475 2 448 154 2 737 784 496 260 459 847 2015-16 S 698,671 $454,136 SZ23,674 S187.890 .225 5.46 $510 791 473.203 2016-17 S 719,631 S467,760 $232,621 1993 907 S232.688 2 829 950 3 195 940 525 724 486 943 2017-18 S 741,220 $481,793 S241,926 S2aRJI9 8240.I43 3.0 6 083 541 101 50 0077 (a) These are the cal i a years of(he agreement. Time periods are now TMy _y 1 to December 31 and navmenl made the following Fehr ary 15, The original agreement was projected to commence in 1999-00 and expire in 2008-9 with a cumulative payment to VIP of SIM. The amendment would extend the agreement to 2017-19 or a cumulative payment of SZSNI,whichever first occurs. (b) Total projected City sales tax with an assumed 3%growth in sales. Based on past experience, they are likely to outperform this over lime. (c) The sales tax number is reduced by an assumed 35% to reflect BN"Fs relocation to a different site and reducing the numbers accordingly. The 35%assumplion wiII be adjusted to actual. Developer must provide City with actual auditable data to de(ennine the actual adjustment to Base. Accordingly, (lie 2005-6 assumed date of(his adjustment may be delayed as Developer is still processing this project through City Planning, must complete design and obtain permits and then nmist construct the project. The existing provisions of the Sublease and Exhibit B (including the SIM cap) will continue until BMW has been relocated. All figures in Exhibit Bi shall be calculated for full calendar Years. It is assumed that BMLV will relocale during calendar 2006 and thev -wilt be gnen_an_addtl1onal-45 days to accomplish the relocation Ro February 151. For the calendar Year 2006 pa=pnc BD41' sales will not be deducied from the Base Revenue and One SIM Qap applies Thereafter for 2007 the Base will be reduced by & rlMW sales andAhQ _ K M up will Q12iv. v ilr e. n relocal BIt4R+ is ot complete r 1 R February'15 2007 then the assistance formula is suspended for one yearor more and does not recommence until Jan, N 1 follozAna actual relocation and shall apply for the calendar Year following ay SlLiguuwM=LlLo,nu_pEa-r�tirni _fonnul&iabuacd on l2 monihc) (d) The Base was calculated by taking 35% out of the older base ($240,034). The Base is then held constant for 3 years. The Base then is increased by 10% ($178,489)and thereafter increases by 4%per year rather(hall the prior 3%. W This is 112 the base,plus 113 of the amount over(he base to Developer, which is a 1:2 (Developer to City) ratio over the Base. (f) If sales taxes exceed VIP projections, VIP's share is now capped at 120% of the City's Base. This will prevent VIP from getting paid off excessively early as possible hi the old schedule. City retains sales taxes above the 120%cap. 2 010031001283394.06 (g) Cummlarive minimum amount paid to VIP (h) Cumulative maximum amount paid to VIP if 120%cap reached every year. (i) Annual sales taxes to City, including BMW taxes, assuming VIP reaches 120% cap annually. This is illustrative only as BMW sales are not a part of this agreement. QJ Cumulative sales taxes to City under(i) above. (k) Cumulative paid under[lie basic share. Assuming the maximum share is paid to VIP, there is about 2 years difference in the deals. 3 010031001213339,1.06 s DOC N 2000-158035 04/27/2000 08:00A Fee:NC Page 1 of 77 Recorded in Official Records RECORDING REQUESTED BY County of Riverside Gary L. Orso AND WHEN RECORDED, MAIL TO: Assessor, County Clerk & Recorder — r . n I III II II III III III III I IIII III II II II III III IP:, ltia V�^�1 r SIZE DA PCOR NOCOR SMF MISG t;ra1°f;�a�-'G'e��l'�}�-��i,��`rlf. A �RlCOPY LONG REFUND NOHG EXA A (Space above this line for recorder's use only) '1 Cz DISPOSITION AND DEVELOPMENT AGREEMENT between THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS and VIP MOTOR CARS, LTD, wholly owned by VIP MOTOR CARS ACQUISITION, INC. and FDH ENTERPRISES, INC. 627/014084-0006/3302470.6 a02/29/00 I VIP Motors/FDH Enterprises DDA AGREEMENT#399C R1091, 1-19-00 DISPOSITION AND DEVELOPMENT AGREEMENT This DISPOS - N AND DEVELOPMENT AGREEMENT (the "Agreement") is made and entered into as of. l 2000 ("Effective Date"), by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), and VIP MOTOR CARS, LTD, a California corporation, wholly owned by VIP MOTOR CARS ACQUISITION, INC., a California corporation (collectively "Developer") and FDH ENTERPRISES, INC. an Arkansas corporation ("Owner"). All attaclunents and exhibits hereto are incorporated herein by reference. RECITALS: A. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000, et SeMc .). B. Agency desires to implement the Redevelopment Plan for Palm Springs Redevelopment Project Area 9G (the "Project Area") through the disposition by sublease to Developer of a portion of the Project Area designated herein as the "Site", as that term is further defined herein. C. To facilitate redevelopment of the Site, Owner wishes to lease the site to the Agency, and Agency wishes to sublease the Site to Developer, all under the terms of the Lease and Sublease attached hereto as Exhibits "B" and "C", respectively and provide financial assistance to Developer through a land write-down of the sublease payments to facilitate Developer's construction of renovations to the automobile dealership facilities on the Site. D. The parties wish to impose obligations requiring Developer to continuously operate the dealerships on the Site in accordance with the terms of this Agreement. E. Developer is prepared to redevelop the Site in accordance with the terms and conditions set forth in this Agreement. COVENANTS: Based upon the foregoing Recitals and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by the parties, Agency, Developer and Owner hereby agree as follows: ARTICLE 1 PURPOSE OF THE AGREEMENT This Agreement and the Exhibits attached hereto are intended to effectuate the Redevelopment Plan for the Redevelopment Project Area by providing for the development of the Project, as defined below, on the Site. Developer has agreed to participate in the redevelopment of the Site by entering into this Agreement with Agency. The development of the Site pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the 629/011084-0006/3302470.6 a02/29/00 II II III II II I I I I III I IIIII I III 2%0-198035 0 27,,20p£ 08 OOA I best interests of the City and the welfare of its residents, and are in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements under which the Project, as defined below, has been undertaken and is being assisted. This Agreement is entered into by the Agency pursuant to its authority under the Community Redevelopment Law of the State of California, Health and Safety Code Sections 33000 et seq. (all statutory references herein are to the Health and Safety Code unless otherwise provided); which authorizes the Agency to make agreements with owners, purchasers and lessees of property in the Redevelopment Project Area providing for the development of property in conformity with the Redevelopment Plan, and providing that the Agency retain controls and establish restrictions or covenants running with the land so that the Site will be developed, operated, and used in conformity with this Agreement and the Redevelopment Plan (see Sections 33380, 33381, 33437-33439 and 33339). The Project shall mean and encompass Developer's expansion and construction of renovations to the improvements on the Site wherein the Existing Dealerships exist, and the operation thereon of the New Dealerships. Construction of improvements on the Site shall include remodelling, and upgrading the Existing Dealership facilities at the Site, including painting, tiling, plumbing, flooring, glazing, blacktopping, updating the facade, installing lighting and security poles, expanding, remodelling and furnishing the showroom, customer waiting, and convenience areas and offices, constructing a boutique and parts counter, constructing a covered parking area for demonstration cars, installing computer equipment and computer links, signage, phone lines, shop equipment, parts storage, and office equipment. In the event of any inconsistency between the narrative description of the Project in this Agreement z�M1 and the Governmental Approvals, the Governmental Approvals shall govern. c, z.s The Agency shall provide financial assistance for the redevelopment of the New Dealerships by leasing the Site from Owner under the terms of the Lease from Owner and .r subleasing it to the Developer under the terms of the Sublease. The Lease and Sublease are entered into by the Agency for the purpose of providing assistance to Developer through a land write-down of the rent due by Developer to Agency under the Sublease, which write-down shall be based upon and limited to the amount of tax increment (amount of sales tax over a base amount, as shown on Exhibit "B") generated by the New Dealerships. ARTICLE 2 DEFINITIONS The following terms as used in this Agreement shall have the meanings given unless expressly provided to the contrary: 2.1 "ADA" shall mean the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et 2.2 "Agency" shall mean the Community Redevelopment Agency of the City of Palm Springs, a public body, corporate and politic, having its offices at 3200 E. Tahquitz Canyon Way, Palm Springs, California 92263. The term "Agency" as used herein also includes any 627/014084-0006/3302470.6 a02/29/00 -2- assignee of, or successor to, the rights, powers, and responsibilities of the Community Redevelopment Agency of the City of Palm Springs. 2.3 "City" shall mean the City of Palm Springs, a municipal corporation, organized under the laws of the State of California and having its offices at City Hall, at 3200 E. Tahquitz Canyon Way, Palm Springs, California 92263. The City is not a party to this Agreement and shall have no obligations hereunder, but shall have the indemnity and other rights set forth in Section 6. 2.4 "Construction Costs" shall mean all costs and expenses of any kind or nature (including both "hard" and "soft" costs and working capital for a period not less than one (1) year after the scheduled completion of construction of the Project) incurred by Developer to construct the New Dealerships at the Site. 2.5 "Construction Loan" shall mean a loan or loans obtained by Developer from any private lending source(s) for the costs of construction of the Project in an amount of no less than One Million Dollars ($1,000,000) having an interest rate obligation which is competitive in the industry and upon such other terms which are commercially reasonable in the industry for the nature and size of loan herein required. 2.6 "Developer" shall mean VIP MOTOR CARS, LTD, a California corporation, wholly owned by VIP MOTOR CARS ACQUISITION, INC, a California corporation, and shall include any legally permissible assignee or successor to the rights, powers, and responsibilities of Developer hereunder, in accordance with Section 4.6. 2.7 "Developer Covenant to Open" shall have the meaning ascribed in Section 5.2. 2.8 "Effective Date" shall mean the date this Agreement is executed by Agency after approval by Agency at a public meeting, which date is inserted into the preamble of this Agreement. 2.9 "Executive Director" shall mean the individual duly appointed to the position of Executive Director of the Agency. 2.10 "Existing Dealerships" shall mean the existing Mercedes-Benz, Infiniti and BMW dealership franchises located on the Site. 2.11 "Force Majeure" shall mean any war, insurrection, strike, lock-out, labor dispute, riot, flood, earthquake, fire, casualty, Act of God, act of the public enemy, epidemic, quarantine restriction, freight embargo, unavoidable lack of transportation, governmental restriction, unusually severe weather, inability to secure necessary labor, materials or tools, delay of any contractor, subcontractor or supplier, act of the other party, act or failure to act of City or any other public or governmental agency or entity (except that any act or failure to act of City or Agency shall not excuse performance by Agency), or any other cause beyond the control or without the fault of the party claiming an extension of time to perform. II II I I II II I I I I II II I I II ©4,R7/ G 52C+o5r 627/014084-0006/3302470.6 a02/29/00 -3- 2.12 "Governmental Approvals" shall mean and include, if any, any and all general plan amendments, specific plans or specific plan amendments, zoning approvals or changes, required approvals and certifications under the California Environmental Quality Act, tentative and final tract maps/parcel maps, variances, conditional use permits, demolition permits, excavation/foundation permits, grading permits, building permits, inspection reports and approvals, certificates of occupancy, and all other approvals, permits, orders, consents, entitlements, filings, registrations, and actions of any nature whatsoever required from any Governmental Authority in order to commence and complete construction of the New Dealerships and the operation thereof on the Site. 2.13 "Governmental Authority" shall mean the United States, the State of California, the County of Riverside, the City of Palm Springs, or any other agent, court, political subdivision, or instrumentality, including but not limited to any regional governmental authority or any quasi-governmental authority, have jurisdiction over the Site. 2.14 "Hazardous or Toxic Substances or Materials" shall mean any substance or material identified by the United States Government, or the State of California, or the County of Riverside, or any regional governmental or any agency, department, bureau, or subdivision of any of the foregoing, as hazardous or toxic and which is included on any list of such substances published by any of the foregoing entities. 2.15 "Lease" shall mean that certain lease agreement executed by and between Owner and the Agency for the lease of the Site from Owner to Agency in the form attached hereto as Exhibit "B". 2.16 "Major Motor Vehicle Manufacturers" shall mean Mercedes-Benz, BMW, Infiniti or any other comparable luxury passenger vehicle manufacturer whose domestic passenger vehicle sales of all models combined rank in the top ten of passenger vehicle manufacturers in the world. 2.17 "New Dealerships" shall mean the proposed renovated and expanded, modern sales, leasing, and service facility to be constructed on the Site and operated as three separate Major Motor Vehicle Manufacturer franchises for the sales and leasing of new and incidentally related used passenger vehicles, and the servicing of passenger vehicles and sale of parts, as more particularly described in this Agreement. 2.18 "New Dealerships Commencement Date" shall have the meaning ascribed in Section 5.2. 2.19 "Notice of Release of Construction Covenant$" shall mean the notice by Agency to be recorded, which Notice shall be in the form set forth in Exhibit "E", stating that Developer has satisfied Developer's Covenant to Open in accordance with the terms of this Agreement. 2.20 "Owner" shall mean FDH Enterprises, Inc. an Arkansas corporation, and shall include any legally permissible assignee or successor to the rights, powers, and responsibilities of Owner hereunder, in accordance with Section 4.6. IIIIIIIIIII IIII IIIIIIII III IIIIIIII 111111111IIII c4 ""SFl� a7�a" 627/014084-0006/3302400.6 a02/29/00 -- 2.21 "Project" shall have the meaning set forth at Article 1 above. 2.22 "Project Area" shall mean Palm Springs Redevelopment Project Area 9G. The exact boundaries of the Project Area are specifically described in the Redevelopment Plan and are made a part hereof as though fully set forth herein. 2.23 "PRWORA" shall mean the federal Personal Responsibility And Work Opportunity Reconciliation Act. 2.24 "Redevelopment Plan" shall mean the Redevelopment Plan for Palm Springs Redevelopment Project Area 9G which was adopted by Ordinance No. 1321 of the City Council of the City of Palm Springs on or about December 29, 1988 and amended by Ordinance No. 1496 on or about December 21, 1994. The Redevelopment Plan is incorporated herein by this reference and made a part hereof as though fully set forth herein. 2.25 "Schedule of Performance" shall mean that certain Schedule of Performance attached hereto as Exhibit "D". 2.26 "Site" shall mean that certain real property consisting of three parcels and commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, Palm Springs, California consisting of approximately 4.5 acres. The Site is legally described in Exhibit "A", attached hereto and incorporated herein. 2.27 "Sublease" shall mean that certain sublease agreement executed by and between Developer and the Agency for the sublease of the Site from Agency to Developer in the form attached hereto as Exhibit "C". ✓ ARTICLE 3 REPRESENTATIONS AND WARRANTIES. 3.1 Developer and Owner Representations and Warranties. Developer and Owner hereby make the following representations, covenants, and warranties for the benefit of Agency, and Agency's successors and assigns, and acknowledge that the execution of this Agreement by Agency has been made, in material reliance by Agency on such representations and warranties: 3.1.1 Construction Loan. Developer has obtained an irrevocable commitment from a private source to fund the Construction Loan. 3.1.2 Litigation. There are no pending or threatened claims, actions, proceedings, or lawsuits of any kind, whether for personal injury, property damage, landlord-tenant disputes, property taxes, or otherwise, that could adversely affect title to or the operation or value of the Site or which questions the validity or enforceability of this transaction, including, but not limited to, this Agreement, the Lease and Sublease, nor is there any governmental investigation of any type or nature, pending or threatened, against or relating to the Site or the transactions contemplated hereby (other than those conducted by City and Agency). 627/014084-0006/3302470.6 .02/29/00 -5- III II I I II III I I I III IIIII I I III r34,2FlCUS©©2&35F FiR 3.1.3 No Default. The execution and delivery of this Agreement, the Lease or Sublease will not constitute or result in any default or event that with notice or the lapse of time, or both, would be a default, breach, or violation of any lease, mortgage, deed of trust, or other agreement, instrument or arrangement by which Developer, Owner or the Site are bound or any event which would permit any party to terminate an agreement or accelerate the maturity of any indebtedness or other obligation affecting Developer, Owner or the Site. 3.1.4 No Violation. The execution and delivery of this Agreement, the Lease or Sublease and the consummation of the transactions contemplated herein will not violate any provision of, or require any consent, authorization, or approval under any law or administrative regulation or any other order, award, judgment, writ, injunction or decree applicable to, or any governmental permit or license issued to, Developer or Owner or relating to the Site. 3.1.5 No Possessory Interests. Upon execution of the Sublease, Developer has the right of possession of the Site free from any tenant leases, tenancies, licenses, or other similar occupancy agreements that could interfere with Developer's right to develop the Project. 3.1.6 No Bankruptcy. Neither Developer or Owner, or the entities constituting Developer or Owner, if any, has filed or been the subject of any filing of a petition under the Federal Bankruptcy Law or any insolvency laws, or any laws for the discharge of indebtedness or for the reorganization of debtors. 3.1.7 No Misrepresentation. No representation, warranty, or covenant of Developer or Owner in this Agreement, or in any document or certificate furnished or to be furnished to Agency pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading. 3.1.8 Disclosure. Developer and Owner have disclosed all information concerning the Site of which Developer or Owner are aware which may materially affect the value of the Site, Owner's or Developer's continued ability to develop and utilize the Site as provided in this Agreement. 3.1.9 Due Execution. This Agreement has been duly executed by Developer and Owner and constitutes a valid, binding, and enforceable obligation of Developer and Owner. 3.1.10 No Extraneous Consideration. Neither Developer or Owner has paid or given to, and will not pay or give to, the Agency or City or any official or agent of the Agency or City any money or other consideration for obtaining this Agreement, except as expressly provided herein. 627/014084-0006/3302470.6 a02/29/00 -6- IIIIII III II II � �II� II 1 II II II II 4. 7�� of 77 y F 0 3.2 Agency Representations and Warranties. Agency hereby represents and warrants for the benefit of Owner and Developer and their successors and assigns, that the following facts are true as of the execution of this Agreement: 3.2.1 No Approvals. No approvals or consents not heretofore obtained by Agency are necessary in connection with the execution of this Agreement by Agency. 3.2.2 Due Execution. This Agreement has been duly executed by Agency or its duly authorized officers or agents and constitutes a valid, binding, and enforceable obligation of Agency. 3.2.3 Governmental Approvals. Notwithstanding anything contained herein to the contrary, the Agency makes no representations or warranties with respect to the approvals required by any other governmental entity or with respect to approvals hereinafter required from the City or the Agency. The Agency reserves full authority over the Project and Developer and Owner acknowledge that the City retains such full authority and police power as well. Nothing in this Agreement shall be deemed to be a prejudgment or commitment with respect to such items nor to guaranty that such approvals or permits will be issued within any particular time or with or without any particular conditions. ARTICLE 4 REDEVELOPMENT OF THE SITE. 4.1 Construction of the Project. 4.1.1 Lease and Sublease of the Site. This Agreement, which includes the Exhibits hereto, is intended to set forth the rights and obligations of the Agency, Developer and Owner with respect to the Site owned by Owner and subleased by Developer that is located within the Project Area. To accomplish the goals and objectives of the parties hereto, Agency has agreed to assist Developer and Owner in the redevelopment of the Site through the construction of the Project by entering into the Lease and Sublease, with a land write-down of the sublease payments, as provided in the Sublease attached hereto. 4.1.2 Concurrent Effectiveness. Because each of the Lease, Sublease and this Agreement is contingent upon the execution of each of the other, the parties hereto agree that all such agreements shall be executed concurrently and none shall be effective until all of the above listed agreements are fully executed. 4.1.3 Proposed Development's Consistency With Plan and Codes. Agency warrants and represents that the City's General Plan, Zoning Ordinance, and Redevelopment Plan permits Developer's proposed development, and construction, operation, and use of the Site as provided in this Agreement, including without limitation the Scope of Development, subject only to (i) approval of the Project pursuant to Health and Safety Code Sections 33433 and 33421.1, (ii) those development approvals yet to be obtained, and (iii) City's and Agency's review and approval of the Project in accordance with the California Environmental Quality Act; provided that it is expressly understood 629/014004-0006/3302470.6 a02/29/00 -7- II II I I II II I I I I II G 111111111 II R4'2 ,'80cf r? RUA by the parties hereto that Agency makes no representations or warranties with respect to approvals required by any other governmental entity or with respect to approvals hereinafter required from City and Agency, Agency and City reserving full authority over the Project. Nothing in this Agreement shall be deemed to be a prejudgment or commitment with respect to such items nor a guarantee that such approvals or permits will be issued within any particular time or with or without any particular conditions. 4.1.4 Evolution of Development Plan. The Planning Commission has approved the proposed architectural design submitted by Developer for development of the Site in accordance with the Project. Concurrently with the approval of this Agreement, the Agency has approved the Developer's basic concept drawings and preliminary drawings for development of the Site in accordance with the scope of development of the Project, and all in accordance with the City's requirements. The final drawings shall include site plans, building plans and elevations, landscaping plans, parking plans, signage, a description of structural, mechanical, and electrical systems, and all other plans, drawings and specifications. Final drawings will be in sufficient detail to obtain a building permit. Developer agrees that said plans, drawings and specifications shall be consistent with the scope of development of the Project and the various development approvals referenced hereinabove, except as such items may be amended by City (if applicable) and by mutual consent of Agency and Developer. Final drawings and specifications shall be in sufficient detail to obtain all necessary land use approvals and permits. Final drawings and specifications for construction of the improvements may be submitted and processed separately for each New Dealership at the Site, within the time set forth in the Schedule of Performance. 4.1.5 Developer Best Efforts to Obtain Approvals. Developer shall exercise its best efforts to timely submit all documents and information necessary to obtain all development and building approvals from the City in a timely manner. Not by way of limitation of the foregoing, in developing and constructing the Project, Developer shall comply with all applicable development standards in City's Municipal code and shall comply with all building code, landscaping, signage, and parking requirements, except as may be permitted through approved variances and modifications. 4.1.6 Other Governmental Permits. Developer shall, at its own expense and before commencement of construction upon the Site, secure or cause to be secured any and all permits and approvals which may be required by City or any other governmental agency affected by such construction, including but not limited to, necessary building permits and all approvals required under CEQA. 4.1.7 Approval by Agency. The Agency shall approve or disapprove any submittal made by the Developer pursuant to this Agreement, if any, within thirty (30) days after such submittal. All submittals made by Developer will note in bold type the thirty (30) day time limit and specifically reference this Agreement and this Section 4.1.7. Any disapproval shall state in writing the reason for the disapproval and the changes which the Agency requests to be made. After Developer resubmits the corrected submittal, Agency shall have an additional thirty (30) days for the review of the 627/014084-0006/3302470.6 .02/29/00 -8- 111111 HIM 11111111111111111111111111 III 111111111111 2 915 f899599F resubmittal but if the Agency disapproves the resubmittal, then the cycle shall repeat, until the Agency's approval has been obtained. 4.1.8 Agency Assistance. Subject to Developer's compliance with (i) applicable City and Agency development standards for the Site and (ii) all applicable laws and regulations governing such matters as public hearings, site plan review and environmental review, Agency agrees to provide reasonable assistance to Developer, at no cost to Agency, in the expeditious processing of Developer's submittals required under this Agreement in order that Developer may obtain a final City action on such matters on or before the date set forth in the Schedule of Performance; provided that Agency does not warrant or represent that such approval shall be obtained. 4.1.9 Construction Schedule; Reports. Developer shall commence and complete construction of the Project in accordance with the Schedule of Performance. Developer shall keep Agency informed of the progress of construction and submit to Agency written reports of the progress of construction when and in the form requested by Agency, but not less than monthly. 4.2 Cost of Development. Except for the Agency Financial Assistance, pursuant to the terms of the Sublease, Developer shall be responsible for all costs of acquiring the Site and developing the Project, including but not limited to pre-development costs incurred for items such as planning, design, engineering, and environmental remediation; all development and building fees; any cost incurred to demolish and clear any and all existing improvements, furnishings, fixtures, and equipment from the Site; relocation expenses payable to existing occupants of the Existing Dealerships and Site (if and as applicable); costs for insurance and bonds (as required); costs for financing; and all on-site and off-site construction costs; costs for environmental mitigations (if any); costs for extending or relocating utility services; costs incurred for construction, installation, repair, or replacement of improvements within the public rights-of-way around the Site; costs for landscaping required on the Site; any development impact fees and other applicable City or other governmental agency fees; costs associated with meeting applicable seismic standards; interim and permanent financing; broker's and leasing commissions; and fees or charges for development and building. 4.3 Rights of Access. Representatives of Agency shall have the reasonable right of access to the Site without charges or fees, at any time during normal construction hours during the period of construction, for the purpose of assuring compliance with this Agreement including, but not limited to, the inspection of the work of construction being performed by or on behalf of Developer. Such representatives of Agency shall be those who are so identified in writing to Developer by the Executive Director of Agency. Each such representative of Agency shall identify himself or herself at the job site office upon his or her entrance to the Site and shall provide owner or the construction superintendent or similar person in charge on the Site a reasonable opportunity to have a representative accompany him or her during the inspection. If the Agency determines that any work or materials are not in conformity with any provisions of this Agreement, or any laws or ordinances, or not otherwise in conformity with the laws of the City, Agency may stop the work and order replacement or correction of any such work or materials on any portion of the Site, unless a similar use of such materials has been previously approved by Agency for use on the Site. Inspection by Agency of the Site or any improvements 627/014064-0006/3302470.6 a02/29/00 -9- II II I I II III 1 II II III r 2�rarI aofFJ85 r7R thereon is not to be construed as an acknowledgment, acceptance or representation by Agency that there has been compliance with any plans approved pursuant to this Agreement or that the Site or any improvements thereon will be free from defect in design or construction or that the same is free of any faulty material or workmanship. Agency shall indemnify, defend and hold Developer harmless from any injury or property damage caused or liability arising out of Agency's exercise of this right of access. 4.4 Applicable Laws. Developer shall construct the Project in conformity with all applicable laws, including all applicable State and Federal labor standards and the provisions of the ADA and PRWORA. 4.5 Notice of Release of Construction Covenants. Within five (5) days of Developer's satisfactory completion of construction of the Project and compliance with the Developer's Covenant to Open, as set forth at Section 5.2 below, Agency shall furnish Developer with a Notice of Release of Construction Covenants for such work in the form attached hereto as Exhibit "E" upon written request therefor by Developer. Such Notice of Release of Construction Covenants shall be in a form so as to permit recordation, and shall be recorded, in the Office of the Recorder of the County of Riverside. The Notice of Release of Construction Covenants shall be, and shall so state, a conclusive determination of satisfactory completion of Developer's development obligations under this Agreement, and of full compliance with the terms of this Agreement relating to construction of the Project on the Site. After the date Developer is entitled to the issuance of the Notice of Release of Construction Covenants, and notwithstanding any other provisions of this Agreement to the contrary, any party then owning or thereafter purchasing, leasing, or otherwise acquiring any interest in the Site shall not (because of such ownership, purchase, lease, or acquisition) incur any obligation or liability under this Agreement, except that such party shall be bound by the following: (i) the indemnity obligations referred to in Sections 6.1 and 6.2; (ii) the covenants regarding use and maintenance contained in Article 5; and (iii) the covenants regarding non-discrimination contained in Section 5.8. Agency shall not unreasonably withhold issuance of the Notice of Release of Construction Covenants. If Agency refuses or fails to furnish the Notice of Release of Construction Covenants after written request from Developer, Agency shall, within thirty (30) days after such written request, provide Developer with a written statement of the reasons Agency refused or failed to furnish the Notice of Release of Construction Covenants. The statement shall also contain Agency's opinion of the action Developer must take to obtain the Notice of Release of Construction Covenants. If the reason for such refusal is confined to the immediate availability of specific items or materials for land- scaping, Agency will issue its Notice of Release of Construction Covenants upon the posting of a cash deposit by Developer with Agency in an amount representing the fair value of the work not yet completed. The Notice of Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage or any insurer of a mortgage on or with respect to the Site. The Notice of Release of Construction Covenants is not a notice of completion as referred to in California Civil Code Section 3093 and is not, and does not take the place of, a certificate of occupancy from the City. -1 o-I 1111111��11111 III 1111111111 II 111111 III III 1111 3£�as 629/014094-0006/3302470.6 aoz/zs/oo e,©F 4.6 Prohibition on Transfer Prior to Completion. Developer or Owner shall not transfer (as hereinafter defined) their interests, rights or obligations under this Agreement with respect to the Site without the prior written consent of Agency, which consent shall not be unreasonably withheld or delayed. As used in this section, the term "transfer" shall include the transfer to any person or group of persons acting in concert of more than fifty percent (50%) of the present equity ownership and/or more than fifty percent (50%) of the voting control of Developer or Owner (jointly and severally referred to herein as the "Trigger Percentages") or any general partner of Developer or Owner in the aggregate, taking all transfers into account on a cumulative basis, except transfers of such ownership or control interest between affiliates (as defined in the 1933 Securities Act), members of the same immediate family, or transfers to a trust, testamentary or otherwise, in which the beneficiaries are limited to members of the transferor's immediate family. A transfer of interests (on a cumulative basis) in the equity ownership and/or voting control of Developer or Owner in amounts less than Trigger Percentages shall not constitute a transfer subject to the restrictions set forth herein. In the event Developer or Owner or any general partner comprising Developer or Owner or its successor is a corporation or trust, such transfer shall refer to the transfer of the issued and outstanding capital stock of Developer or Owner, or of beneficial interests of such trust; in the event that Developer or Owner or any general partner comprising Developer or Owner is a limited or general partnership, such transfer shall refer to the transfer of more than the Trigger Percentages in the limited or general partnership interest; in the event that Developer or Owner or any general partner is a joint venture, such transfer shall refer to the transfer of more than the Trigger Percentages of such joint venture partner, taking all transfers into account on a cumulative basis. Developer or Owner shall not transfer this Agreement or any of Developer's or Owner's rights hereunder with respect to the Site, directly or indirectly, voluntarily or by operation of law, except as provided below, without the prior written approval of Agency, and if so purported to be transferred, the same shall be null and void. Agency shall not disapprove of any proposed transfer by Developer or Owner unless Agency reasonably finds one or more of the following: (i) the completion of the Project will be delayed or jeopardized; (ii) the proposed transferee does not have the financial strength and capability to develop the Project; or(iii) the proposed transferee does not have experience and expertise in the planning, financing, development, ownership, and operation of similar projects. In addition, no attempted assignment of any of Developer's or Owner's obligations hereunder shall be effective unless and until the successor party executes and delivers to Agency an assumption agreement in a form approved by the Agency Counsel assuming such obligations. No consent or approval by Agency of any transfer requiring Agency's approval shall constitute a further waiver of the provision of this Section 4.6. Agency's consent to a transfer and the transferee's execution of the assumption agreement shall release Developer or Owner of liability for performance under this Agreement with respect to the transferred Site. Notwithstanding the above, the provisions of this Section 4.6 shall terminate upon the issuance of the Notice of Release of Construction Covenants. II II I I II II I I I I II II II I II 35 04 e�r12 ffof' 0F �?7 627/014084-0006/3302470.6 a02/29/00 -1]_- 4.7 Performance of Terms of Any Mortgage Agreement. Developer and Owner hereby covenant to Agency that Developer shall perform all of the duties and obligations of any mortgage agreement including, but not limited to, payment of principal or interest thereunder, taxes, insurance premiums, and utility costs and maintaining the Demised Premises. Developer and Owner covenant and agree that Agency shall not be responsible for the performance of any duties or obligations of Developer or Owner under any mortgage agreement upon the Site. Notwithstanding the foregoing, during the term of this Agreement, Agency shall have (i) the right, but not the obligation, to cure any monetary and non-monetary defaults by Developer or Owner of any mortgage agreement. In such event, Developer or Owner, as applicable, shall immediately reimburse Agency for any and all reasonable expenses incurred by Agency, including attorneys' fees, upon presentation of an invoice therefor. Such sums shall bear interest from the date expended until repaid by Developer or Owner at the rate of ten percent (10%) per annum or the maximum non-usurious rate permitted by law, whichever is less. ARTICLE 5 USE OF THE SITE 5.1 Authorized Uses. The Agency Financial Assistance shall be used solely and exclusively for the development of the Project and operation of the New Dealerships, consisting of sales, leasing, and service facilities on the Site and operated as Major Motor Vehicle Manufacturer franchises for the sales and leasing of new and incidentally related used passenger vehicles, and the servicing of passenger vehicles and sale of parts. 5.2 Developer Covenant to Open; Notice of Release of Construction Covenants. Developer covenants and agrees, which covenants shall run with the land and bind all succes- sors, assigns, and every successor in interest of Developer, that it shall, within the time set forth in the Schedule of Performance, open the New Dealerships for regular business to the public with hours of operation not less than what had been the customary hours of operation of the Existing Dealerships (which shall not include any "pre-opening sales" or other promotional periods prior to the date the New Dealerships are open for regular and normal business to the general public at customary hours of operation) (the "Developer Covenant to Open"). The date of the Notice of Release of Construction Covenants shall be deemed the "New Dealerships Commencement Date" for purposes of this Agreement. Notwithstanding the foregoing, after release of the Developer Covenant to Open, Developer shall be governed by a covenant to operate as contained in the Sublease. 5.3 Term of Agreement; Effect and Duration of Covenants. As set forth in this Agreement, Developer, Owner and Agency contemplate concurrently entering into the Lease and Sublease for the Site. Upon execution of the Lease, Developer, Owner and Agency contemplate entering into the Sublease. During such time as the Sublease is in effect, Agency agrees to assist Developer financially in accordance with the terms of the Sublease. To give proper effect to this Agreement, Agency, Owner and Developer agree that the Lease and Sublease shall have the same effective date as this Agreement and that this Agreement shall continue in full force and effect until the date the Agency issues the Release of Construction Covenants; and all of the terms, covenants, agreements, or conditions set forth in this Agreement shall extend for the duration of this Agreement, except as applicable to the interpretation and enforcement of particular matters, which terms, covenants, and conditions shall survive as stated with reference to those matters. 0r,627/014084-0006/3302470.6 a02/29/00 -12 III II III III III III III I II II I I II ©� 2r1�o£s77 5n0aR • • 5.4 Prohibition Against Discrimination. 5.4.1 No Discrimination During Construction. Developer, for itself and its successors and assigns, agrees that during the construction of the Project, Developer will not discriminate against any employee or applicant for employment because of race, color, creed, religion, sex, marital status, ancestry, or national origin. 5.4.2 Obligation to Refrain from Discrimination. There shall be no discrimination against, or segregation of, any persons, or group of persons, on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the enjoyment of the Site, nor shall Developer or Owner, or any person claiming under or through it, 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, subtenants, sublessees, or vendees of the Site or any portion thereof. The foregoing covenants shall run with the land and shall remain in effect in perpetuity. 5.4.3 Form of Nondiscrimination and Non-segregation Clauses. Developer and Owner, and all persons claiming under or through it, shall refrain from restricting the rental, sale, or lease of any portion of the Site, or contracts relating to the Site, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substan- tially the following nondiscrimination or non-segregation clauses: (a) In deeds: "The grantee herein covenants by and for himself, his 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 of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the grantee himself, or any persons claiming under or through him, 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, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators, and assigns, and all persons claiming under or through him, 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 race, color, creed, religion, sex, marital status, ancestry, or national origin in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee himself, or any person claiming under or through him, 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 land herein leased. (c) In contracts: "There shall be no discrimination against or segregation of any persons or group of persons on account of race, color, creed, religion, 627/014084-0006/3302470.6 .02/29/00 -13- II HIM II II � �� II I HIM � III r �,a 14 of'3o b aF sex, marital status, ancestry, or national origin in the sale, lease, transfer, use, occupancy, tenure, or enjoyment of land, nor shall the transferee himself, or any person claiming under or through him, 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, subtenants, sublessees, or vendees of land." 5.5 Relocation Assistance. Developer and Owner waive any claims that they or any entities owned or controlled by them, and their successors and assigns may have to receive relocation assistance or benefits arising out of the work to be performed pursuant to this Agreement. 5.6 No Inconsistent Uses. Developer and Owner covenant and agree, for themselves, their successors, assigns, and every successor in interest to the Site, or any part thereof, that for the period beginning on the Effective Date and ending at the end of the term of this Agreement, Developer and Owner and such successors shall not devote the Site to uses inconsistent with the Redevelopment Plan, the applicable zoning restrictions or this Agreement; provided that, in the event of any inconsistency, the provisions of the Redevelopment Plan shall prevail over all others. 5.7 Transfers After Completion. From and after the date the Agency issues the Notice of Release of Construction Covenants, Developer or Owner shall have the right to Transfer the Site, or applicable portion thereof, pursuant to the terms of the Sublease. 5.8 Effect of Covenants. Agency is deemed a beneficiary of the terms and provisions of this Agreement and of the restrictions and covenants running with the land, for the periods provided in this Agreement, for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit the covenants running with the land have been provided. The covenants in favor of Agency shall run without regard to whether Agency has been, remains, or is an owner of any land or interest therein in the Site or the Project Area. Agency shall have the right, if any of the covenants set forth in this Agreement which are provided for its benefit are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches. ARTICLE 6 INDEMNIFICATION AND INSURANCE 6.1 Indemnification. During the period of construction of any of the improvements pursuant to this Agreement and until such time as is issued a Release of Construction Covenants, Developer and Owner agree to and shall indemnify and hold the Agency and the City harmless from and against all liability, loss, damage, cost or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss, or damage whatsoever caused to any person or to the property of any person which shall occur on any of the properties subject to this Agreement and which shall be directly or indirectly caused by the acts done thereon or any errors or omissions of the Developer or Owner or their agents, servants, employees or contractors. Neither Developer or Owner shall be responsible for (and such indemnity shall not apply to) any acts, errors or omissions of the 627/014084-0006/3302470.6 .02/29/00 -14- III II III II III II II II IIIIIII 1III r,4 27/i5cofG7 WUH Agency or the City or their respective agents, servants, employees or contractors. Agency and City shall not be responsible for any acts, errors or omissions of any person or entity except Agency and City and their respective agents, servants, employees or contractors, subject to any and all statutory and other immunities. 6.2 Physical and Environmental Condition of the Site. Agency shall have no responsibility or obligation under this Agreement, the Lease or Sublease with respect to the physical or environmental condition of the Site. Developer and Owner acknowledge that the Lease and Sublease are being entered into by Agency to effect the Agency Financial Assistance to Developer only, and that Agency shall not thereby accept, or be deemed to accept, any obligations for the Site, including but not limited to, the presence of Hazardous or Toxic Substances or Materials at the Site. Developer and Owner shall indemnify, defend, and hold Agency and City harmless from and against any and all claims, suits, penalties, expenses, losses, damages, attorney's fees, judgments, or any other action or damage of any kind or nature arising out of or related to the physical or environmental condition of the Site, including but not limited to the geological, hydrological, seismological conditions, soils conditions, or the presence of Hazardous or Toxic Substances or Materials. 6.3 Insurance. 6.3.1 Public Liability Insurance. Beginning on the Effective Date hereof and until completion of construction by Developer on the Site, Developer shall at its sole cost and expense keep or cause to be kept in force for the mutual benefit of Agency and Developer comprehensive broad form general public liability insurance against claims and liability for personal injury or death arising from the use, occupancy, disuse or condition of the Site, improvements or adjoining areas or ways, affected by such use of the Site or for property damage, providing protection of at least Two Million Dollars ($2,000,000.00) for bodily injury or death to any one person, at least Five Million Dollars ($5,000,000.00) for any one accident or occurrence, and at least One Million Dollars ($1,000,000.00) for property damage. 6.3.2 Builder's Risk Insurance. Before commencement of any construction, Developer, or its contractors, shall procure and maintain in force until completion and acceptance of the work, "all risks" builder's risk insurance including vandalism and malicious mischief, covering improvements in place and all material and equipment at the job site furnished under contract, but excluding contractor's, subcontractor's, and construction manager's tools and equipment and property owned by contractor's or subcontractor's employees, with limits in accordance with subsection 6.3.1 above. 6.3.3 Worker's Compensation. Developer shall also furnish or cause to be furnished to Agency evidence reasonably satisfactory to it that any contractor with whom Developer has contracted for the performance of any work for which Developer is responsible hereunder carries workers' compensation insurance as required-by law. 629/014084-0066/3302990.6 a02/29/00 -15 II IIII II II I II I I■ II II II 2,2000 LAS 00H In of 77 6.3.4 Other Insurance. Developer may procure and maintain any insurance not required by this Agreement, but all such insurance shall be subject to all of the provisions hereof pertaining to insurance and shall be for the benefit of Agency and Developer. 6.3.5 Insurance Policy Form. Content and Insurer. All insurance required by express provisions hereof shall be carried only by responsible insurance companies licensed to do business by California, rated "A-" or better in the most recent edition of Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better. All such policies shall be nonassessable and shall contain language, to the extent obtainable, to the effect that (i) any loss shall be payable notwithstanding any act of negligence of Agency or Developer that might otherwise result in the forfeiture of the insurance, (ii) the insurer waives the right of subrogation against Agency and against Agency's agents and representatives, except as provided in this Section 6.3.5; (iii) the policies are primary and noncontributing with any insurance that may be carried by Agency; and (iv) the policies cannot be canceled or materially changed except after thirty (30) days' written notice by the insurer to Agency or Agency's designated representative. Developer shall furnish Agency with copies of all such policies promptly on receipt of them, or with certificates evidencing the insurance. Agency shall be named as an additional insured on all policies of insurance required to be procured by the terms of this Agreement. 6.3.6 Failure to Maintain Insurance and Proof of Com liance. Developer shall deliver to Agency, in the manner required for notices, copies of certificates of all insurance policies required hereunder together with evidence satisfactory to Agency of payment required for procurement and maintenance of each policy within the following time limits: (a) For insurance required above, within thirty (30) days after the Effective Date. (b) For any renewal or replacement of a policy already in existence, at least ten (10) days before expiration or termination of the existing policy. If Developer fails or refuses to procure or maintain insurance as required hereby or fails or refuses to furnish Agency with required proof that the insurance has been procured and is in force and paid for, such failure or referral shall be a default hereunder. ARTICLE 7 DEFAULTS AND REMEDIES. 7.1 Developer or Owner Default. The occurrence of any one or more of the following events during the term of this Agreement shall constitute a Developer or Owner default hereunder if, after receiving written notice from Agency as provided in Section 7.3 below identifying such event, Developer or Owner fails to cure said event within ten (10) days if such event is a monetary default or Developer or Owner fails to cure said default within thirty (30) days, if such event is a non-monetary default; provided that if such non-monetary default 627I014084-0006/3302490 6 a02/29/00 —16 IIIIIIIIIIIIIIIIIIIIIIIIII IIIIII III IIIIIII III IIII 04.2��r171 u50�7?00R is not capable of being cured within thirty (30) days Developer or Owner commences to cure said event within thirty (30) days and diligently and in good faith continues to cure the event of default: 7.1.1 Owner or Developer fails to observe or perform any term or provision of this Agreement, the Lease or Sublease, respectively, within the time set forth in this Agreement, the Lease or Sublease, as applicable; 7.1.2 Developer fails to timely obtain all required permits and approvals for the Project which shall be determined by Agency; 7.1.3 Developer makes or delivers to Agency any statement, report, financial statement, or certificate that is not true or correct in any material respect; 7.1.4 Developer or Owner applies for the appointment of a receiver, trustee, or custodian for any of Developer's or Owner's assets, respectively; 7.1.5 Developer or Owner files a petition under any section or chapter of the Bankruptcy Code or any similar law or regulation; 7.1.6 Developer or Owner makes a general assignment for the benefit of its creditors; 7.1.7 A petition under any section or chapter of the Bankruptcy Code or any similar law or regulation is filed against Developer or Owner, and such injunction, restraint, or petition is not dismissed within thirty (30) days after the entry or filing thereof; 7.1.8 Developer ceases to conduct its business as the New Dealerships or violates the operating covenants in the Sublease; 7.1.9 Developer or Owner is enjoined, restrained, or in any way prevented by court order from conducting all or any material part of its business affairs; 7.1.10 Developer or Owner becomes insolvent or admits in writing its inability to pay its debts as they mature; or 7.1.11 A notice of lien, levy, or assessment is filed of record with respect to all or any of Developer's or Owner's assets by the United States, or any department, agency or instrumentality thereof, or by any state, county, municipal, or other governmental agency, or if any taxes or debts owing at any time hereafter to any one of these becomes a lien or encumbrance upon any of Developer's or Owner's assets or the Site and the same is not released within thirty (30) days after the same becomes a lien or encumbrance; provided that Developer or Owner shall have the right to contest in good faith and by appropriate proceedings any such lien, levy or assessment if Developer or Owner provides Agency with a bond or indemnity satisfactory to Agency assuring the payment of such lien, levy, or assessment; 627/014084-0006/3302470.6 a02/29/00 -17- II II I I II II II I II I II II I I III 04,C7.1 C0!3fu 7-, • • 7.1.12 Any of Developer's or Owner's representations and warranties set forth in Section 3.1 of this Agreement is untrue or materially misleading. 7.2 Agency Default. The occurrence of any one or more of the following events during the term of this Agreement shall constitute an Agency default hereunder, if, after receiving written notice from Developer as provided in Section 7.3 below identifying such event, Agency fails to cure said event within ten (10) days if such event is a monetary default or Agency fails to cure said default within thirty (30) days, if such event is a non-monetary default; provided that if such non-monetary default is not capable of being cured within thirty (30) days Agency commences to cure said event within thirty (30) days and diligently and in good faith continues to cure the event of default: 7.2.1 Agency fails to observe or perform any term or provision of this Agreement within the time set forth in this Agreement, Lease or Sublease, as applicable; 7.2.2 Agency makes or delivers to Developer any statement, report, or certificate that is not true or correct in any material respect; or 7.2.3 Any of Agency's representations and warranties set forth in Section 3.2 of this Agreement is untrue or materially misleading. 7.3 Notice of Default. The non-defaulting party shall give written notice of any default under this Article 7 to the defaulting Party, clearly specifying the default. Copies of any Notice of Default given to the defaulting Party shall also be given to any permitted lender requesting such notice. Any failure or delay in giving such notice or in asserting any of either Party's rights and remedies as to any default shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it deprive either Party of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 7.4 Remedies. In addition to any other rights or remedies set forth in this Section 7.4, either party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement. Such legal actions must be instituted and maintained in the Superior Court of the County of Riverside, State of California, or in any other appropriate court in that county. Subject to any applicable cure periods and the general right to notice provided for in this Agreement, upon a default or breach of this Agreement by one Party to this Agreement, the other Party may bring an action for damages proximately caused thereby or for specific performance of this Agreement or any term or provision hereof. Developer agrees that Agency shall be entitled to the judicial remedy of specific performance and Developer agrees (subject to its reserved right to contest whether in fact a default does exist) not to challenge or contest the appropriateness of such remedy. In this regard, Developer specifically acknowledges that Agency is entering into this Agreement for the purpose of assisting in the redevelopment of the Site and not for the purpose of enabling Developer to speculate with land. II II I I II II I I I I II II I I II 04.c�."190of?SOCR 627/014 0 84-00 0 6/3 3 024 7 0.6 a02/29/00 -18- 7.5 Agency's Right to Terminate. In the event that, prior to Developer's commencement of construction of the Project, Agency is not in default under this Agreement and: (i) Developer commits a material default hereunder and fails to cure such default within the time provided in Sections 7.1; or (ii) Developer fails to obtain any of the required approvals for the Project referenced herein within the time provided in Sections 7.1; then, in such event, Agency may deliver a thirty (30) day written notice of termination to Developer and, if the applicable default or condition has not been satisfied (or waived by Agency) within said time period, this Agreement shall terminate and neither Party shall have any further rights against or liabilities to the other (except Agency reserves its rights under Section 7.4 if Developer is in default), including any right by Developer to receive the Agency Financial Assistance provided under the Sublease. 7.6 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties hereto are cumulative, and the exercise by any Party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another Party. 7.7 _Right of Agency to Cure Mortgage Deed of Trust or Other Security Interest Default. In the event of a default or breach by Developer of a mortgage, deed of trust, or other security interest or lease-back or conveyance for financing, including, but not limited to, the Construction Loan, prior to the issuance by Agency of the Release of Construction Covenants for the Project, Agency may cure the default prior to completion of any foreclosure. In such event, Agency shall be entitled to reimbursement from Developer of all costs and expenses reasonably incurred by Agency in curing the default, which right of reimbursement shall be secured by a lien upon the Site to the extent of such costs and disbursements. Any such lien shall be subject to: 7.7.1 Any mortgage, deed of trust or other security instrument or sale and leaseback or other conveyance for financing permitted by this Agreement, including, but not limited to, the Construction Loan; or 7.7.2 Any rights or interests provided in this Agreement for the protection of the holders of such mortgages, deeds of trust, or other security instruments, the lessor under a sale and lease-back, or the grantee under such other conveyance for financing; provided that nothing herein shall be deemed to impose upon Agency any affirmative obligations (by the payment of money, construction or otherwise)with respect to the Site in the event of its enforcement of its lien. 7.8 Right of Agency to Satisfy Liens. Prior to the issuance by Agency of the Release of Construction Covenants for the Project, and after Developer has had a reasonable time to challenge, cure, or satisfy any liens or encumbrances on the Site, Agency, after thirty (30) days prior written notice to Developer, shall have the right, but not the obligation, to satisfy any liens or encumbrances on the Site; provided, however, that nothing in this Agreement shall require Developer to pay or make provision for the payment of any tax, assessment, lien, or charge so long as Developer in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Site to forfeiture or sale. 627/014084-0006/3302470.6 a02/29/00 -19- III II III III III III I 11111 II IIII II II u41 z,GO 0 SOGA ARTICLE 8 GENERAL PROVISIONS. 8.1 Standards of Review. The Agency's and Executive Director's approval(s) under this Agreement shall not be unreasonably withheld. Any disapproval by Agency or Executive Director shall state in writing the reasons for disapproval and the changes which Agency or Executive Director requests to be made. Such reasons and such changes must be consistent with any items previously approved hereunder. Any item submitted to and approved in writing by Agency or Executive Director shall not be subject to subsequent disapproval. An approval by Agency or Executive Director under this Agreement shall not be deemed as a waiver of any requirements that may be imposed by City. 8.2 Governing Law. The laws of the State of California shalt govern the interpretation and enforcement of this Agreement. 8.3 Attorney's Fees. In the event of litigation between the Parties arising out of this Agreement, the prevailing Party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, including attorneys' fees on appeal and all other reasonable costs and expenses for investigation of such action, including the conducting of discovery, in addition to whatever other relief to which it may be entitled. 8.4 Notices. Demands, and Communications Between the Parties. Formal notices, demands, and communications between Agency and Developer shall be sufficiently given if: (i) personally delivered; (ii) delivered by overnight courier (acknowledged by receipt); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: CITY: City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director A copy to: RUTAN & TUCKER, LLP 611 Anton Blvd., Suite 1400, P.O. Box 1950 Costa Mesa, CA 92628 Telecopier No. (714) 546-9035 Attn: David J. Aleshire, Esq. Developer: VIP MOTOR CARS, LTD. Jerry G. Johnson 11300 Rodney Parham Rd., Suite 300 Little Rock, AR 72212 2Nrit7 154N+5 II II I I II III I I I I I II II I I II a. `lrzi , £ _ a 627/0140e4-0006/3302470.6 a02/29/00 -2 0- All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States Postal System in the manner described in this Section. 8.5 Acceptance of Service of Process. In the event that any legal action is commenced by Developer against Agency, service of process on Agency shall be made by personal service upon Executive Director or the Secretary of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Developer, service of process on Developer shall be made by personal service upon Developer or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. 8.6 Conflicts of Interest. No member, official, or employee of Agency shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official, or employee participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. 8.7 Nonliabilit�of Agency Officials and Employees. No member, official, employee, or consultant of Agency or City shall be personally liable to Developer, or any successor in interest of Developer, in the event of any Agency default or for any amount which may become due to Developer or to its successor, or for breach of any obligation of the terns of this Agreement. No official, agent, contractor, or employee of the Developer shall be personally liable to the Agency, or any successor in interest, in the event of any Developer default or for any amount which may become due to the Agency or to its successor, or for breach of any obligation of the terms of this Agreement. 8.8 Books and Records. 8.8.1 Maintenance of Books and Records. Developer shall prepare and maintain all books, records and reports necessary to substantiate Developer's compliance with the terms of this Agreement or reasonably required by the Agency. 8.8.2 Right to Inspect. Either party shall have the right, upon not less than seventy-two (72) hours notice, at all reasonable times, to inspect the books and records of the other party pertaining to the Site as pertinent to the purposes of this Agreement. Said right of inspection shall not extend to documents privileged under attorney-client or other such privileges. 8.9 Ownership of Documents. Copies of all drawings, specifications, reports, records, documents and other materials prepared by Developer, its employees, agents and subcontractors, in the performance of this Agreement, which documents are in the possession of Developer and are not confidential shall be delivered to Agency upon request in the event of a termination of this Agreement, and Developer shall have no claim for additional compensation as a result of the exercise by Agency of its rights hereunder. The Agency shall have an unrestricted right to use such documents and materials as if it were in all respects the owner of the same. Developer makes no warranty or representation regarding the accuracy or sufficiency 627/0i40e4-0006/3302490.6 a02/29/00 —2 1— II II I I II II I I I I II 111111111 II 34r2 ri�z© .£ e5 ©R of such documents for any future use by Agency, and Developer shall have no liability therefor. Notwithstanding the foregoing, the Agency shall not have any right to sell, license, convey or transfer the documents and materials to any third party, or to use the documents and materials for any other site, except in the case of a termination of this Agreement due to default of Developer. 8.10 Fair Meaning. This Agreement shall be construed according to its fair meaning and as if prepared by each respective party hereto. 8.11 Titles and Ca to ions. Titles and captions are for convenience only and shall not constitute a portion of this Agreement. 8.12 Gender. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others wherever and whenever the context so dictates. 8.13 Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto. 8.14 Merger of Prior Agreements and Understandings. This Agreement, the Lease and Sublease, and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged herein and shall be of no further force or effect. 8.15 No Third Parties Benefited. This Agreement shall create no other third party beneficiary rights or any other rights in favor of any persons, firms or corporations. This Agreement is for the sole use and benefit of the parties hereto and is not for the use or benefit of any other person or entity. 8.16 Assurances to Act in Good Faith. Agency and Developer agree to execute all documents and instruments and to take all action, including deposited funds in addition to such funds as may be specifically provided for herein and as may be required for the development of the Site as herein contemplated and shall use their best efforts to accomplish the development of the Site in accordance with the provisions hereof. Agency and Developer shall each diligently and in good faith pursue the satisfaction of any conditions or contingencies subject to their approval. 8.17 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. 8.18 Effect of Redevelopment Plan Amendment. Pursuant to the provisions of the Redevelopment Plan for modification or amendment thereof, Agency agrees that no further amendment to the Redevelopment Plan which causes the uses or development permitted on the 627/014094-o0os/3302990.6 o02/29/00 —22— II II II II 1 II II II r,4 2 t�t2, of 7", F Site, or changes the restrictions or controls that apply to the Site or otherwise affects the Site shall be made or become effective as to the Site without the prior written consent of Developer. Further amendment to the Redevelopment Plan applying to other property in the Redevelopment Project Area shall not require the consent of Developer. 8.19 Time For Acceptance of Agreement By Agency. This Agreement, when executed by Developer and delivered to Agency must be authorized, executed and delivered by Agency not later than the time set forth in the Schedule of Performance or this instrument shall be void, except to the extent that Developer shall consent in writing to further extensions of time for the authorization, execution and delivery of this Agreement. After execution by Developer, this Agreement shall be considered an irrevocable offer until such time as such offer shall become void due to the failure of the Agency to authorize, execute and deliver this Agreement in accordance with this Section. 8.20 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 8.21 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 8.22 Due Execution. The person(s) executing this Agreement on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing this Agreement, such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other agreement to which said party is bound. 8.23 Extension of Times of Performance. Time is of the essence of the performance of this Agreement. Notwithstanding the foregoing, in addition to the specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default during an event of Force Majeure. An extension of time for an event of Force Majeure shall be limited to the period of such event, and shall commence to run from the time of the commencement of the cause, provided notice by the party claiming such extension is sent to the other party within ten (10) days of the commencement of the cause. In the event of such delay, the party delayed shall continue to exercise reasonable diligence to minimize the period of delay. Times of performance under this Agreement may also be extended by mutual written agreement by Agency and Developer. The Executive Director shall have the authority on behalf of Agency to approve extensions of time not to exceed a cumulative total of one hundred eighty (180) days. IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the date first written above (the "Effective Date"). 627/014084-0006/3302470 6 a02/29/00 -2 3- III IIIIIII II II I II I II I IIII I I II as 2Nl�`24 oi' c State of i- a AIJSA 5 County of PJL'-'-sLi On MAR- a8f a-ovo before me, &iJIJEU ParA 2� , , A)D7>Lj PubL,c- I �L personally appeared ��"l2fzc 1 .1 o h n1 S v n) ✓ personally known to me--OR—proved to me eft basis of sa4 s€aet fy-e*idauce to be the person whose name is aK subscribed to the within instrument and acknowledged to me that he/she-AAhey executed the same in his/#entlieir authorized capacity(ies), and that by his/her4hei3= signatureN on the instrument the personZN� or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal, \\\\\\ P P/h' ,//,/i .............,RF�.,i C1ARY 2 lCO I my commission expires jL- aa, aooF III II III II III II III I I III 111111111111 II aa. ,©50ofU ?00A CALIFORNIA ALL-PURPA ACKNOWLEDGMENT State of County of � �.e�� 2L-✓f�_�� On l.4`C� �,� o®� before me, C24/4,�J �, 141 tv e)/-)D %1,�7� t J Date / 1 Narr)P entl'GI�o-f OHloer(e.g.,"Jane DavNotary Public") personally appeared (VP�� e2cC �/Lr U Name(s)of Signer(s) personally known to me—9R—Qproved-to`ms-orrthe-basis-of-satisfaetory-evidence to be the persons) l 4 whose namsO is a `subscribed to the within instrument 0 and acknowledged to me that he/sh6AWdxecuted the same in ��/h�tlelr_a O uthorized capacity ;and that by his/heeiir�ignature(Zpon the instrument the persons), or the entity upon behalf of which the persony acted, ELAINE L.WEDEKIND i executed the instrument. () .� COM.#1206984 NOTARY MPILIC CAUFORNIA IO RIVERSIDE COUNTY 0 WITNESS my hand and official seal. °i COMM.EXP.FEB.3,2r703 i n Signaturelof Notary Public OPTIONAL m Though the information below is not required by law, it may prove valuable to persons relying on the document H-04could prevent fraudulent removal and reattachment of this farm to another document. Co oo Description of Attached Document Cie;,ce ,v ,ce r< v Title or Type of Document: a Document Date: Number of Pages: Signer(s) Other Than Named Above: v Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Individual ❑ Individual ❑ Corporate Officer ❑ Corporate Officer Title(s): Title(s): ❑ Partner—❑ Limited ❑ General ❑ Partner—❑ Limited ❑ General ❑ Attorney-in-Fact ❑ Attorney-in-Fact v ❑ Trustee ❑ Trustee ❑ Guardian or Conservator ❑ Guardian or Conservator _— ❑ Other: Top of thumb here ❑ Other: Top of thumb here Signer Is Representing: Signer Is Representing: 1994 National Notary Assocla07184 O on•8236 Remmel Ave,P0.Box •Canoga Park,CA 91369-7184 Prod.No 5907 Reorder.Call Tall Free 1-060-076�6827 "AGENCY" ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body corporate and politic 4 — Agency Secretary Executive Director APPROVED AS TO FORM: Agency Counsel "Developer" VIP MOTOR CARS, LTD, a California corporation, wholly owned by VIP MOTOR CARS rn ACQUISITION, INC., a California corporation i135�� By: TOL+rJsow Title. p By: Title: (Signatures continued on next page) 0-6 c� 627/014084-0006/3302470.6 a02/29/00 -24- I IIIIII IIIIII IIIIII IIIII IIII IIIIII IIIII III IIIIIII II IIII OV 7, u 8700 (Signatures continued from previous page) "Owner" FDH Enterprises, Inc. an Arkansas corporation Nei By: G,. tf✓JSo�J Title: Cam/ By: Title: [END OF SIGNATURES] 5fi trF ArQ-kA-N SA-S Y— IIIIII IIIIII IIIIII illll I II I IIII III I I II IIII IIII 04 27, ' &l 730 70R 627/014084-0006/3302470.6 a02/29/00 -2 5- EXHIBIT "A" LEGAL DESCRIPTION OF SITE [SEE FOLLOWING PAGE] II II I I II III I I I II II II II r34r2 il, ID f0 00R 627/014084-0006/3302470.6 a02/29/00 -0- 0 LEGAL DESCRIPTION AND IDENTIFICATION OF PROPERTY Location: Southwest comer of E. Palm Canyon Drive and Cherokee Way. Palm Springs. Riverside County, CA. i Assessors Parcel Numbers: Riverside County Tax Assessor's Parcel Numbers: 681 070 009 —010 Common Address: 3919. 4057, and 4095 E. Palm Canyon Drive, Palm Springs, CA 92264 Legal Description: • APN: 681 070 008 2.31 Acres NUL in PAR 1 PM 0111005 • APN: 681 070 009 1.33 Acres M/L in PAR 2 PM 0111005 • APN: 681 070 010 0.66 Acres M1L in PAR 3 PM 0111005 I lillll llllll 13t 3E IIII 1lllll It$IIII llll It 04.27/ 0oi977 rOrM EXHIBIT "B" LEASE [SEE FOLLOWING PAGES] lill Hill 11111111 lill 11111 IN N4,27/E0 3£0 S00R 627/014084-0006/3302470.6 .02/29/00 -1- LEASE AGREEMENT THIS LEASE AGREEMENT("Lease") is entered into as of March , 2000 ('Effective Date") by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), and FDH ENTERPRISES, INC., an Arkansas corporation ("Lessor"). RECITALS A. VIP Motor Cars, Ltd, and VIP Motor Cars Acquisition, Inc. (collectively "VIP"), Lessor and Agency have entered into that certain Disposition and Development Agreement ("DDA"), which DDA is incorporated herein by this reference as though fully set forth, pursuant to which the parties have established the terms and conditions for the improvement, occupancy, and use of the property located in the City of Palm Springs, State of California, commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, and more particularly described in the legal description attached hereto and incorporated herein as Exhibit "A" ("Site") B. Under the terms of the DDA, the Agency has agreed to provide financial assistance to VIP for the redevelopment of the Site, which financial assistance is to be provided through the lease of the Site from Lessor to Agency, pursuant to the terms provided in this Lease, and sublease from Agency to VIP, with a land write-down of sublease payments made from VIP to Agency based on the sales tax increment generated from the Site, pursuant to the terms of a sublease agreement entered into by and between VIP and Agency concurrently with the DDA and this Lease ("Sublease"). D. The parties hereto understand and acknowledge that the sole purpose for this Lease and the Sublease is to effectuate the DDA. The Agency shall not have physical possession of the Site, shall not be responsible for performing any of the obligations VIP may have for the use and occupation of the Site under the Sublease, and shall not be liable for any breach under any mortgage, deed of trust, or other agreement, instrument or arrangement upon the Site by which Lessor or the Site are bound (collectively "Mortgage Agreement"). C. In order to effectuate the DDA, Lessor desires to lease the Site to Agency pursuant to the terms of this Lease. NOW, THEREFORE, the parties hereto agree as follows: 1. Lease. Lessor hereby leases the Site to Agency upon the terms and conditions set forth herein. In leasing the Site to Agency, Lessor represents that it is the current owner of the Site and is entitled to lease the Site to Agency pursuant to the terms herein. 627/014084-0006/3310236.3 a02/29/00 I II II I I II II I I I I II I II II II 158035 r]412'_I ae 08r4F3R 32 of 77 2. Consideration for Lease. In consideration for the lease of the Site, Agency agrees to pay to VIP lease payments of Fifty Five Thousand and 00/100 Dollars ($55,000.00) per month for the Term of this Lease ("Rent"), payable in the manner set forth at Section 3 below. 3. Payment of Rent. Agency shall pay to Lessor the Rent, beginning on or before the fifth (5th) day of each month of the Term, subject to the following conditions: a. Agency shall not be required to pay any portion of the Rent for any given month of the Term unless and until Agency receives the sublease rental payment from VIP for such month under the terms of the Sublease; and b. Agency shall not be required to pay Rent hereunder in the event that VIP fails to operate the New Dealerships, as those terms are defined in the DDA, upon the Site pursuant to the terms of the Sublease, regardless of whether VIP is in default of the payment of the sublease rental payments under the Sublease. Lessor agrees that it shall have no recourse against Agency for non-payment of Rent for any given month of the Term for which VIP fails to pay agency the sublease rental payment under the Sublease, or if VIP fails to operate the site pursuant to the terns of the Sublease, and that Lessor's only recourse for nonpayment of Rent shall be against VIP, as provided under Section 7 herein. 4. Term. This Lease shall commence on the date of the Notice of Release of Construction Covenants pursuant to the terms of the DDA, and shall terminate on the date that is the earlier of (i) twelve (12) years after the date of the Notice of Release of Construction Covenants; (ii) Lessor's or VIP's breach of any provision in the DDA or Sublease, after the expiration of the time to cure, as set forth in the DDA or Sublease, respectively, (iii) expiration of the term of the Sublease; or (iv) Lessor's breach of any provision in this Lease, after the expiration of the time to cure, as set forth herein. Notwithstanding anything herein to the contrary, all of the terms, covenants, agreements, or conditions set forth in this Lease shall extend for the duration of this Lease, except as applicable to the interpretation and enforcement of particular matters, which terms, covenants, and conditions shall survive as stated with reference to those matters. 5. No Possessory Interest Obligations. Other than as specifically stated elsewhere in this Lease, Lessor and Agency agree that Agency shall not have any usual obligations or responsibilities of a tenant with a possessory interest in property with respect to the Site, including, but not limited to, the performance of any maintenance, repairs or alterations of the Site, including the improvements thereon, or payment of any taxes, assessments, utilities or insurance premiums of any kind (collectively "Possessory Interest Obligations") in connection with the Site or any improvement thereon.. Lessor agrees and acknowledges that VIP shall be solely responsible for any and all Possessory Interest Obligations pursuant to the terms of the Sublease. 627/014084-0006/3310236.3 a02/29/00 2 I II I II I I II II II I II I II A II II II 35 z.r{ 5 t, 77as T 6. Performance of Terms of Any Mortgage Agreement. Lessor hereby covenants to Agency that Lessor shall perform all of the duties and obligations of any Mortgage Agreement including, but not limited to, payment of principal or interest thereunder, taxes, insurance premiums, and utility costs and maintaining the Site. Lessor and Agency covenant and agree that Agency shall not be responsible for the performance of any duties or obligations of Lessor under any Mortgage Agreement upon the Site. Notwithstanding the foregoing, during the term of this Lease, Agency shall have the right, but not the obligation, to cure any monetary and non- monetary defaults by Lessor of any Mortgage Agreement. In such event, Lessor shall immediately reimburse Agency for any and all reasonable expenses incurred by Agency, including attorneys' fees, upon presentation of an invoice therefor. Such sums shall bear interest from the date expended until repaid by Lessor at the rate of ten percent (10%) per annum or the maximum non-usurious rate permitted by law, whichever is less. 7. Subrogation of Agency's Rights Under Sublease. Lessor and Agency agree that, should VIP be in default of any term under the Sublease, Lessor shall have the right, subject to the written consent of Agency, to enforce the terms of the Sublease on behalf of Agency, and the rights of Agency shall be subrogated to Lessor for the purpose of any action by Lessor against VIP to enforce the terms of the Sublease. S. Indemnity• Lessor, as a material part of the consideration to be rendered to Agency under this Lease, hereby waives all claims against Agency for damage to equipment or other personal property, trade fixtures and leasehold improvements in, upon or about the Site, for any liability of Lessor under any Mortgage Agreement and for injuries to persons in or about the Site, from any cause arising at any time. Lessor shall indemnify the Agency, its officers, agents and employees against, and shall hold and save them and each of them harmless from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities, (hereinafter "claims or liabilities ) that may be asserted or claimed by any person, firm or entity arising out of or in connection with the use of the Site, by Lessor or its employees and customers, for any liability of Lessor under any Mortgage Agreement or arising from the failure of Lessor or VIP to keep the Site in good condition and repair or arising from the negligent acts or omissions of Lessor or VIP hereunder, or arising from Lessor's or VIP's negligent performance of or failure to perform any term, provision covenant or condition of this Lease, and in connection therewith: (a) Lessor shall defend any action or actions filed in connection with any of said claims or liabilities and will pay all costs and expenses, including legal costs and attorneys' fees incurred in connection therewith; (b) Lessor shall promptly pay any judgment rendered against the Agency, its officers, agents or employees for any such claims or liabilities arising out of or in connection with the negligent performance of or failure to perform such work, operations or activities of Lessor or VIP hereunder; and Lessor shall save and hold the Agency, its officers, agents, and employees harmless therefrom; 627/014084-0006/3310236.3 a02/29/00 I13 20GIIIIII IIIIII IIIIII IIIIIIIIIIIIIII IIIII III IIIII IIII IIII J4/27 240 LA G f077 dyF (c) In the event the Agency, its officers, agents or employees is/are made a party to any action or proceeding filed or prosecuted against Lessor or VIP for such damages or other claims arising out of or in connection with the negligent performance of or failure to perform the work, operation or activities of Lessor or VIP hereunder, Lessor or VIP shall pay to the Agency, its officers, agents or employees, any and all costs and expenses incurred by the Agency, its officers, agents or employees in such action or proceeding, including but not limited to, legal costs and attorneys' fees. 9. Insurance. (a) During the term of this Lease, Lessor shall maintain without any period of lapse, the policies of insurance specified in any Mortgage Agreement. Said policies of insurance shall name, by endorsement, the Agency and City, and their respective officials, officers, employees, and agents as additional insureds. In addition, Lessor shall maintain policies of worker's compensation insurance to the extent required by the Laws of the state of California. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days' prior written notice by certified or registered mail to Agency. Prior to the commencement date of this Lease and within at least thirty (30) days after the renewal of any such policy, Lessor shall provide Agency with certificates of insurance evidencing the required coverages and the naming of the Agency and City and their respective officials, officers, employees, and agents as additional insureds, and shall additionally provide Agency with a copy of the endorsements) naming the Agency and City and their respective officials, officers, employees, and agents as additional insureds. In addition, Lessor, upon reasonable notice by Agency, shall make available for inspection by Agency at Lessor's office in Palm Springs, California, copies of said insurance policies. 10. Hazardous Substances. Lessor represents and warrants that there exists no "Hazardous Materials" (as such term is herein defined) nor oil wells, underground storage tanks, or pipelines in, on, under, or about the Site. Lessor understands and agrees that in the event Lessor incurs any loss or liability concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines whether attributable to events occurring prior to or following the date this Lease is executed, Lessor may look to the prior owners of the Site, but under no circumstances shall Lessor look to Agency or City for any liability or indemnification regarding Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines. Further, Lessor shall have the sole responsibility for complying with all Environmental Laws during the term of this Lease. Lessor hereby waives, releases, acquits and forever discharges Agency, City, and their officers, officials, employees, and agents, and their respective heirs, successors, personal representatives and assigns, of and from any and all Environmental Claims, Environmental Cleanup Liability and Environmental Compliance Costs, as those terms are defined below, and from any and all actions, suits, legal or administrative orders or proceedings, demands, actual damages, punitive damages, loss, costs, liabilities and expenses, which concern or in any way 627/014064-0006/3310236.3 a02/29/00 I 4 IIIIII IIIIII IIIIII IIIII III I I II II IIIIII III t4 27.� ce£ri3 aEdF 3 relate to the physical or environmental conditions of the Site, the existence of any Hazardous Material thereon, or the release or threatened release of Hazardous Materials therefrom, whether existing prior to, at or after the date this Lease was executed. It is the intention of the parties pursuant to this release that any and all responsibilities and obligations of Agency, and any and all rights, claims, rights of action, causes of action, demands or legal rights of any kind of Lessor, its successors, assigns or any affiliated entity of Lessor, arising by virtue of the physical or environmental condition of the Site, the existence of any Hazardous Materials thereon, or any release or threatened release of Hazardous Material therefrom, whether existing prior to, at or after the date this Lease was executed, are by this release provision declared null and void and of no present or future force and effect as to the parties. In connection therewith, Lessor and each of the entities constituting Lessor, expressly agree to waive any and all rights which said party may have under Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." Lessor and each of the entities constituting Lessor, shall, defend, indemnify and hold harmless Agency, City, and their respective officers, directors, employees, agents and representatives (collectively, the "Indemnified Parties") from and against any and all Environmental Claims, Environmental Cleanup Liability, Environmental Compliance Costs, and any other claims, actions, suits, legal or administrative orders or proceedings, demands or other liabilities resulting at any time from the physical and/or environmental conditions of the Site whether before or after the date this Lease was executed or from the existence of any Hazardous Materials or the release or threatened release of any Hazardous Materials of any kind whatsoever, in, on or under the Site occurring at any time whether before or after the date this Lease was executed, including but not limited to, all foreseeable and unforeseeable damages, fees, costs, losses and expenses, including any and all attorneys' fees and environmental consultant fees and investigation costs and expenses, directly or indirectly arising therefrom, and including fines and penalties of any nature whatsoever, assessed, levied or asserted against any Indemnified Parties to the extent that the fines and/or penalties are the result of a violation or an alleged violation of any Environmental Law. Lessor further agrees that in the event Lessor obtains, from former or present owners of the Site or any other persons or entities, releases from liability, indemnities, or other forms of hold harmless relating to the subject matter of this Section, Lessor shall use its diligent efforts to obtain for Agency the same releases, indemnities, and other comparable provisions. For purposes of this Section, the following terms shall have the following meanings: (a) 'Environmental Claimrr means any claim for personal injury, death and/or property damage made, asserted or prosecuted by or on behalf of any third party, 627/014084-0006/3310236.3 a02/29/00 5 �� II1111II11111111II1111111111II9 26- wR • • including, without limitation, any governmental entity, relating to the Site or its operations and arising or alleged to arise under any Environmental Law. (b) "Environmental Cleanup Liability" means any cost or expense of any nature whatsoever incurred to contain, remove, remedy, clean up, or abate any contamination or any Hazardous Materials on or under all or any part of the Site, including the ground water thereunder, including, without limitation, (i) any direct costs or expenses for investigation, study, assessment, legal representation, cost recovery by governmental agencies, or ongoing monitoring in connection therewith and (ii) any cost, expense, loss or damage incurred with respect to the Site or its operation as a result of actions or measures necessary to implement or effectuate any such containment, removal, remediation, treatment, cleanup or abatement. (c) Environmental Compliance Cost" means any cost or expense of any nature whatsoever necessary to enable the Site to comply with all applicable Environmental Laws in effect. "Environmental Compliance Cost" shall include all costs necessary to demonstrate that the Site is capable of such compliance. (d) "Environmental Law" means any federal, state or local statute, ordinance, rule, regulation, order, consent decree, judgment or common-law doctrine, and provisions and conditions of permits, licenses and other operating authorizations relating to (i) pollution or protection of the environment, including natural resources, (ii) exposure of persons, including employees, to Hazardous Materials or other products, raw materials, chemicals or other substances, (iii) protection of the public health or welfare from the effects of byproducts, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities, or (iv) regulation of the manufacture, use or introduction into commerce of chemical substances, including, without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal. (e) "Hazardous Material" is defined to include any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California, or the United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is: (i) petroleum or oil or gas or any direct or derivative product or by-product thereof; (ii) defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (iii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (iv) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Sections 255010) and (k) and 25501.1 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (v) defined as a "hazardous substance" under 627/014084-0006/3310236.3 a02/29/00 6 IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII III IIIIIIIIIIIII 2� rloo5UOA a�. Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (vi) "used oil" as defined under Section 25250.1 of the California Health and Safety Code; (vii) asbestos; (viii) listed under Article 9 or defined as hazardous or extremely hazardous pursuant to Article 1 of Title 22 of the California Code of Regulations, Division 4, Chapter 30; (ix) defined as waste or a hazardous substance pursuant to the Porter-Cologne Act, Section 13050 of the California Water Code; (x) designated as a "toxic pollutant" pursuant to the Federal Water Pollution Control Act, 33 U.S.C. § 1317; (xi) defined as a "hazardous waste" pursuant to the Federal Resource Conservation and Recovery Act, 42 U.S.C. S 6901 et seq. (42 U.S.C. § 6903); (xii) defined as a "hazardous substance" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et L . (42 U.S.C. § 9601); (xiii) defined as "Hazardous Material" pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq.; or (xiv) defined as such or regulated by any "Superfund" or "Superlien" law, or any other federal, state or local law, statute, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines, as now, or at any time hereafter, in effect. Notwithstanding any other provision of this Lease, Lessor's release and indemnification as set forth in the provisions of this Section, as well as all provisions of this Section shall survive the termination of this Lease and shall continue in perpetuity. 11. No Indemnification for Agency Active Negligence or Willful Misconduct. Notwithstanding anything in this Sublease to the contrary, Lessor and Agency acknowledge that Lessor shall not indemnify Agency for any claims or liabilities caused by or arising out of the willful misconduct of Agency. 12. Assig_nment and Subletting. Lessor understands and acknowledges that Agency entered into the DDA, this Lease and the Sublease based upon Lessor's experience, knowledge, capability and reputation. For this reason, Lessor shall not assign this Lease, or further sublet the Site or otherwise transfer the Site or this Lease without the prior written consent of Agency, which consent may be given or withheld in Agency's sole and absolute discretion, except for the following transfers and assignments which Agency's prior written consent shall be given or withheld in Agency's reasonable discretion: (i) transfers/assignments resulting from death or incapacity of an individual; (ii) transfers/assignments resulting from a reorganization, merger, or sale of assets or stock, as long as Lessor retains majority ownership and managerial control; in the event of (i) or (ii) above, the transferee or assignee shall agree in writing to Agency's reasonable satisfaction to undertake Lessor's responsibilities and obligations under this Lease. Any assignment, subletting or other transfer without the prior written consent of Agency shall be void. The consent by Agency to one assignment, subletting or other transfer shall not be deemed to be a consent to any subsequent assignment, subletting, or other transfer. 627/014084-0006/3310236.3 .02/29/00 7 III II III III III III III I I III I III I I III 0.1 ,�IlIJo of t3 F 38 13. Non Discrimination. Lessor covenants by and for itself, its successors, assigns and for all persons claiming under or though it that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Site nor shall Lessor or any person claiming under or through it 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 Site. Lessor acknowledges that this Lease was made and accepted upon and subject to the provisions of this Section. 14. Default. a. Default by Lessor. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Lessor: (a) the failure to perform any obligation under any Mortgage Agreement that constitutes such Mortgage Agreement; (b) the failure to perform any of Lessor's material agreements or obligations hereunder where such default shall continue for a period of thirty (30) days after written notice thereof from Agency to Lessor, except for such defaults that Lessor demonstrates to Agency's reasonable satisfaction will take longer than thirty (30) days to cure, so long as Lessor has commenced to cure within the thirty (30) day period after notice from Agency; (c) the breach by Lessor of any of the DDA after expiration of the time cure, as set forth in the DDA (d) the vacation or abandonment of the Site by Lessor; (e) the making by Lessor of a general assignment for the benefit of creditors to avoid bankruptcy; (f) the filing by Lessor of a voluntary petition in bankruptcy or the adjudication of Lessor as a bankrupt; (g) the appointment of a receiver to take possession of all or substantially all the assets of Lessor located at the Site or of Lessor's leasehold interest in the Site; (h) the filing by any creditor of Lessor of an involuntary petition in bankruptcy which is not dismissed within sixty (60) days after filing; or (i) the attachment, execution or other judicial seizure of all or substantially all of the assets of Lessor or Lessor's leasehold where such an attachment, execution or seizure is not discharged within sixty (60) days. In the event of any such default or breach by Lessor, Agency may at any time thereafter, without further notice or demand, rectify or cure such default, and any sums expended by Agency for such purposes shall be paid by Lessor to Agency upon demand and as additional compensation hereunder. In the event of any such default or breach by Lessor, Agency shall have the right to recover from Lessor any amount necessary to compensate the Agency for all the detriment proximately caused by Lessor's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. Agency shall also have the right but not the obligation upon the breach by Lessor of any Mortgage Agreement, to sublease the Site to a third party. Efforts as Agency may make to mitigate damages caused by Lessor's breach of this Lease shall not constitute a waiver of Agency's right to recover damages against Lessor hereunder, nor shall anything herein contained affect Agency's right to indemnification against Lessor for any liability arising prior to the termination of this Lease. Failure of Agency to terminate this Lease shall not prevent Agency from later terminating this Lease or constitute as waiver of Agency's right to do so. 627/014084-0006/3310236.3 a02/29/00 O I IIIIII IIIIII IIIIII IIIII IIII IIIIII IIIII III IIIII It 11 F44rG�N©�5 f0a 79C4A b. Default by Agency. The failure to perform any of Agency's agreements or obligations hereunder, where such default shall continue for a period of thirty (30) days after written notice thereof from Lessor to Agency, shall constitute a default and breach of this Lease by Agency, except for such defaults Agency demonstrates to Lessor's reasonable satisfaction will take longer than thirty (30) days to cure so long as Agency has commenced to cure within the thirty (30) day period after notice from Lessor. In the event of any such default or breach by Agency, Lessor shall have the right (i) to continue this Lease in full force and effect and enforce all of its rights and remedies under this Lease, or (ii) Lessor shall have the right at any time thereafter to elect to terminate this Lease. 15. Miscellaneous. a. Lessor Compliance With Laws. It shall be the sole responsibility of Lessor to comply with all federal, state, and local laws, regulations, and rules regarding environmental compliance subsequent to execution of this Lease. b. Legal Actions. In the event of a dispute between the parties arising out of or related to this Lease, legal actions shall be instituted in the Superior Court of the County of Riverside, State of California, in any other appropriate court in that county, or in the United States District Court for the Central District of California. Lessor agrees to submit to the personal jurisdiction of such court. The laws of the state of California shall govern the interpretation and enforcement of this Lease. C. Merger of Prior Agreements and Understandings. This Lease, the DDA, the Sublease, and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged herein and shall be of no further force or effect. d. Notices Demands. and Communications Between the Parties. Formal notices, demands, and communications between Agency and Lessor shall be sufficiently given if: (i) personally delivered; (ii) delivered by overnight courier (acknowledged by receipt); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: CITY: City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director 627/014084-0006/3310236.3 a02/29/00 9 IIIIII IIII I IIIIII I III II I IIII IIII III IIII IIII IIII l4�N[�4o A copy to: RUTAN & TUCKER, LLP 611 Anton Blvd., Suite 1400, P.O. Box 1950 Costa Mesa, CA 92628 Telecopier No. (714) 546-9035 Attn: David J. Aleshire, Esq. Lessor: FDH ENTERPRISES, INC. Jerry G. Johnson 1300 Rodney Parham Road, Suite 300 Little Rock AR 72212 All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States Postal System in the manner described in this Section. e. Acceptance of Service of Process. In the event that any legal action is commenced by Lessor against Agency, service of process on Agency shall be made by personal service upon Executive Director or the Secretary of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Lessor, service of process on Lessor shall be made by personal service upon Lessor or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. f. Attorney's Fees. In the event of litigation between the Parties arising out of this Lease, the prevailing Party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, including attorneys' fees on appeal and all other reasonable costs and expenses for investigation of such action, including the conducting of discovery, in addition to whatever other relief to which it may be entitled. g. Conflicts of Interest. No member, official, or employee of Agency shall have any personal interest, direct or indirect, in this Lease nor shall any such member, official, or employee participate in any decision relating to this Lease which affects his or her personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. h. Due Execution. The person(s) executing this Lease on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Lease on behalf of said party, (iii) by so executing this Lease, such party is formally bound to the provisions of this Lease, and (iv) the entering into this Lease does not violate any provision of any other agreement to which said party is bound. 627/014084-0006/3310236.3 a02/29/00 10 III I II I I II II II I I I II II I 11111I1111 411 £05 00A IN WITNESS WHEREOF, the parties hereto have executed this Lease to be effective as of the date first written above (the "Effective Date"). "AGENCY" ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body corporate and politic Agency Secretary Executive Director APPROVED AS TO FORM: Agency Counsel "Lessor" FDH ENTERPRISES, INC., an Arkansas corporation By: Title: By: Title: 627/014084-0006/3310236.3 a02/29/00 11 IIIIII IIIIII IIIIII IIIII IIII IIIIII IIIII III IIIIII III IIII f 4/6Nf1R 77 42 of EXHIBIT "C" SUBLEASE [SEE FOLLOWING PAGES] 206 1l 158035 IIIIII II III IIIIII IIIII IIII IIIII IIIII III III II III III F 4 27/4 0,4f071OCiR 62 7/014 084-0 0 06/3 3 024 7 0.6 a02/29/00 -2- RECORDING REQUESTED BY AND WHEN RECORDED, MAIL TO: RUTAN & TUCKER, LLP 611 Anton Boulevard Suite 1400 Costa Mesa, CA 92626-1998 Attn: D. Aleshire, Esq. (Space above this line for recorder's use only) This Document is recorded at the request of the Redevelopment Agency of the City of Palm Springs and is therefore exempt from the payment of recording fees pursuant to Government Code § 6103 SUBLEASE AGREEMENT THIS SUBLEASE AGREEMENT ("Sublease") is entered into as of March _, 2000 ("Effective Date") by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), and VIP MOTOR CARS, LTD, a California corporation, wholly owned by VIP MOTOR CARS ACQUISITION, INC. (collectively "VIP"). RECITALS A. FDH Enterprises, Inc. ("Owner"), VIP and Agency have entered into that certain Development and Disposition Agreement ("DDA") concurrently herewith, which DDA is incorporated herein by this reference as though fully set forth, pursuant to which, in exchange for VIP's improvements, occupancy, and use of the property located in the City of Pahn Springs, State of California, commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, and more particularly described in the legal description attached hereto and incorporated herein as Exhibit "A" ("Site"). B. Under the terms of the DDA, the Agency has agreed to provide financial assistance to VIP for the redevelopment of the Site, which financial assistance is to be provided through the lease of the Site from Lessor to Agency, pursuant to the terms provided in a lease agreement entered into by and between Owner and Agency concurrently with the DDA ("Lease") and this Sublease, with a land write-down of sublease payments made from VIP to Agency based on the sales tax increment generated from the Site, pursuant to the terms herein. C. The parties hereto understand and acknowledge that the sole purpose for the Lease and this Sublease is to effectuate the DDA. The Agency shall not have physical possession of 627/014084-0006/3304734.5 a02/29/00 I III IIII III II IIIIIII II II III III III r_4/'.TOA0F'h770A the Site, shall not be responsible for performing any of the obligations imposed upon VIP for use and occupation of the Site, as provided herein, and shall not be liable for any breach under any Mortgage Agreement, as defined herein, by which VIP or the Site are bound. E. In order to effectuate the DDA, VIP desires to sublease the Site from Agency pursuant to the terms of this Lease. NOW, THEREFORE, the parties hereto agree as follows: 1. DEFINITIONS. All words and phrases shall have the meaning provided in the DDA, except as specifically defined herein. 1.1 "Agency" shall mean the Community Redevelopment Agency of the City of Palm Springs, a public body, corporate and politic, having its offices at 3200 E. Tahquitz Canyon Way, Palm Springs, California 92263. The term Agency as used herein also includes any assignee of, or successor to, the rights, powers, and responsibilities of the Community Redevelopment Agency of the City of Palm Springs. 1.2 "Annual Increment Rent Assistance" shall have the meaning ascribed in Section 4 herein. 1.3 'Base Year Revenue" shall have the meaning ascribed in Section 4.2(b) herein. 1.4 'Base Rent" shall have the meaning ascribed in Section 2.2 herein. 1.5 "City" shall mean the City of Palm Springs, a municipal corporation, organized under the laws of the State of California and having its offices at City Hall, at 3200 E. Tahquitz Canyon Way, Palm Springs, California 92263. The City is not a party to this Agreement and shall have no obligations hereunder, but shall have the indemnity and other rights set forth in Section 8. 1.6 "Cumulative Increment Rent Assistance" shall mean the total Annual Increment Rent Assistance provided by Agency to VIP throughout the Sublease Term, which amount shall in no event exceed One Million Dollars ($1,000,000) in actual dollars paid in the aggregate (no interest or present value adjustment, as more specifically provided at Section 4.3(d) herein). 1.7 "Executive Director" shall mean the individual duly appointed to the position of Executive Director of the Agency. 1.8 "Existing Dealerships" shall mean the existing Mercedes-Benz, Infiniti and BMW dealership franchises located on the Site. 1.9 "Financial Assistance Schedule" shall mean that certain schedule attached hereto as Exhibit "B" and incorporated herein by reference, setting forth the Annual Increment Rent Assistance to be provided to VIP by Agency, subject to the terms of Section 4 herein. 627/014084-0006/3304734.3 -2 ��11111 It 11111111111111111111111IN 04 27,45 n�977OOA 1.10 "Increment Deficiency(ies)" shall have the meaning ascribed in Section 4.3(a) herein. 1.11 "Hazardous Materials" shall have the meaning ascribed in Section 8.3 herein. 1.12 "Major Motor Vehicle Manufacturers" shall mean Mercedes-Benz, BMW, Infiniti or any other comparable luxury passenger vehicle manufacturer whose domestic passenger vehicle sales rank in the top ten of passenger vehicle manufacturers in the world. 1.13 "Mortgage Agreement" shall mean any mortgage, deed of trust, or other agreement, instrument or arrangement upon which the Site or VIP is bound. 1.14 "New Dealerships" shall mean the proposed renovated and expanded, modern sales, leasing, and service facility to be constructed on the Site and operated as three separate Major Motor Vehicle Manufacturer franchises for the sales and leasing of new and incidentally related used passenger vehicles, and the servicing of passenger vehicles and sale of parts, as more particularly described in this Agreement. 1.15 "Notice of Release of Construction Covenants" shall mean the notice by Agency to be recorded, which Notice shall be in the form set forth in Exhibit "E", stating that Developer has satisfied Developer's Covenant to Open in accordance with the terms of this Agreement. 1.16 "Sales Taxes Revenue" shall have the meaning ascribed in Section 4.2(a) herein. 1.17 "Sublease Term" shall have the meaning ascribed in Section 2.3 herein. 1.18 "Site" shall mean that certain real property consisting of three parcels and commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, Palm Springs, California consisting of approximately 4.5 acres. The Site is legally described in Exhibit "A", attached hereto and incorporated herein. 1.19 "Substitute Operator" shall have the meaning ascribed in Section 3.2 herein. 1.20 "Use Covenants" shall have the meaning ascribed in Section 3.1. 2. SUBLEASE AND SUBLEASE RENT. 2.1 Sublease. Agency hereby subleases the Site to VIP upon the terms and conditions set forth herein. 2.2 Consideration for Sublease. In consideration for the sublease of the Site, VIP agrees to pay to Agency the base rent of Fifty Five Thousand and 00/100 Dollars ($55,000.00) per month for the Sublease Term of this Sublease ("Base Rent"), on or before the first (1st) day of each month of the Sublease Term, provided that VIP receive the Annual Increment Rent Assistance pursuant to the terms and conditions in Section 4. aF 627/014084-0006/3304734 3 -3 I IIIIII IIIIII IIIIII(IIII IIII IIIIII IIIII I!I IIIIII III IIII 04 2 4EA f� crl11F 2.3 Sublease Term. This Sublease shall commence on the date in which the Agency issues the Notice of Release of Construction Covenants, pursuant to the terms of the DDA, and shall terminate on the date that is the earlier of (i) twelve (12) years after the date in which the Agency issues the Notice of Release of Construction Covenants; (ii) Owner's or VIP's breach of any provision in the DDA or Lease, after the expiration of the time to cure, as set forth in the DDA or Lease, respectively, (iii) the date that the Cumulative Increment Rent Assistance equals One Million Dollars ($1,000,000); or (iv) VIP's material breach of any provision in this Sublease, after the expiration of the time to cure, as set forth herein ("Sublease Term"). Notwithstanding anything herein to the contrary, all of the terms, covenants, agreements, or conditions set forth in this Sublease shall extend for the duration of this Sublease, except as specifically stated elsewhere in this Sublease, including but not limited to the duration of the Use Covenants at Section 3, and as applicable to the interpretation and enforcement of particular matters, which terms, covenants, and conditions shall survive as stated with reference to those matters. 3. VIP USE AND OPERATING COVENANTS. 3.1 Use Covenants. VIP recognizes that a material consideration for Agency's entering into this Sublease is to assist in the generation of additional sales and property tax revenues to the City and Agency from the operation of the New Dealerships on the Site and the increased valuation of said property and to assist in revitalization of the Project Area and the immediate neighborhood in which the Project is located. Accordingly, VIP covenants and agrees, which covenants shall run with the land and bind all successors, assigns, and every successor in interest of VIP during the term of the Redevelopment Plan for Palm Springs Project Area 9G: (a) The use of the Site shall be restricted to the operation of the New Dealerships or other Major Motor Vehicle Manufacturer franchise; (b) VIP shall make commercially reasonable efforts to assure that the New Dealerships shall be operated on a continuous and uninterrupted basis and shall be open to the public for regular business with hours of operation not less than what had been the customary hours of operation of the Existing Dealerships for the full Sublease Term; (c) The Site shall be used as the point of sale for sales and leases of new and used automobiles sold or leased by the Major Motor Vehicle Manufacturer franchise operating on the Site, except that nothing herein shall prevent VIP from providing out-of- state deliveries, based on specific customer demands; and (d) VIP shall exercise its best efforts to maximize long-term sales, consistent with market conditions and prudent business practices. All of the foregoing sub-sections (a) through (d), inclusive, are referred to as the "Use Covenants". 3.2 Violation of Use Covenants. This Section shall govern defaults concerning violations of the Use Covenants, and in the event of any inconsistency with Section 11, 627/014084-0006/3304734.3 4 II II I I II II I I I I II I III II 4. LtIU�4 lr7r£ar=nrR the provisions of this Section shall govern. In the event that VIP, or any successor or assign, violates any of the Use Covenants set forth in this Section 3.2 during the Sublease Term and such default continues for a period of thirty (30) days after Agency has given VIP the written notice thereof, Agency may, at Agency's election, either terminate this Sublease without liability to Owner or VIP, or may give VIP sixty (60) days of such default to find a substitute dealership operator of a Major Motor Vehicle Manufacturer ("Substitute Operator"), which Substitute Operator shall be subject to the written consent of Agency, to operate the New Dealerships pursuant to the terms of the Lease and this Sublease. VIP further agrees that it shall be required to continue to pay the Sublease Rent for any period in which it is in violation of the Use Covenants, and acknowledges that Agency shall not be required to pay Rent under the Lease for such period. Should VIP or Owner be unable to find a Substitute Operator satisfactory to Agency within such sixty (60) days, Agency and VIP agree that VIP shall further reimburse Agency for any costs incurred by it as a result of such violation, including, but not limited to costs in finding and securing a Substitute Operator to operate the New Dealerships on the Site (which Substitute Operator shall not be subject to the approval or consent of VIP or Owner) and may either: (i) terminate the Sublease without liability to Owner or VIP, or (ii) give VIP and/or Owner a written extension of time to obtain a satisfactory Substitute Operator. 4. ANNUAL INCREMENT RENT ASSISTANCE. Agency, subject to the terms of this Sublease, agrees to provide to VIP rental assistance in the form, in an amount and for the term specifically described herein ("Annual Increment Rent Assistance") to assist VIP with the construction of the Project under the terms of the DDA. Agency shall have no responsibility or obligation for any income tax or other tax consequences to VIP resulting from the provision of the Annual Increment Rent Assistance. 4.1 Agency's Conditions to Paying the Annual Increment Rent Assistance. Agency's obligations to make any payments of the Annual Increment Rent Assistance for use by VIP in the construction of the Project shall be conditional and contingent upon the satisfaction, or Agency's written and signed waiver, of each of the following conditions precedent: (a) VIP shall have submitted to Agency evidence of VIP's financial capability to develop the Site and operate the New Dealerships in a form acceptable to the Agency and obtained the Executive Director's approval of same; (b) VIP shall have satisfied the terms and conditions of the DDA and the Agency shall have issued the Notice of Release of Construction Covenants pursuant to the terms of the DDA. (c) Increment Rent Assistance shall have accrued pursuant to Section 4.2. 4.2 Determination of Increment Rent Assistance. Commencing with the satisfaction of the conditions in Section 4.1 and the Agency's issuance of the Notice of Release of Construction Covenants in Subsection 4.l(d) and ending at the close of business on the day prior to the one (1) year anniversary of the beginning of the Sublease Term, and for 627/014084-0006/3304734.3 5 I IIII II I I I III II II I IIII II II III II II IN 04,27/;6100£08500R each year thereafter for the entire Sublease Term, Agency shall pay to VIP the Annual Increment Rent Assistance, which shall be a rebate of a portion of the Base Rent. The "Annual Increment Rent Assistance" shall be measured by the Sales Tax Revenue as defined in this Section 4.2 below, generated at the Site over the Base Year Revenue, as defined at Section 4.2 below, for each given year of the Sublease Term pursuant to the Financial Assistance Schedule at Exhibit "B", which Annual Increment Rent Assistance shall be in the amount shown at Exhibit "B" for each given year of the Sublease Term. The Annual Increment Rent Assistance shall be payable by Agency to VIP pursuant to Section 4.3 below. The following terms and provisions shall apply with respect to the foregoing obligation: (a) As used herein, the term "Sales Tax Revenue" shall mean the sales and use taxes paid or payable by the State Board of Equalization to the City that are generated from sales from the Site upon which sales or use taxes are imposed pursuant to applicable California law, including but not limited to California Revenue and Taxation Code Section 6000 et seq., and shall include the sales or use taxes imposed on the leasing of vehicles (including but not limited to the sales or use taxes paid for the capitalized cost reduction on vehicle leases) which are included in VIP's quarterly sales tax filings to the State Board of Equalization. (b) As used herein, the "Base Revenue" shall mean the amount set forth at the 6th column of Exhibit "B" (entitled "Actual Sales Tax Base plus 3% Grow 1 1/2% per year") for each given year of the Sublease Term. The Base Revenue shall be the projected sales taxes in the first year, escalated at the rate of one and one-half percent (1 1/2%) per year. (c) VIP shall timely report all sales and use taxes from the Site to the State Board of Equalization in accordance with the laws, rules, and regulations applicable to such reporting. (d) If due to a change in state law, the City loses Sales Tax Revenue so that it is not receiving an amount equal to the Base Revenue, the Annual Increment Rent Assistance shall be reduced or eliminated to the extent necessary to assure the City receipt of the Base Revenue. (e) The parties hereto acknowledge that the State Board of Equalization makes payments to the City based on both actual and anticipated sales and use tax revenues and that the State Board of Equalization makes periodic reconciliations. The determination of Sales Tax Revenue for any annual, quarterly, or other period shall be subject to the timing and reconciliation process related to the processing by the State Board of Equalization of payments of such Sales Tax Revenue to the City. Any adjustments resulting from any interim or estimated determination of Sales Tax Revenue for any annual, quarterly, or other period shall be reconciled by the parties as soon as practicable without inclusion of, or any obligation to pay, interest. (f) Sales Tax Revenue shall be determined based on actual amounts received by the City based only on the City's share of the State sales and use tax applicable to the 627/014084-0006/3304734 3 61 I III II I I I III III II I IIII II II I IIII I III 04 21/420 f017OOP Site (which, as of the Effective Date, is 1% of the taxable amount). Sales Tax Revenue shall not include amounts paid to the City by the State Board of Equalization derived from any sales tax overrides or special tax amounts received by the City, nor shall include any administrative fees or charges imposed by the State Board of Equalization that reduce the actual amounts of sales and use taxes received by the City. (g) VIP shall keep at its office in the City of Palm Springs, full and accurate books of account, records, and other pertinent data showing all gross income earned upon the Site that is reportable for California sales and use tax purposes, including all documents required to be maintained by VIP by the State of California for sales and use tax purposes. (h) VIP shall furnish to Agency true and correct photocopies of its quarterly California sales and use tax returns at the time each is filed with the State of California, together with a copy of all checks or wire transfers or other forms of transfer of funds sent by VIP for such payment of sales and use taxes. (i) Agency shall be entitled, during the Sublease Term and for two (2) years following expiration of the Sublease Term, to inspect and examine all of VIP's books of account, records, and other pertinent data so that Agency can ascertain VIP's gross sales upon which California sales and use tax is payable. 4.3 Agency Payment of Annual Increment Rent Assistance, Agency shall determine, following the end of each year of the Sublease Term whether VIP has generated sufficient Sales Tax Revenue to produce any Annual Increment Rent Assistance for the year just ended. Agency shall, within thirty (30) days following its receipt of the reports filed by VIP with the State Board of Equalization in accordance with Revenue and Taxation Code Section 6452, calculate, determine and pay to VIP any amount of Annual Increment Rent Assistance generated at the Site for the year just ended [up to the amount of the Sublease Rent]. In the event VIP fails to generate Sales Tax Revenue in an amount sufficient to create any Annual Increment Rent Assistance for any given year of the Sublease Term, Agency shall not be required to pay VIP any Annual Increment Rent Assistance as a rebate of the Sublease Rent for such given year of the Sublease Term, and the following conditions shall apply: (a) For any year that VIP fails to generate any Annual Increment Rent Assistance [or sufficient Annual Increment Rent Assistance up to the amount of Base Rent] VIP may carry over such deficiency(ies) of Annual Increment Rent Assistance ("Increment Deficiency(ies)") to future years of the Sublease Term, and VIP shall be entitled to payment of Annual Increment Rent Assistance in any future year of the Sublease Tenn where Annual Increment Rent Assistance exceeds the Base Rent for such given year, up to the amount of Increment Deficiency carried over from any previous year or years. (b) VIP shall not be entitled to carry any Increment Deficiency over to any year beyond the Sublease Term. IIIIIIIIIIIIIIIIIIIIIIIII III IIIIII IIIIIIIIII III III 042Gh)r50j 00f0 UOA 627/014084-0006/3304734.3 -7- _ — -- (c) In no event shall VIP be entitled to receive Annual Increment Rent Assistance for the entire Sublease Term, in an amount which exceeds total Base Rent paid by VIP for the Sublease Term. (d) Notwithstanding anything in this Sublease to the contrary, in no event shall Agency owe any funds to VIP in the event VIP generates, in any year of the Sublease Term or cumulatively, Sales Tax Revenue from the Site that is greater than the Annual Increment Rent Assistance for any given year of the Sublease Term, nor shall Agency owe any additional funds or rent assistance to VIP after the Cumulative Increment Rent Assistance equals One Million Dollars ($1,000,000) in actual dollars paid in the aggregate (no interest or present value adjustment). The following examples are provided to illustrate the operation of the foregoing provisions. For the purposes of the examples only, assume the following Base Tax, Sales Tax Revenue, and maximum Annual Incremental Rent Assistance for the following years: Year 2 Year 3 Year 11 Year 12 Minimum Sales Tax Revenue: $300,000 $320,000 $500,000 $520,000 Base Tax: 200,000 210,000 300,000 310,000 Maximum Annual Incremental Rent Assistance: 100,000 110,000 200,000 210,000 EXAMPLE #1: As shown in the above table, in the second year of the Sublease Term, VIP is required to generate a minimum of $300,000 in Sales Tax Revenue to recover all $100,000 in Annual Increment Rent Assistance for that year, but VIP only generates $250,000. The Increment Deficiency for the second year shall be $50,000 ($300,000 - $250,000). VIP would receive only $50,000 Annual Increment Rent Assistance for the second year ($100,000 - $50,000). In the third year, VIP is required to generate a minimum of $320,000 in Sales Tax Revenue to receive the full Annual Increment Rent Assistance of $110,000 for that year, but actually generates $370,000 in Sales Tax Revenue. VIP has generated $50,000 more than the minimum required for the third year. The $50,000 of Increment Deficiency from the second year is offset and, at the end of the third year, Agency shall pay VIP $160,000 ($50,000 Increment Deficiency + the full amount of Annual Increment Rent Assistance due for the third year of $110,000). II II III II III II III I I II II II I II III 03/2 .' l 10of&77 9R 6271014084-0006/3304734 1 -8- EXAMPLE #2: In the second year of the Sublease Term VIP generates only $150,000 in Sales Tax Revenue. The Increment Deficiency for the second year is thus $150,000($300,000 - $150,000), and VIP shall not be entitled to any Annual Increment Rent Assistance for the second year of the Sublease Term ($100,000 - $150,000 = negative $50,000). The third year of the Sublease Term, VIP is required to generate $310,000, but generates $360,000 of Sales Tax Revenue. VIP has generated $50,000 over the minimum Sales Tax Revenue for the third year required to receive the full Annual Increment Rent Assistance of $110,000. VIP shall be entitled to Annual Increment Rent Assistance for the third year in the amount of$160,000 ($110,000, the full Annual Increment Rent Assistance for the third year. plus $50,000 of the Increment Deficiency carried over from the second year of the Sublease Term). The adjusted Increment Deficiency for the second year is $100,000 ($150,000 - $50,000). EXAMPLE #3: VIP has no Increment Deficiencies at the end of the tenth year of the Sublease Term. In the eleventh year of the Sublease Term, VIP is required to generate a minimum Sales Tax Revenue of $ 500,000, but VIP only generates $ 400,000. An Increment Deficiency for the eleventh year of the Sublease Term exists for $ 100,000 ($500,000 - $400,000). In the twelfth year of the Sublease Term, VIP generates $520,000; thus insufficient to pay the Increment Deficiency for the eleventh year of the Sublease Term. VIP shall not be entitled to any further payment under this Sublease because Increment Deficiencies may not be carried over past the Sublease Term. The foregoing are illustrations for interpretative purposes only and do not supersede the substantive provisions of this Sublease. Nothing herein shall prevent or preclude VIP from challenging the Annual Increment Rent Assistance stated in any Agency invoice or the calculation thereof. VIP and the Agency Executive Director shall promptly meet and confer in an attempt to resolve any differences concerning the calculation. The Agency Executive Director shall make a final determination concerning the Annual Increment Rent Assistance. The Agency Executive Director's determination-shall be given to the VIP in writing. If VIP is not satisfied with the Agency Executive Director's determination, VIP may, in writing, appeal such determination to the Agency Board within ten (10) days of receipt of the Agency Executive Director's written determination. 4.4 Time Limit on Assistance. Agency's goal is to encourage the prompt development of the Project; therefore, Agency's obligation to provide Financial Assistance through payment of the Annual Increment Rent Assistance shall terminate if VIP has failed to substantially complete construction of the Project on or before December 31, 2000. 1111111111111111111111111111111111111111111111 04,271'0U�2035 GJ 0©P 627/014084-000613304734.1 -9- -- -- --- --- 5. MAINTENANCE OF THE SITE. At all times during the Sublease Term, VIP agrees to maintain all improvements on the Site and all improvements comprising the Project described in the DDA in first class condition and repair (and, as to landscaping, in a healthy condition) and in accordance with the Governmental Approvals and all applicable laws, rules, ordinances, orders, and regulations, as the same may from time to time be amended, of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all then respective departments, bureaus, and officials. In addition, VIP shall keep the Site free from all graffiti and any accumulation of debris or waste material. VIP shall make all repairs and replacements necessary to keep the improvements in first class condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. In the event that VIP breaches any of the covenants contained in this Section 4.4 and fails to cure such default within a period of twenty (20) days after written notice from Agency (with respect to landscaping, graffiti, debris, waste material, and general maintenance) or thirty (30) days after written notice from Agency (with respect to building improvements), or, in the event that any such cure cannot reasonably be completed within said time period(s), if VIP fails to commence such cure within said time period(s) or commences the cure but thereafter fails to diligently prosecute such cure to completion, then Agency shall have the right to enter upon the Site and perform or cause to be performed all such acts and work necessary to cure the default. VIP agrees to immediately pay all of Agency's costs to cure, and that any unpaid Agency costs may be assessed as a lien against the Site or the leasehold herein as provided for public nuisances, and in this regard VIP waives any other public notice, hearing, and other procedures that may be provided for under public nuisance laws and ordinances that are a prerequisite to the assessment of such a lien. 6. PERFORMANCE OF TERMS OF ANY MORTGAGE AGREEMENT. VIP hereby covenants to Agency that VIP shall perform all of the duties and obligations of any Mortgage Agreement including, but not limited to, payment of principal or interest thereunder, taxes, insurance premiums, and utility costs and maintaining the Site. VIP and Agency covenant and agree that Agency shall not be responsible for the performance of any duties or obligations of VIP under any Mortgage Agreement upon the Site. Notwithstanding the foregoing, during the term of this Sublease, Agency shall have (i) the right, but not the obligation, to cure any monetary and non-monetary defaults by VIP of any Mortgage Agreement. In such event, VIP shall immediately reimburse Agency for any and all reasonable expenses incurred by Agency, including attorneys' fees, upon presentation of an invoice therefor. Such sums shall bear interest from the date expended until repaid by VIP at the rate of ten percent (10%) per annum or the maximum non-usurious rate permitted by law, whichever is less. 7. INSURANCE AND INDEMNITY. 7.1 Indemnity. VIP, as a material part of the consideration to be rendered to Agency under this Sublease, hereby waives all claims against Agency for damage to equipment or other personal property, trade fixtures and leasehold improvements in, upon or about the Site, for any liability of VIP under any Mortgage Agreement and for injuries to persons in or about the Site, from any cause arising at any time. VIP shall indemnify 627/014084-0006/3304734 1 -10- I IIII IIIIII I III II II 111111 III 1111111111111111 ]d.'PlllC20 o 0�770dN the Agency, its officers, agents and employees against, and shall hold and save them and each of them harmless from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities, (hereinafter "claims or liabilities") that may be asserted or claimed by any person, firm or entity arising out of or in connection with the use of the Site, by VIP or its employees and customers, for any liability of VIP under any Mortgage Agreement or arising from the failure of VIP to keep the Site in good condition and repair or arising from the negligent acts or omissions of VIP hereunder, or arising from VIP's negligent performance of or failure to perform any term, provision covenant or condition of this Sublease, and in connection therewith: (a) VIP shall defend any action or actions filed in connection with any of said claims or liabilities and will pay all costs and expenses, including legal costs and attorneys' fees incurred in connection therewith; (b) VIP shall promptly pay any judgment rendered against the Agency, its officers, agents or employees for any such claims or liabilities arising out of or in connection with the negligent performance of or failure to perform such work, operations or activities of VIP hereunder; and VIP shall save and hold the Agency, its officers, agents, and employees harmless therefrom; (c) In the event the Agency, its officers, agents or employees is/are made a party to any action or proceeding filed or prosecuted against VIP for such damages or other claims arising out of or in connection with the negligent performance of or failure to perform the work, operation or activities of VIP hereunder, VIP shall pay to the Agency, its officers, agents or employees, any and all costs and expenses incurred by the Agency, its officers, agents or employees in such action or proceeding, including but not limited to, legal costs and attorneys' fees. 7.2 Insurance. During the term of this Sublease, VIP shall maintain without any period of lapse, the policies of insurance specified in any Mortgage Agreement. Said policies of insurance shall name, by endorsement, the Agency and City, and their respective officials, officers, employees, and agents as additional insureds. In addition, VIP shall maintain policies of worker's compensation insurance to the extent required by the Laws of the state of California. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days' prior written notice by certified or registered mail to Agency. Prior to the commencement date of this Sublease and within at least thirty (30) days after the renewal of any such policy, VIP shall provide Agency with certificates of insurance evidencing the required coverages and the naming of the Agency and City and their respective officials, officers, employees, and agents as additional insureds, and shall additionally provide Agency with a copy of the endorsements) naming the Agency and City and their respective officials, officers, employees, and agents as additional insureds. In addition, VIP, upon reasonable notice by Agency, shall make available for inspection by Agency at VIP's office in Palm Springs, California, copies of said insurance policies. 11111 II <<Nr54 5se_s 627/014084-0006/3304734.3 1 1- rFJ4/2?i2000 r38 IUA • 7.3 Hazardous Substances. VIP represents and warrants that there exists no "Hazardous Materials" (as such term is herein defined) nor oil wells, underground storage tanks, or pipelines in, on, under, or about the Site. VIP understands and agrees that in the event VIP incurs any loss or liability concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines whether attributable to events occurring prior to or following the date this Sublease is executed, VIP may look to the prior owners of the Site, but under no circumstances shall VIP look to Agency for any liability or indemnification regarding Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines. Further, VIP shall have the sole responsibility for complying with all Environmental Laws during the term of this Sublease. VIP hereby waives, releases, acquits and forever discharges Agency, City, and their officers, officials, employees, and agents, and their respective heirs, successors, personal representatives and assigns, of and from any and all Environmental Claims, Environmental Cleanup Liability and Environmental Compliance Costs, as those terms are defined below, and from any and all actions, suits, legal or administrative orders or proceedings, demands, actual damages, punitive damages, loss, costs, liabilities and expenses, which concern or in any way relate to the physical or environmental conditions of the Site, the existence of any Hazardous Material thereon, or the release or threatened release of Hazardous Materials therefrom, whether existing prior to, at or after the date this Sublease was executed. It is the intention of the parties pursuant to this release that any and all responsibilities and obligations of Agency, and any and all rights, claims, rights of action, causes of action, demands or legal rights of any kind of VIP, its successors, assigns or any affiliated entity of VIP, arising by virtue of the physical or environmental condition of the Site, the existence of any Hazardous Materials thereon, or any release or threatened release of Hazardous Material therefrom, whether existing prior to, at or after the date this Sublease was executed, are by this release provision declared null and void and of no present or future force and effect as to the parties. In connection therewith, VIP and each of the entities constituting VIP, expressly agree to waive any and all rights which said party may have under Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." VIP and each of the entities constituting VIP, shall, defend, indemnify and hold harmless Agency, City, and their respective officers, directors, employees, agents and representatives (collectively, the "Indemnified Parties") from and against any and all Environmental Claims, Environmental Cleanup Liability, Environmental Compliance Costs, and any other claims, actions, suits, legal or administrative orders or proceedings, demands or other liabilities resulting at any time from the physical and/or environmental conditions of the Site whether before or after the date this Sublease was executed or from the existence of any Hazardous Materials or the release or threatened release of any Hazardous Materials of any kind whatsoever, in, on or under the Site occurring at any 627/014084-0006/3304734.3 12 I IIIIII IIII I IIIIII I III I I I I II III I 111111111111 II III II r 4 2 R 20 0 a0R time whether before or after the date this Sublease was executed, including but not limited to, all foreseeable and unforeseeable damages, fees, costs, losses and expenses, including any and all attorneys' fees and environmental consultant fees and investigation costs and expenses, directly or indirectly arising therefrom, and including fines and penalties of any nature whatsoever, assessed, levied or asserted against any Indemnified Parties to the extent that the fines and/or penalties are the result of a violation or an alleged violation of any Environmental Law. VIP further agrees that in the event VIP obtains, from former or present owners of the Site or any other persons or entities, releases from liability, indemnities, or other forms of hold harmless relating to the subject matter of this Section, VIP shall use its diligent efforts to obtain for Agency the same releases, indemnities, and other comparable provisions. For purposes of this Section, the following terms shall have the following meanings: (a) 'Environmental Claim" means any claim for personal injury, death and/or property damage made, asserted or prosecuted by or on behalf of any third party, including, without limitation, any governmental entity, relating to the Site or its operations and arising or alleged to arise under any Environmental Law. (b) "Environmental Cleanup Liability" means any cost or expense of any nature whatsoever incurred to contain, remove, remedy, clean up, or abate any contamination or any Hazardous Materials on or under all or any part of the Site, including the ground water thereunder, including, without limitation, (i) any direct costs or expenses for investigation, study, assessment, legal representation, cost recovery by governmental agencies, or ongoing monitoring in connection therewith and (ii) any cost, expense, loss or damage incurred with respect to the Site or its operation as a result of actions or measures necessary to implement or effectuate any such containment, removal, remediation, treatment, cleanup or abatement. (c) "Environmental Compliance Cost" means any cost or expense of any nature whatsoever necessary to enable the Site to comply with all applicable Environmental Laws in effect. 'Environmental Compliance Cost" shall include all costs necessary to demonstrate that the Site is capable of such compliance. (d) 'Environmental Law" means any federal, state or local statute, ordinance, rule, regulation, order, consent decree, judgment or common-law doctrine, and provisions and conditions of permits, licenses and other operating authorizations relating to (i) pollution or protection of the environment, including natural resources, (ii) exposure of persons, including employees, to Hazardous Materials or other products, raw materials, chemicals or other substances, (iii) protection of the public health or welfare from the effects of byproducts, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities, or (iv) regulation of the manufacture, use or introduction into commerce of chemical substances, including, without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal. 627/014084-0006/3304734 3 -13 I IIIIII IIIIII IIIIII(IIII IIII IIIIII IIIII III IIIIIII II IIII 04i N iheufn 77 @OA (e) "Hazardous Material" is defined to include any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California, or the United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is: (i) petroleum or oil or gas or any direct or derivative product or by-product thereof; (ii) defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (iii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (iv) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Sections 255010) and (k) and 25501.1 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (v) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (vi) "used oil" as defined under Section 25250.1 of the California Health and Safety Code; (vii) asbestos; (viii) listed under Article 9 or defined as hazardous or extremely hazardous pursuant to Article I of Title 22 of the California Code of Regulations, Division 4, Chapter 30; (ix) defined as waste or a hazardous substance pursuant to the Porter-Cologne Act, Section 13050 of the California Water Code; (x) designated as a "toxic pollutant" pursuant to the Federal Water Pollution Control Act, 33 U.S.C. § 1317; (xi) defined as a "hazardous waste" pursuant to the Federal Resource Conservation and Recovery Act, 42 U.S.C. S 6901 et M. (42 U.S.C. § 6903); (xii) defined as a "hazardous substance" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et se . (42 U.S.C. § 9601); (xiii) defined as "Hazardous Material" pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et se .; or (xiv) defined as such or regulated by any "Superfund" or "Superlien" law, or any other federal, state or local law, statute, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines, as now, or at any time hereafter, in effect. Notwithstanding any other provision of this Sublease, VIP's release and indemnification as set forth in the provisions of this Section, as well as all provisions of this Section shall survive the termination of this Sublease and shall continue in perpetuity. 7.4 No Indemnification for Agency Negligence or Willful Misconduct. Notwithstanding anything in this Sublease to the contrary, VIP and Agency acknowledge that VIP shall not indemnify Agency for any claims or liabilities caused by or arising out of the negligence or willful misconduct of Agency. 8. ASSIGNMENT AND SUBLETTING. VIP understands and acknowledges that Agency entered into the DDA and this Sublease based upon VIP's experience, knowledge, capability and reputation. For this reason, VIP shall not assign this Sublease, or further sublet the Site or otherwise transfer the Site or this Sublease without the prior written consent of Agency, which consent may be given or withheld in Agency's reasonable discretion, except for the following 627/014084-0006/3304734.3 -14 I IIIIII IIIIII IIIIII IIIII IIII IIIIII IIIII III(IIIIII II IIII 34.27 R 000 02 OCR transfers and assignments which Agency's prior written consent shall be given or withheld in Agency's reasonable discretion: (i) transfers/assignments resulting from death or incapacity of an individual; (ii) transfers/assignments resulting from a reorganization, merger, or sale of assets or stock, as long as VIP retains majority ownership and managerial control; in the event of (i) or (ii) above, the transferee or assignee shall agree in writing to Agency's reasonable satisfaction to undertake VIP's responsibilities and obligations under the DDA and this Sublease. Any assignment, subletting or other transfer without the prior written consent of Agency shall be void. The consent by Agency to one assignment, subletting or other transfer shall not be deemed to be a consent to any subsequent assignment, subletting, or other transfer. 9. NON DISCRIMINATION. VIP covenants by and for itself, its successors, assigns and for all persons claiming under or though it that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Site nor shall VIP or any person claiming under or through it 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 Site. VIP acknowledges that this Sublease was made and accepted upon and subject to the provisions of this Section. 10. DEFAULT. 10.1 Default by VIP. The occurrence of any one or more of the following events shall constitute a default and breach of this Sublease by VIP: (a) the breach of any Mortgage Agreement, which breach remains uncured; (b) the failure to perform any of VIP's material agreements or obligations hereunder where such default shall continue for a period of thirty (30) days after written notice thereof from Agency to VIP, except for such defaults that VIP demonstrates to Agency's reasonable satisfaction will take longer than thirty (30) days to cure, so long as VIP has commenced to cure within the thirty (30) day period after notice from Agency; (c) the vacation or abandonment of the Site by VIP; (d) the making by VIP of a general assignment for the benefit of creditors to avoid bankruptcy; (e) the filing by VIP of a voluntary petition in bankruptcy or the adjudication of VIP as a bankrupt; (f) the appointment of a receiver to take possession of all or substantially all the assets of VIP located at the Site or of VIP's leasehold interest in the Site; (g) the filing by any creditor of VIP of an involuntary petition in bankruptcy which is not dismissed within sixty (60) days after filing; or (h) the attachment, execution or other judicial seizure of all or substantially all of the assets of VIP or VIP's leasehold where such an attachment, execution or seizure is not discharged within sixty (60) days. In the event of any such default or breach by VIP, Agency may at any time thereafter, without further notice or demand, rectify or cure such default, and any sums expended by Agency for such purposes shall be paid by VIP to Agency upon demand and as additional compensation hereunder. In the event of any such default or breach by VIP, Agency shall have the right to recover from VIP any amount necessary to compensate the Agency for all the detriment proximately caused by VIP's failure to perform its obligations under this Sublease or which in the ordinary course of things 627/014084-0006/3304734.3 -15-,i III III III IIII II IIII I IIII IIII IIIIIIIII II IIII A4.27,'2009 ] 00R 58 £ would be likely to result therefrom. Agency shall also have the right but not the obligation upon the breach by VIP of any Mortgage Agreement, to sublease the Site to a Substitute Operator, pursuant to Section 3.2 above. Efforts as Agency may make to mitigate damages caused by VIP's breach of this Sublease shall not constitute a waiver of Agency's right to recover damages against VIP hereunder, nor shall anything herein contained affect Agency's right to indemnification against VIP for any liability arising prior to the termination of this Sublease. Failure of Agency to terminate this Sublease shall not prevent Agency from later terminating this Sublease or constitute a waiver of Agency's right to do so. VIP further agrees that, in the event of a default by VIP, and subject to the consent of Agency pursuant to the Lease, Owner shall have the right to cure such default to the same extent allowed by Agency hereunder. 10.2 Default by Agency. The failure to perform any of Agency's agreements or obligations hereunder, where such default shall continue for a period of thirty (30) days after written notice thereof from VIP to Agency, shall constitute a default and breach of this Sublease by Agency, except for such defaults Agency demonstrates to VIP's reasonable satisfaction will take longer than thirty (30) days to cure so long as Agency has commenced to cure within the thirty (30) day period after notice from VIP. In the event of any such default or breach by Agency, VIP shall have the right (i) to continue this Sublease in full force and effect and enforce all of its rights and remedies under this Sublease, or (ii) VIP shall have the right at any time thereafter to elect to terminate this Sublease. 11. MISCELLANEOUS. 11.1 VIP Compliance With Laws. It shall be the sole responsibility of VIP to comply with all federal, state, and local laws, regulations, and rules regarding environmental compliance subsequent to execution of this Sublease. 11.2 Right of Access. For the purpose of assuring that VIP is complying with the terms of this Sublease, representatives of Agency shall have the right upon reasonable notice to VIP to enter upon the Site, without charge, during normal business hours. 11.3 Legal Actions. In the event of a dispute between the parties arising out of or related to this Sublease, legal actions shall be instituted in the Superior Court of the County of Riverside, State of California, in any other appropriate court in that county, or in the United States District Court for the Central District of California. VIP agrees to submit to the personal jurisdiction of such court. The laws of the state of California shall govern the interpretation and enforcement of this Sublease. 11.4 Merger of Prior Agreements and Understandings. This Sublease, the Lease and the DDA, and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged herein and shall be of no further force or effect. 627/014084-0006/3304734.3 16 IIIIIII IIIIII IIIIII IIIII IIII IIIIII IIIII III IIIIIII 11 IIII N4, 2�C53113o 977 wR 11.5 Notices Demands and Communications Between the Parties. Formal notices, demands, and communications between Agency and VIP shall be sufficiently given if: (i) personally delivered; (ii) delivered by overnight courier (acknowledged by receipt); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: CITY: City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director A copy to: RUTAN & TUCKER, LLP 611 Anton Blvd., Suite 1400, P.O. Box 1950 Costa Mesa, CA 92628 Telecopier No. (714) 546-9035 Attn: David J. Aleshire, Esq. VIP: VIP MOTORS Jerry G. Johnson 1300 Rodney Parham Road, Suite 300 Little Rock AR 72212 All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight(48) hours after depositing in the United States Postal System in the manner described in this Section. 11.6 Acceptance of Service of Process. In the event that any legal action is commenced by VIP against Agency, service of process on Agency shall be made by personal service upon Executive Director or the Secretary of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against VIP, service of process on VIP shall be made by personal service upon VIP or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. 11.7 Attorney's Fees. In the event of litigation between the Parties arising out of this Sublease, the prevailing Party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, including attorneys' fees on appeal and all other reasonable costs and expenses for investigation of such action, including the conducting of discovery, in addition to whatever other relief to which it may be entitled. 11.8 Conflicts of Interest. No member, official, or employee of Agency shall have any personal interest, direct or indirect, in this Sublease nor shall any such member, official, or employee participate in any decision relating to this Sublease which affects his or her personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. 627/014084-0006/3304734.3 17 II II III II II I I I I II I III II 04,27/2005 f08 8+0F 11.9 Due Execution. The person(s) executing this Lease on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Lease on behalf of said party, (iii) by so executing this Lease, such party is formally bound to the provisions of this Lease, and (iv) the entering into this Lease does not violate any provision of any other agreement to which said party is bound. IN WITNESS WHEREOF, Agency and VIP have caused this instrument to be executed on their behalf by their respective officers or agents herein duly authorized as of the date first written above. "AGENCY" ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body corporate and politic Agency Secretary Executive Director APPROVED AS TO FORM: Agency Counsel "VIP" VIP MOTOR CARS, LTD, a California corporation wholly owed by VIP MOTOR CARS ACQUISITION, INC. By: Title: By: Title: I �000 1540 35 IIII IIII I II III III III I III III II 11I 04/27/ c00 08 UUA 627/014084-0006/3304734.3 -18- STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 111111IIIN1311111111111411III111113111 04 2 F2, G?760F 627/014084-0006/3304734.3 -19- STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] II II I I II II I I I I II 111111111111 II 04. 27 63158035 3a£0 37G&A 627/014084-0006/3304734.3 -20- STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On ,beforeme, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] IIIIII IIII I IIIIII I III I II I IIII II I I III IIII INH4.2G'7 541�f085r�uF 627/014094-0006/3304734.3 -21 EXHIBIT "A" LEGAL DESCRIPTION OF SITE [SEE FOLLOWING PAGE] II II I I II II I I I I II I II I II ©"cC7�R OofN 77 0R 627/014084-0006/3304734 3 -22- EXHIBIT "B" FINANCIAL ASSISTANCE SCHEDULE [SEE FOLLOWING PAGES] II II I I I III III II I IIII III III III II III 2009 1 A J4 5 fo el 6271014084-000613304734.3 -23- Exhibit"B" FINANCIAL ASSISTANCE SCHEDULE VIP Motorcars, Ltd. Sales Tax Analysis, Lease/Sublease 28-Feb-00 Normal Adjusted Actual Sales New Before CPI Before CPI City Share of City Share of Tax Base(1998) Incremental Lease Lease Fiscal Taxable Sales Tax Sales Tax plus 3%,grow Sales Tax Payment to Payment from Available Tax Cumulative Year Year Sales (1%of Sales) 90%of Normal 1 5slyear (G[Qss) EQH VIP Increment Savings to VIP 1999-00 $ 25,765,854 $ 257,659 $ 231,893 $ 222,814 $ 9,079 $ 349,500 $ 349,500 $ - 2000-01 $ 33,622,888 $ 336,229 $ 302,606 $ 226,156 $ 76,450 $ 699,000 $ 622,550 $ 45,600 $ 76,450 3 2001-02 $ 34,631,575 $ 346,316 $ 311,684 $ 229.548 $ 82,136 $ 699,000 $ 616,864 $ 46,512 $ 158,586 4 2002-03 $ 38,000,000 $ 380,000 $ 342,000 $ 232,991 $ 109,009 $ 699,000 $ 589,991 $ 47,442 $ 267,594 5 2003-04 $ 39,140,000 $ 391,400 $ 352,280 $ 236,486 $ 115,774 $ 699,000 $ 583,226 $ 48,391 $ 383,368 6 2004-05 $ 40,314,200 $ 403,142 $ 362,828 $ 240,034 $ 122,794 $ 699,000 $ 576,206 $ 49,359 $ 506,162 7 2005-06 $ 41,523,626 $ 415,236 $ 373,713 $ 243,634 $ 130,078 $ 699,000 $ 568,922 $ 50,346 $ 636,241 8 2006-07 $ 42,769,335 $ 427,693 $ 384,924 $ 247,259 $ 137,635 $ 699,000 $ 561,365 $ 51,353 $ 773,876 9 2007-08 $ 44,052,415 $ 440,524 $ 396,472 $ 250.998 $ 145,474 $ 699,000 $ 553,526 $ 52,380 $ 919,350 10 2006-09 $ 45,373,987 $ 453,740 $ 408,366 $ 254,763 $ 153,603 $ 699,000 $ 545,397 $ 53,428 $ 1,072,953 ¢ 11 2009-10 $ 46,735,207 $ 467,352 $ 420,617 $ 258,584 $ 162,032 $ 699,000 $ 536,968 $ 54,496 $ 1,234985 'zn 12 2010-11 $ 48,137,263 $ 481,373 $ 433,235 $ 262,463 $ 170,772 $ 699.000 $ 528,228 $ 55,586 $ 1,405:757 ��o r $ 1,414,836 $ 8,038,500 $ 6,632,743 $ 554,893 r h •r s EXHIBIT "D" SCHEDULE OF PERFORMANCE AGREEMENT ITEM TO BE PERFORMED TIME FOR PERFORMANCE SECTION REFERENCE 1. Developer executes and delivers March 15, 2000 4.1.4 Agreement to Agency. 2. Agency approves Participant's Basic Concurrently with execution of 4.1.4 Concept Drawings. Agreement 3. Developer prepares and submits to Within thirty (30) days of 4.1.4 City final working drawings, grading execution of Agreement plan and landscaping plan. 4. City and Agency approve or Within thirty (30) days of the date 4.1.7 disapprove final drawings and plans. Developer submits final drawings and plans. 5. Developer resubmits final drawings Within thirty (30) days of the date 4.1.7 and plans with any revisions required Agency or City returns final by the City or Agency. drawings and plans to Developer with requested changes. 6. City and Agency approve or Within thirty (30) days of the date 4.1.7 disapprove resubmitted final drawings Developer resubmits revised final and plans. drawings and plans. k7Developerer to submit proof of Within thirty (30) days of the 6.3.6 e. Effective Date of this Agreement. er to commence constructionNo later than March 15, 2000. 4.1.9 roject. er to substantially completeNo later than December 31, 2000. 4.5 the Project. er Covenant to Open. Within thirty (30) days of the 4.5 substantial completion of construction of the Project. III I IIII I I II II II III II I III I III I II III 2000 7 raR 68 o£ 7 TO DISPOSITION AND DEVELOPMENT AGREEMENT PAGE 1 OF 627/014084-0006/3302470.6 a02/29/00 AGREEMENT ITEM TO BE PERFORMED TIME FOR PERFORMANCE SECTION REFERENCE 11. Agency to issue Notice of Release of Within five (5) days of 5.2 Construction Covenants. Developer's compliance with the Developer Covenant to Open. 12. New Dealerships Commencement Concurrent with the date of the 5.2 Date. Notice of Release of Construction Covenants. 13. Execution of Lease and Sublease. Concurrent with the execution of 5.3 this Agreement. 14. Developer's obligation to refrain from Applies throughout term of 5.4.2 discrimination. Agreement, and shall run with the land in perpetuity. 15. Commencement of Lease and Concurrent with New Dealerships 5.3 Sublease. Commencement Date. 16. Lease: Agency's rent payment On or before the fifteenth (15th) Exhibit "B" obligation under Lease. day of each month of the Lease (Lease), 3 Term. 17. Term of Lease. Twelve (12) years after the Exhibit "B" Agency issues the Notice of (Lease), 4 Release of Construction Covenants, or as provided at Section 4 of the Lease. 18. Sublease: Exhibit "C" VIP's rent payment obligation On or before the first (1st) day of (Sublease), 2.2 under Sublease. each month of the Sublease Term. 19. Term of Sublease Twelve (12) years after the Exhibit "C" Agency issues the Notice of (Sublease), 2.3 Release of Construction Covenants, or as provided at Section 2.3 of the Sublease. 20. Use Covenants Apply throughout term of the Exhibit "C" Redevelopment Plan for Palm (Sublease), 3.1 Springs Project Area 9G. III IIIIII II II III IIIII II I II III II 9422-1R90oof08700A EXHIBIT T„ _- - - -- -- -- --- - TO DISPOSITION AND DEVELOPMENT AGREEMENT 627/014004-0006/3302470.6 a02/29/00 PAGE 2 OF A � AGREEMENT ITEM TO BE PERFORMED TIME FOR PERFORMANCE SECTION REFERENCE 21. VIP's obligation to provide Prior to the commencement date of Exhibit "C" Agency with certificates of Sublease and within at least thirty (Sublease), 7.2 insurance required under (30) days after the renewal of any Sublease. policy during the Term of the Sublease. 22. Agency's obligation to provide Terminates if VIP has failed to Exhibit "C" Financial Assistance. substantially complete construction (Sublease), 4.4 of the Project by December 31, 2000. 23. Agency payment of Annual Following the end of each year of Exhibit "C" Increment Rent Assistance. the Sublease Term and within (Sublease), 4.3 thirty (30) days following Agency's receipt of the reports filed by VIP with the State Board of Equalization. It is understood that this Schedule of Performance is subject to all of the terms and conditions of the text of the Agreement. The summary of the items performance in this Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any conflict or inconsistency between this Schedule of Performance and the text of the Agreement, the text shall govern. The time periods set forth in this Schedule of Performance may be altered by attorney or amended only by written agreement signed by both the Developer and the Agency. The Executive Director of Agency shall have the authority to approve extensions of time without action of the Board of Directors of Agency not to exceed a cumulative total of 180 days. III II IIII I II II II I I 1 II I III I II III ca C77 0 53fc3 aca EXHIBIT „ " TO DISPOSITION AND DEVELOPMENT AGREEMENT 627/014094-DD06/3302470.6 a02/29/DO PAGE 3 OF EXHIBIT "E" NOTICE OF RELEASE OF CONSTRUCTION COVENANTS [SEE FOLLOWING PAGES] II II I I II III I I I I II II III II II '27,12 n�Fista35 04�2000-17r803 er7P EXI-IIBIT °C° 71 of 77 TO DISPOSITION AND DEVELOPMENT AGREEMENT 627/014084-0006/3302470.6 a02/29/00 PAGE 1 OF I RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director (Space Above Line for Recorder's Use) (Exempt From Recording Fee Per Gov. Code §6103) [Record as Partial Release of Agreement] NOTICE OF RELEASE OF CONSTRUCTION COVENANTS WHEREAS, VIP MOTOR CARS, LTD, a California corporation, wholly owned by VIP MOTOR CARS ACQUISITION, INC., a California corporation (collectively "Developer") and FDH Enterprises, Inc., an Arkansas corporation ("Owner") is the owner of the fee interest in that certain real property in the City of Palm Springs, County of Riverside, California, legally described in Exhibit "A" hereto (the "Site"); and WHEREAS, by a Disposition and Development Agreement (hereinafter referred to as the "DDA") dated as of March , 2000, by and between Developer, Owner and the Community Redevelopment Agency of the City of Palm Springs, a public body, corporate and politic ("Agency"), Developer has redeveloped the Site by constructing the "New Dealerships" (as defined in the DDA) on the Site; and WHEREAS, pursuant to Section 4.5 of the DDA, promptly after Developer has satisfied the Developer Covenant to Open, Agency shall furnish Developer with a Notice of Release of Construction Covenants upon written request therefor by Developer; and WHEREAS, Developer has requested that Agency issue this Notice of Release of Construction Covenants; and WHEREAS, the issuance by Agency of this Notice of Release of Construction Covenants shall be conclusive evidence that Developer has satisfied the Developer Covenant to Open as set forth in the DDA; and III II IIII I I II II II III I II I II II II a4 200 72©]�;S EXHIBIT HI aaFl TO DISPOSITION AND DEVELOPMENRREI MENT 627/014084-0006/3302470.6 a02/29/00 PAGE 2 OF 1 NOW, THEREFORE: 1. As provided in the DDA, Agency does hereby certify that Developer has satisfied the Developer Covenant to Open and that such covenant is hereby released by Agency in accordance with the terms of the DDA. 2. This Notice of Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance construction work on the Site, or any part thereof. Nothing contained herein shall modify in any way any other provision of the DDA. 3. This Notice of Release of Construction Covenants is not a Notice of Completion as referred to in California Civil Code Section 3093. IN WITNESS WHEREOF, Agency has executed this Notice of Release of Construction Covenants as of this day of COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS By: Executive Director [Consent to Recordation on following page] II II III III I III II I II I II l l I I II III qa. AC ©^ ©aa EXHIBIT „C" 7 TO DISPOSITION AND DEVELOPMENT AGREEMENT 627/014084-0006/3302470.6 o02/29/00 PAGE 3 OF 1 CONSENT TO RECORDATION FDH ENTERPRISES, INC. THE OWNER OF THE FEE INTEREST IN THE REAL PROPERTY DESCRIBED IN EXHIBIT "A" HERETO, HEREBY CONSENTS TO THE RECORDATION OF THE FOREGOING NOTICE OF RELEASE OF CONSTRUCTION COVENANTS AGAINST SAID REAL PROPERTY. FDH ENTERPRISES, INC., an Arkansas corporation By: Title: By: Title: IIIIII IIIIII IIIIII IIIII IIII IIIIII IIIII III IIIIII III IIII na �r f 25 7�, a EXHIBIT "C, TO DISPOSITION AND DEVELOPMENT AGREEMENT 627/014084-0006/3302470.6 a02/29/00 PAGE 4 OF I STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] IIIIIIIIIIIIIIIII III III IIIIIIIIIIIIIIII III III 042�hrC751]o£ 75CRFl EXHIBIT „C, -- - - TO DISPOSITION AND DEVELOPMENT AGREEMENT 627/014084-0006/3302470.6 a02/29/00 PAGE 5 OF I STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] I IIIIII IIIIII IIIIII IIIII IIII IIIIII IIIII III IIIIII III IIII a4,'27 26G of F Gal 00A EXHIBIT „C, TO DISPOSITION AND DEVELOPMENT AGREEMENT - - --- - - PAGE 6 OF 1 627/014064-0006/3302470.6 a02/29/00 STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On beforeme, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] IIII II III II IIII III III II III II IIII II IN 04r yh)Ecll of 95f99R EXHIBIT TO DISPOSITION AND DEVELOPMENT AGREEMENT 627/014094-0006/3302470.6 .02/29/00 PAGE 7 OF 1 DOC a 2000-147609 00 RECORDING REQUESTED BY 04/20/2paage0I of 25ee:NC AND WHEN RECORDED, MAIL TO: Recorded in official Records County of Riverside Gary L. Orso --- _ Assessor, County Clerk 6 Recorder d9�; IIIIIII IIIIII IIIIII IIII IIIII IIIII IIIIII III IIIII IIII IIII d ^�rrs /, Pi`0 01F f',INI SF,�C;grv... _Gy�'bp27fk7 M S U yPAGE SIZE OA PCOR NOOOR 9MF MSC ��.7e.3��O�G�,e%-a �,'—[`;_ - - _ • /mil A R L COPY LONG REFUND •NVOHG EXA This Document is recorded at the request of the Redevelopment Agency of the City of Palm Springs and is therefore exempt from the payment of recording fees 6 � III pursuant to Government Code § 6103 5— SUBLEASE AGREEMENT p THIS SUBLEASE AGREEMENT ("Sublease") is entered into as of Mft 1 ¢ , 2000 ("Effective Date")by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), and VIP MOTOR CARS, LTD, a California corporation, wholly owned by VIP MOTOR CARS ACQUISITION, INC. (collectively "VIP"). RECITALS A. FDH Enterprises, Inc. ("Owner"), VIP and Agency have entered into that certain Development and Disposition Agreement ("DDA") concurrently herewith, which DDA is incorporated herein by this reference as though fully set forth, pursuant to which, in exchange for VIP's improvements, occupancy, and use of the property located in the City of Palm Springs, State of California, commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, and more particularly described in the legal description attached hereto and incorporated herein as Exhibit "A" ("Site"). B. Under the terms of the DDA, the Agency has agreed to provide financial assistance to VIP for the redevelopment of the Site, which financial assistance is to be provided through the lease of the Site from Lessor to Agency, pursuant to the terms provided in a lease agreement entered into by and between Owner and Agency concurrently with the DDA ("Lease") and this Sublease, with a land write-down of sublease payments made from VIP to Agency based on the sales tax increment generated from the Site, pursuant to the terms herein. C. The parties hereto understand and acknowledge that the sole purpose for the Lease and this Sublease is to effectuate the DDA. The Agency shall not have physical possession of 627/014084-0006/3304734.5 a02/29/00 the Site, shall not be responsible for performing any of the obligations unposed upon VIP for use and occupation of the Site, as provided herein, and shall not be liable for any breach under any Mortgage Agreement, as defined herein, by which VIP or the Site are bound. E. In order to effectuate the DDA, VIP desires to sublease the Site from Agency pursuant to the terms of this Lease. NOW, THEREFORE, the parties hereto agree as follows: 1. DEFINITIONS. All words and phrases shall have the meaning provided in the DDA, except as specifically defined herein. 1.1 "Agency" shall mean the Community Redevelopment Agency of the City of Palm Springs, a public body, corporate and politic, having its offices at 3200 E. Tahquitz Canyon Way, Palm Springs, California 92263. The term "Agency" as used herein also includes any assignee of, or successor to, the rights, powers, and responsibilities of the Community Redevelopment Agency of the City of Palm Springs. 1.2 "Annual Increment Rent Assistance" shall have the meaning ascribed in Section 4 herein. 1.3 'Base Year Revenue" shall have the meaning ascribed in Section 4.2(b) herein. 1.4 'Base Rent" shall have the meaning ascribed in Section 2.2 herein. 1.5 "City" shall mean the City of Palm Springs, a municipal corporation, organized under the laws of the State of California and having its offices at City Hall, at 3200 E. Tahquitz Canyon Way, Palm Springs, California 92263. The City is not a party to this Agreement and shall have no obligations hereunder, but shall have the indemnity and other rights set forth in Section 8. 1.6 "Cumulative Increment Rent Assistance" shall mean the total Annual Increment Rent Assistance provided by Agency to VIP throughout the Sublease Term, which amount shall in no event exceed One Million Dollars ($1,000,000) in actual dollars paid in the aggregate (no interest or present value adjustment, as more specifically provided at Section 4.3(d) herein). 1.7 "Executive Director" shall mean the individual duly appointed to the position of Executive Director of the Agency. 1.8 "Existing Dealerships" shall mean the existing Mercedes-Benz, Infiniti and BMW dealership franchises located on the Site. 1.9 "Financial Assistance Schedule" shall mean that certain schedule attached hereto as Exhibit "B" and incorporated herein by reference, setting forth the Annual Increment Rent Assistance to be provided to VIP by Agency, subject to the terms of Section 4 herein. 627/014084-0006/3304734.3 -2- II 111111111111111111111111111111111111 25 11111111111111111 04.20,' 00F70 1.10 "Increment Deficiency(ies)" shall have the meaning ascribed in Section 4.3(a) herein. 1.11 "Hazardous Materials" shall have the meaning ascribed in Section 8.3 herein. 1.12 "Major Motor Vehicle Manufacturers" shall mean Mercedes-Benz, BMW, Infiniti or any other comparable luxury passenger vehicle manufacturer whose domestic passenger vehicle sales rank in the top ten of passenger vehicle manufacturers in the world. 1.13 "Mortgage Agreement" shall mean any mortgage, deed of trust, or other agreement, instrument or arrangement upon which the Site or VIP is bound. 1.14 "New Dealerships" shall mean the proposed renovated and expanded, modern sales, leasing, and service facility to be constructed on the Site and operated as three separate Major Motor Vehicle Manufacturer franchises for the sales and leasing of new and incidentally related used passenger vehicles, and the servicing of passenger vehicles and sale of parts, as more particularly described in this Agreement. 1.15 "Notice of Release of Construction Covenants" shall mean the notice by Agency to be recorded, which Notice shall be in the form set forth in Exhibit "E", stating that Developer has satisfied Developer's Covenant to Open in accordance with the terms of this Agreement. 1.16 "Sales Taxes Revenue" shall have the meaning ascribed in Section 4.2(a) herein. 1.17 "Sublease Term" shall have the meaning ascribed in Section 2.3 herein. 1.18 "Site" shall mean that certain real property consisting of three parcels and commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, Palm Springs, California consisting of approximately 4.5 acres. The Site is legally described in Exhibit "A", attached hereto and incorporated herein. 1.19 "Substitute Operator" shall have the meaning ascribed in Section 3.2 herein. 1.20 "Use Covenants" shall have the meaning ascribed in Section 3.1. 2. SUBLEASE AND SUBLEASE RENT. 2.1 Sublease. Agency hereby subleases the Site to VIP upon the terms and conditions set forth herein. 2.2 Consideration for Sublease. In consideration for the sublease of the Site, VIP agrees to pay to Agency the base rent of Fifty Five Thousand and 00/100 Dollars ($55,000.00) per month for the Sublease Term of this Sublease ('Base Rent"), on or before the first (1st) day of each month of the Sublease Term, provided that VIP receive the Annual Increment Rent Assistance pursuant to the terms and conditions in Section 4. 627/014084-0006/3304734.3 -3- III II�� III 1IIIIIII�IIIII111111I III A z�ea£,2s90aR 2.3 Sublease Term. This Sublease shall commence on the date in which the Agency issues the Notice of Release of Construction Covenants, pursuant to the terms of the DDA, and shall terminate on the date that is the earlier of (i) twelve (12) years after the date in which the Agency issues the Notice of Release of Construction Covenants; (ii) Owner's or VIP's breach of any provision in the DDA or Lease, after the expiration of the time to cure, as set forth in the DDA or Lease, respectively, (iii) the date that the Cumulative Increment Rent Assistance equals One Million Dollars ($1,000,000); or (iv) VIP's material breach of any provision in this Sublease, after the expiration of the time to cure, as set forth herein ("Sublease Term"). Notwithstanding anything herein to the contrary, all of the terms, covenants, agreements, or conditions set forth in this Sublease shall extend for the duration of this Sublease, except as specifically stated elsewhere in this Sublease, including but not limited to the duration of the Use Covenants at Section 3, and as applicable to the interpretation and enforcement of particular matters, which terms, covenants, and conditions shall survive as stated with reference to those matters. 3. VIP USE AND OPERATING COVENANTS. 3.1 Use Covenants. VIP recognizes that a material consideration for Agency's entering into this Sublease is to assist in the generation of additional sales and property tax revenues to the City and Agency from the operation of the New Dealerships on the Site and the increased valuation of said property and to assist in revitalization of the Project Area and the immediate neighborhood in which the Project is located. Accordingly, VIP covenants and agrees, which covenants shall run with the land and bind all successors, assigns, and every successor in interest of VIP during the term of the Redevelopment Plan for Patin Springs Project Area 9G: (a) The use of the Site shall be restricted to the operation of the New Dealerships or other Major Motor Vehicle Manufacturer franchise; (b) VIP shall make commercially reasonable efforts to assure that the New Dealerships shall be operated on a continuous and uninterrupted basis and shall be open to the public for regular business with hours of operation not less than what had been the customary hours of operation of the Existing Dealerships for the full Sublease Term; (c) The Site shall be used as the point of sale for sales and leases of new and used automobiles sold or leased by the Major Motor Vehicle Manufacturer franchise operating on the Site, except that nothing herein shall prevent VIP from providing out-of- state deliveries, based on specific customer demands; and (d) VIP shall exercise its best efforts to maximize long-term sales, consistent with market conditions and prudent business practices. All of the foregoing sub-sections (a) through (d), inclusive, are referred to as the "Use Covenants". 3.2 Violation of Use Covenants. This Section shall govern defaults concerning violations of the Use Covenants, and in the event of any inconsistency with Section 11, 627/014084-0006/3304734 3 -4- 1111111 II II 1 II I I I I II 1 II II II 04 �0 0£0 08 90RR the provisions of this Section shall govern. In the event that VIP, or any successor or assign, violates any of the Use Covenants set forth in this Section 3.2 during the Sublease Term and such default continues for a period of thirty (30) days after Agency has given VIP the written notice thereof, Agency may, at Agency's election, either terminate this Sublease without liability to Owner or VIP, or may give VIP sixty (60) days of such default to find a substitute dealership operator of a Major Motor Vehicle Manufacturer ("Substitute Operator"), which Substitute Operator shall be subject to the written consent of Agency, to operate the New Dealerships pursuant to the terms of the Lease and this Sublease. VIP further agrees that it shall be required to continue to pay the Sublease Rent for any period in which it is in violation of the Use Covenants, and acknowledges that Agency shall not be required to pay Rent under the Lease for such period. Should VIP or Owner be unable to find a Substitute Operator satisfactory to Agency within such sixty (60) days, Agency and VIP agree that VIP shall further reimburse Agency for any costs incurred by it as a result of such violation, including, but not limited to costs in finding and securing a Substitute Operator to operate the New Dealerships on the Site (which Substitute Operator shall not be subject to the approval or consent of VIP or Owner) and may either: (i) terminate the Sublease without liability to Owner or VIP, or (ii) give VIP and/or Owner a written extension of time to obtain a satisfactory Substitute Operator. 4. ANNUAL INCREMENT RENT ASSISTANCE. Agency, subject to the terns of this Sublease, agrees to provide to VIP rental assistance in the form, in an amount and for the term specifically described herein ("Annual Increment Rent Assistance") to assist VIP with the construction of the Project under the terms of the DDA. Agency shall have no responsibility or obligation for any income tax or other tax consequences to VIP resulting from the provision of the Annual Increment Rent Assistance. 4.1 Agency's Conditions to Paving the Annual Increment Rent Assistance. Agency's obligations to make any payments of the Annual Increment Rent Assistance for use by VIP in the construction of the Project shall be conditional and contingent upon the satisfaction, or Agency's written and signed waiver, of each of the following conditions precedent: (a) VIP shall have submitted to Agency evidence of VIP's financial capability to develop the Site and operate the New Dealerships in a form acceptable to the Agency and obtained the Executive Director's approval of same; (b) VIP shall have satisfied the terms and conditions of the DDA and the Agency shall have issued the Notice of Release of Construction Covenants pursuant to the terms of the DDA. (c) Increment Rent Assistance shall have accrued pursuant to Section 4.2. 4.2 Determination of Increment Rent Assistance. Commencing with the satisfaction of the conditions in Section 4.1 and the Agency's issuance of the Notice of Release of Construction Covenants in Subsection 4.l(d) and ending at the close of business on the day prior to the one (1) year anniversary of the beginning of the Sublease Term, and for 627/014084-0006/3304734.3 -5- 11 If II I I I I I I II II 1 rg4 z00e o0'08 25�00R each year thereafter for the entire Sublease Term, Agency shall pay to VIP the Annual Increment Rent Assistance, which shall be a rebate of a portion of the Base Rent. The "Annual Increment Rent Assistance" shall be measured by the Sales Tax Revenue as defined in this Section 4.2 below, generated at the Site over the Base Year Revenue, as defined at Section 4.2 below, for each given year of the Sublease Term pursuant to the Financial Assistance Schedule at Exhibit "B", which Annual Increment Rent Assistance shall be in the amount shown at Exhibit "B" for each given year of the Sublease Term. The Annual Increment Rent Assistance shall be payable by Agency to VIP pursuant to Section 4.3 below. The following terms and provisions shall apply with respect to the foregoing obligation: (a) As used herein, the term "Sales Tax Revenue" shall mean the sales and use taxes paid or payable by the State Board of Equalization to the City that are generated from sales from the Site upon which sales or use taxes are imposed pursuant to applicable California law, including but not limited to California Revenue and Taxation Code Section 6000 et SeMc ., and shall include the sales or use taxes imposed on the leasing of vehicles (including but not limited to the sales or use taxes paid for the capitalized cost reduction on vehicle leases) which are included in VIP's quarterly sales tax filings to the State Board of Equalization. (b) As used herein, the "Base Revenue" shall mean the amount set forth at the 6th column of Exhibit "B" (entitled "Actual Sales Tax Base plus 3% Grow 1 1/2% per year") for each given year of the Sublease Term. The Base Revenue shall be the projected sales taxes in the first year, escalated at the rate of one and one-half percent (1 1/2%) per year. (c) VIP shall timely report all sales and use taxes from the Site to the State Board of Equalization in accordance with the laws, rules, and regulations applicable to such reporting. (d) If due to a change in state law, the City loses Sales Tax Revenue so that it is not receiving an amount equal to the Base Revenue, the Annual Increment Rent Assistance shall be reduced or eliminated to the extent necessary to assure the City receipt of the Base Revenue. (e) The parties hereto acknowledge that the State Board of Equalization makes payments to the City based on both actual and anticipated sales and use tax revenues and that the State Board of Equalization makes periodic reconciliations. The determination of Sales Tax Revenue for any annual, quarterly, or other period shall be subject to the timing and reconciliation process related to the processing by the State Board of Equalization of payments of such Sales Tax Revenue to the City. Any adjustments resulting from any interim or estimated determination of Sales Tax Revenue for any annual, quarterly, or other period shall be reconciled by the parties as soon as practicable without inclusion of, or any obligation to pay, interest. (f) Sales Tax Revenue shall be determined based on actual amounts received by the City based only on the City's share of the State sales and use tax applicable to the 627/014084-0006/3304734 3 -6- 1111111 1 III III 11111111111111 III1II 1111 04 z0ae of GS 29900R Site (which, as of the Effective Date, is 1% of the taxable amount). Sales Tax Revenue shall not include amounts paid to the City by the State Board of Equalization derived from any sales tax overrides or special tax amounts received by the City, nor shall include any administrative fees or charges imposed by the State Board of Equalization that reduce the actual amounts of sales and use taxes received by the City. (g) VIP shall keep at its office in the City of Palm Springs, full and accurate books of account, records, and other pertinent data showing all gross income earned upon the Site that is reportable for California sales and use tax purposes, including all documents required to be maintained by VIP by the State of California for sales and use tax purposes. (h) VIP shall furnish to Agency true and correct photocopies of its quarterly California sales and use tax returns at the time each is filed with the State of California, together with a copy of all checks or wire transfers or other forms of transfer of funds sent by VIP for such payment of sales and use taxes. (i) Agency shall be entitled, during the Sublease Term and for two (2) years following expiration of the Sublease Term, to inspect and examine all of VIP's books of account, records, and other pertinent data so that Agency can ascertain VIP's gross sales upon which California sales and use tax is payable. 4.3 Agency Payment of Annual Increment Rent Assistance, Agency shall determine, following the end of each year of the Sublease Term whether VIP has generated sufficient Sales Tax Revenue to produce any Annual Increment Rent Assistance for the year just ended. Agency shall, within thirty (30) days following its receipt of the reports filed by VIP with the State Board of Equalization in accordance with Revenue and Taxation Code Section 6452, calculate, determine and pay to VIP any amount of Annual Increment Rent Assistance generated at the Site for the year just ended [up to the amount of the Sublease Rent]. In the event VIP fails to generate Sales Tax Revenue in an amount sufficient to create any Annual Increment Rent Assistance for any given year of the Sublease Term, Agency shall not be required to pay VIP any Annual Increment Rent Assistance as a rebate of the Sublease Rent for such given year of the Sublease Term, and the following conditions shall apply: (a) For any year that VIP fails to generate any Annual Increment Rent Assistance [or sufficient Annual Increment Rent Assistance up to the amount of Base Rent] VIP may carry over such deficiency(ies) of Armual Increment Rent Assistance ("Increment Deficiency(ies)") to future years of the Sublease Term, and VIP shall be entitled to payment of Annual Increment Rent Assistance in any future year of the Sublease Term where Annual Increment Rent Assistance exceeds the Base Rent for such given year, up to the amount of Increment Deficiency carried over from any previous year or years. (b) VIP shall not be entitled to carry any Increment Deficiency over to any year beyond the Sublease Term. 627/0t4084-0006/3304734.3 -7- II II I I II I I I 11111111111111111 II II 11111 04/20/20100©s900a of es s i (c) In no event shall VIP be entitled to receive Annual Increment Rent Assistance for the entire Sublease Term, in an amount which exceeds total Base Rent paid by VIP for the Sublease Term. (d) Notwithstanding anything in this Sublease to the contrary, in no event shall Agency owe any funds to VIP in the event VIP generates, in any year of the Sublease Term or cumulatively, Sales Tax Revenue from the Site that is greater than the Annual Increment Rent Assistance for any given year of the Sublease Term, nor shall Agency owe any additional funds or rent assistance to VIP after the Cumulative Increment Rent Assistance equals One Million Dollars ($1,000,000) in actual dollars paid in the aggregate (no interest or present value adjustment). The following examples are provided to illustrate the operation of the foregoing provisions. For the purposes of the examples only, assume the following Base Tax, Sales Tax Revenue, and maximum Annual Incremental Rent Assistance for the following years: Year 2 Year 3 Year 11 Year 12 Minimum Sales Tax Revenue: $300,000 $320,000 $500,000 $520,000 Base Tax: 200,000 210,000 300,000 310,000 Maximum Annual Incremental Rent Assistance: 100,000 110,000 200,000 210,000 EXAMPLE #1: As shown in the above table, in the second year of the Sublease Term, VIP is required to generate a minimum of $300,000 in Sales Tax Revenue to recover all $100,000 in Annual Increment Rent Assistance for that year, but VIP only generates $250,000. The Increment Deficiency for the second year shall be $50,000 ($300,000 - $250,000). VIP would receive only $50,000 Annual Increment Rent Assistance for the second year ($100,000 - $50,000). In the third year, VIP is required to generate a minimum of $320,000 in Sales Tax Revenue to receive the full Annual Increment Rent Assistance of $110,000 for that year, but actually generates $370,000 in Sales Tax Revenue. VIP has generated $50,000 more than the minimum required for the third year. The $50,000 of Increment Deficiency from the second year is offset and, at the end of the third year, Agency shall pay VIP $160,000 ($50,000 Increment Deficiency + the full amount of Annual Increment Rent Assistance due for the third year of $110,000). 627/014084-0006/3304734.1 -8- 11111111111II II 1! 111111111 II 1 94;��P a0'©��0aR s Qr 8 EXAMPLE #2: In the second year of the Sublease Term VIP generates only $150,000 in Sales Tax Revenue. The Increment Deficiency for the second year is thus $150,000($300,000 - $150,000), and VIP shall not be entitled to any Annual Increment Rent Assistance for the second year of the Sublease Term ($100,000 - $150,000 = negative $50,000). The third year of the Sublease Term, VIP is required to generate $310,000, but generates $360,000 of Sales Tax Revenue. VIP has generated $50,000 over the minimum Sales Tax Revenue for the third year required to receive the full Annual Increment Rent Assistance of $110,000. VIP shall be entitled to Annual Increment Rent Assistance for the third year in the amount of$160,000 ($110,000, the full Annual Increment Rent Assistance for the third year. plus $50,000 of the Increment Deficiency carried over from the second year of the Sublease Term). The adjusted Increment Deficiency for the second year is $100,000 ($150,000 - $50,000). EXAMPLE #3: VIP has no Increment Deficiencies at the end of the tenth year of the Sublease Term. In the eleventh year of the Sublease Term, VIP is required to generate a minimum Sales Tax Revenue of $ 500,000, but VIP only generates $ 400,000. An Increment Deficiency for the eleventh year of the Sublease Term exists for $ 100,000 ($500,000 - $400,000). In the twelfth year of the Sublease Term, VIP generates $520,000; thus insufficient to pay the Increment Deficiency for the eleventh year of the Sublease Term. VIP shall not be entitled to any further payment under this Sublease because Increment Deficiencies may not be carried over past the Sublease Term. The foregoing are illustrations for interpretative purposes only and do not supersede the substantive provisions of this Sublease. Nothing herein shall prevent or preclude VIP from challenging the Annual Increment Rent Assistance stated in any Agency invoice or the calculation thereof. VIP and the Agency Executive Director shall promptly meet and confer in an attempt to resolve any differences concerning the calculation. The Agency Executive Director shall make a final determination concerning the Annual Increment Rent Assistance. The Agency Executive Director's determination shall be given to the VIP in writing. If VIP is not satisfied with the Agency Executive Director's determination, VIP may, in writing, appeal such determination to the Agency Board within ten (10) days of receipt of the Agency Executive Director's written determination. 4.4 Time Limit on Assistance. Agency's goal is to encourage the prompt development of the Project; therefore, Agency's obligation to provide Financial Assistance through payment of the Annual Increment Rent Assistance shall terminate if VIP has failed to substantially complete construction of the Project on or before December 31, 2000. 6271014084-0006/3304734.1 -9- II 111111111111111111111111111111111111111111111111111111111 04 20/20 0708900R 9 of 25 5. MAINTENANCE OF THE SITE. At all times during the Sublease Term, VIP agrees to maintain all improvements on the Site and all improvements comprising the Project described in the DDA in first class condition and repair (and, as to landscaping, in a healthy condition) and in accordance with the Governmental Approvals and all applicable laws, rules, ordinances, orders, and regulations, as the same may from time to time be amended, of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials. In addition, VIP shall keep the Site free from all graffiti and any accumulation of debris or waste material. VIP shall make all repairs and replacements necessary to keep the improvements in first class condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. In the event that VIP breaches any of the covenants contained in this Section 4.4 and fails to cure such default within a period of twenty (20) days after written notice from Agency (with respect to landscaping, graffiti, debris, waste material, and general maintenance) or thirty (30) days after written notice from Agency (with respect to building improvements), or, in the event that any such cure cannot reasonably be completed within said time period(s), if VIP fails to commence such cure within said time period(s) or commences the cure but thereafter fails to diligently prosecute such cure to completion, then Agency shall have the right to enter upon the Site and perform or cause to be performed all such acts and work necessary to cure the default. VIP agrees to immediately pay all of Agency's costs to cure, and that any unpaid Agency costs may be assessed as a lien against the Site or the leasehold herein as provided for public nuisances, and in this regard VIP waives any other public notice, hearing, and other procedures that may be provided for under public nuisance laws and ordinances that are a prerequisite to the assessment of such a lien. 6. PERFORMANCE OF TERMS OF ANY MORTGAGE AGREEMENT. VIP hereby covenants to Agency that VIP shall perform all of the duties and obligations of any Mortgage Agreement including, but not limited to, payment of principal or interest thereunder, taxes, insurance premiums, and utility costs and maintaining the Site. VIP and Agency covenant and agree that Agency shall not be responsible for the performance of any duties or obligations of VIP under any Mortgage Agreement upon the Site. Notwithstanding the foregoing, during the term of this Sublease, Agency shall have (i) the right, but not the obligation, to cure any monetary and non-monetary defaults by VIP of any Mortgage Agreement. In such event, VIP shall immediately reimburse Agency for any and all reasonable expenses incurred by Agency, including attorneys' fees, upon presentation of an invoice therefor. Such sums shall bear interest from the date expended until repaid by VIP at the rate of ten percent (10%) per annum or the maximum non-usurious rate permitted by law, whichever is less. 7. INSURANCE AND INDEMNITY. 7.1 Indemnity. VIP, as a material part of the consideration to be rendered to Agency under this Sublease, hereby waives all claims against Agency for damage to equipment or other personal property, trade fixtures and leasehold improvements in, upon or about the Site, for any liability of VIP under any Mortgage Agreement and for injuries to persons in or about the Site, from any cause arising at any time. VIP shall indemnify 627/014084-0006/3304734.1 -10- 20@9 e I IIIIIIIIIIIIIIIII IIII III II I I NII II IIIIIIIII IIII 4 B/1 0of025S0R the Agency, its officers, agents and employees against, and shall hold and save them and each of them harmless from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities, (hereinafter "claims or liabilities") that may be asserted or claimed by any person, firm or entity arising out of or in connection with the use of the Site, by VIP or its employees and customers, for any liability of VIP under any Mortgage Agreement or arising from the failure of VIP to keep the Site in good condition and repair or arising from the negligent acts or omissions of VIP hereunder, or arising from VIP's negligent performance of or failure to perform any term, provision covenant or condition of this Sublease, and in connection therewith: (a) VIP shall defend any action or actions filed in connection with any of said claims or liabilities and will pay all costs and expenses, including legal costs and attorneys' fees incurred in connection therewith; (b) VIP shall promptly pay any judgment rendered against the Agency, its officers, agents or employees for any such claims or liabilities arising out of or in connection with the negligent performance of or failure to perform such work, operations or activities of VIP hereunder; and VIP shall save and hold the Agency, its officers, agents, and employees harmless therefrom; (c) In the event the Agency, its officers, agents or employees is/are made a party to any action or proceeding filed or prosecuted against VIP for such damages or other claims arising out of or in connection with the negligent performance of or failure to perform the work, operation or activities of VIP hereunder, VIP shall pay to the Agency, its officers, agents or employees, any and all costs and expenses incurred by the Agency, its officers, agents or employees in such action or proceeding, including but not limited to, legal costs and attorneys' fees. 7.2 Insurance. During the term of this Sublease, VIP shall maintain without any period of lapse, the policies of insurance specified in any Mortgage Agreement. Said policies of insurance shall name, by endorsement, the Agency and City, and their respective officials, officers, employees, and agents as additional insureds. In addition, VIP shall maintain policies of worker's compensation insurance to the extent required by the Laws of the state of California. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days' prior written notice by certified or registered mail to Agency. Prior to the commencement date of this Sublease and within at least thirty (30) days after the renewal of any such policy, VIP shall provide Agency with certificates of insurance evidencing the required coverages and the naming of the Agency and City and their respective officials, officers, employees, and agents as additional insureds, and shall additionally provide Agency with a copy of the endorsements) naming the Agency and City and their respective officials, officers, employees, and agents as additional insureds. In addition, VIP, upon reasonable notice by Agency, shall make available for inspection by Agency at VIP's office in Palm Springs, California, copies of said insurance policies. IIIIII HIM II III III 11111111111111 II III II 111 IIII 04/902 '0s90©R 1 6 25 627/014084-0006/3304734.3 -1 1- 7.3 Hazardous Substances. VIP represents and warrants that there exists no "Hazardous Materials" (as such term is herein defined) nor oil wells, underground storage tanks, or pipelines in, on, under, or about the Site. VIP understands and agrees that in the event VIP incurs any loss or liability concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines whether attributable to events occurring prior to or following the date this Sublease is executed, VIP may look to the prior owners of the Site, but under no circumstances shall VIP look to Agency for any liability or indemnification regarding Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines. Further, VIP shall have the sole responsibility for complying with all Environmental Laws dining the term of this Sublease. VIP hereby waives, releases, acquits and forever discharges Agency, City, and their officers, officials, employees, and agents, and their respective heirs, successors, personal representatives and assigns, of and from any and all Environmental Claims, Environmental Cleanup Liability and Environmental Compliance Costs, as those terms are defined below, and from any and all actions, suits, legal or administrative orders or proceedings, demands, actual damages, punitive damages, loss, costs, liabilities and expenses, which concern or in any way relate to the physical or environmental conditions of the Site, the existence of any Hazardous Material thereon, or the release or threatened release of Hazardous Materials therefrom, whether existing prior to, at or after the date this Sublease was executed. It is the intention of the parties pursuant to this release that any and all responsibilities and obligations of Agency, and any and all rights, claims, rights of action, causes of action, demands or legal rights of any kind of VIP, its successors, assigns or any affiliated entity of VIP, arising by virtue of the physical or environmental condition of the Site, the existence of any Hazardous Materials thereon, or any release or threatened release of Hazardous Material therefrom, whether existing prior to, at or after the date this Sublease was executed, are by this release provision declared null and void and of no present or future force and effect as to the parties. In connection therewith, VIP and each of the entities constituting VIP, expressly agree to waive any and all rights which said party may have under Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." VIP and each of the entities constituting VIP, shall, defend, indemnify and hold harmless Agency, City, and their respective officers, directors, employees, agents and representatives (collectively, the "Indemnified Parties") from and against any and all Environmental Claims, Environmental Cleanup Liability, Environmental Compliance Costs, and any other claims, actions, suits, legal or administrative orders or proceedings, demands or other liabilities resulting at any time from the physical and/or environmental conditions of the Site whether before or after the date this Sublease was executed or from the existence of any Hazardous Materials or the release or threatened release of any Hazardous Materials of any kind whatsoever, in, on or under the Site occurring at any 627/014084-0006/3304734.3 -12- II II I I II I I I I I I I III 1111111111111111111 64 2 / 0 08 10P 2 of 25 time whether before or after the date this Sublease was executed, including but not limited to, all foreseeable and unforeseeable damages, fees, costs, losses and expenses, including any and all attorneys' fees and environmental consultant fees and investigation costs and expenses, directly or indirectly arising therefrom, and including fines and penalties of any nature whatsoever, assessed, levied or asserted against any Indemnified Parties to the extent that the fines and/or penalties are the result of a violation or an alleged violation of any Environmental Law. VIP further agrees that in the event VIP obtains, from former or present owners of the Site or any other persons or entities, releases from liability, indemnities, or other forms of hold harmless relating to the subject matter of this Section, VIP shall use its diligent efforts to obtain for Agency the same releases, indemnities, and other comparable provisions. For purposes of this Section, the following terms shall have the following meanings: (a) "Environmental Claim" means any claim for personal injury, death and/or property damage made, asserted or prosecuted by or on behalf of any third party, including, without limitation, any governmental entity, relating to the Site or its operations and arising or alleged to arise under any Environmental Law. (b) "Environmental Cleanup Liability" means any cost or expense of any nature whatsoever incurred to contain, remove, remedy, clean up, or abate any contamination or any Hazardous Materials on or under all or any part of the Site, including the ground water thereunder, including, without limitation, (i) any direct costs or expenses for investigation, study, assessment, legal representation, cost recovery by governmental agencies, or ongoing monitoring in connection therewith and (ii) any cost, expense, loss or damage incurred with respect to the Site or its operation as a result of actions or measures necessary to implement or effectuate any such containment, removal, remediation, treatment, cleanup or abatement. (c) "Environmental Compliance Cost" means any cost or expense of any nature whatsoever necessary to enable the Site to comply with all applicable Environmental Laws in effect. "Environmental Compliance Cost" shall include all costs necessary to demonstrate that the Site is capable of such compliance. (d) "Environmental Law" means any federal, state or local statute, ordinance, rule, regulation, order, consent decree, judgment or common-law doctrine, and provisions and conditions of permits, licenses and other operating authorizations relating to (i) pollution or protection of the environment, including natural resources, (ii) exposure of persons, including employees, to Hazardous Materials or other products, raw materials, chemicals or other substances, (iii) protection of the public health or welfare from the effects of byproducts, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities, or (iv) regulation of the manufacture, use or introduction into commerce of chemical substances, including, without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal. I II II II I I IIIII I III I II II IIIXI III IIII I III III 147889 04r 20 0 3 o0 f8 5GOA 627/014084-0006/3304734 3 -13- (e) "Hazardous Material" is defined to include any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California, or the United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is: (i) petroleum or oil or gas or any direct or derivative product or by-product thereof; (ii) defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (iii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (iv) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Sections 255010) and (k) and 25501.1 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (v) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (vi) "used oil" as defined under Section 25250.1 of the California Health and Safety Code; (vii) asbestos; (viii) listed under Article 9 or defined as hazardous or extremely hazardous pursuant to Article 1 of Title 22 of the California Code of Regulations, Division 4, Chapter 30; (ix) defined as waste or a hazardous substance pursuant to the Porter-Cologne Act, Section 13050 of the California Water Code; (x) designated as a "toxic pollutant" pursuant to the Federal Water Pollution Control Act, 33 U.S.C. § 1317; (xi) defined as a "hazardous waste" pursuant to the Federal Resource Conservation and Recovery Act, 42 U.S.C. S 6901 et M. (42 U.S.C. § 6903); (xii) defined as a "hazardous substance" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et M. (42 U.S.C. § 9601); (xiii) defined as "Hazardous Material" pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 gt sea.; or (xiv) defined as such or regulated by any "Superfund" or "Superlien" law, or any other federal, state or local law, statute, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines, as now, or at any time hereafter, in effect. Notwithstanding any other provision of this Sublease, VIP's release and indemnification as set forth in the provisions of this Section, as well as all provisions of this Section shall survive the termination of this Sublease and shall continue in perpetuity. 7.4 No Indemnification for Agency Negligence or Willful Misconduct. Notwithstanding anything in this Sublease to the contrary, VIP and Agency acknowledge that VIP shall not indemnify Agency for any claims or liabilities caused by or arising out of the negligence or willful misconduct of Agency. 8. ASSIGNMENT AND SUBLETTING. VIP understands and acknowledges that Agency entered into the DDA and this Sublease based upon VIP's experience, knowledge, capability and reputation. For this reason, VIP shall not assign this Sublease, or further sublet the Site or otherwise transfer the Site or this Sublease without the prior written consent of Agency, which consent may be given or withheld in Agency's reasonable discretion, except for the following 627/014084-0006/3304734 3 -14- e IIIIII IIIIII II III II IIII IIII IIIIII II IIII I I IIII 04,20 1419£085GOA ® • transfers and assignments which Agency's prior written consent shall be given or withheld in Agency's reasonable discretion: (i) transfers/assignments resulting from death or incapacity of an individual; (ii) transfers/assignments resulting from a reorganization, merger, or sale of assets or stock, as long as VIP retains majority ownership and managerial control; in the event of (i) or (ii) above, the transferee or assignee shall agree in writing to Agency's reasonable satisfaction to undertake VIP's responsibilities and obligations under the DDA and this Sublease. Any assignment, subletting or other transfer without the prior written consent of Agency shall be void. The consent by Agency to one assignment, subletting or other transfer shall not be deemed to be a consent to any subsequent assignment, subletting, or other transfer. 9. NON DISCRIMINATION. VIP covenants by and for itself, its successors, assigns and for all persons claiming under or though it that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Site nor shall VIP or any person claiming under or through it 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 Site. VIP acknowledges that this Sublease was made and accepted upon and subject to the provisions of this Section. 10. DEFAULT. 10.1 Default by VIP. The occurrence of any one or more of the following events shall constitute a default and breach of this Sublease by VIP: (a) the breach of any Mortgage Agreement, which breach remains uncured; (b) the failure to perform any of VIP's material agreements or obligations hereunder where such default shall continue for a period of thirty (30) days after written notice thereof from Agency to VIP, except for such defaults that VIP demonstrates to Agency's reasonable satisfaction will take longer than thirty (30) days to cure, so long as VIP has commenced to cure within the thirty (30) day period after notice from Agency; (c) the vacation or abandonment of the Site by VIP; (d) the making by VIP of a general assignment for the benefit of creditors to avoid bankruptcy; (e) the filing by VIP of a voluntary petition in bankruptcy or the adjudication of VIP as a bankrupt; (f) the appointment of a receiver to take possession of all or substantially all the assets of VIP located at the Site or of VIP's leasehold interest in the Site; (g) the filing by any creditor of VIP of an involuntary petition in bankruptcy which is not dismissed within sixty (60) days after filing; or (h) the attachment, execution or other judicial seizure of all or substantially all of the assets of VIP or VIP's leasehold where such an attachment, execution or seizure is not discharged within sixty (60) days. In the event of any such default or breach by VIP, Agency may at any time thereafter, without further notice or demand, rectify or cure such default, and any surns expended by Agency for such purposes shall be paid by VIP to Agency upon demand and as additional compensation hereunder. In the event of any such default or breach by VIP, Agency shall have the right to recover from VIP any amount necessary to compensate the Agency for all the detriment proximately caused by VIP's failure to perform its obligations under this Sublease or which in the ordinary course of things 627/014084-0006/3304734.3 -15- 111111 II III II II 1 III II II II1 64 zga000769 OOA 5 8af 25 would be likely to result therefrom. Agency shall also have the right but not the obligation upon the breach by VIP of any Mortgage Agreement, to sublease the Site to a Substitute Operator, pursuant to Section 3.2 above. Efforts as Agency may make to mitigate damages caused by VIP's breach of this Sublease shall not constitute a waiver of Agency's right to recover damages against VIP hereunder, nor shall anything herein contained affect Agency's right to indemnification against VIP for any liability arising prior to the termination of this Sublease. Failure of Agency to terminate this Sublease shall not prevent Agency from later terminating this Sublease or constitute a waiver of Agency's right to do so. VIP further agrees that, in the event of a default by VIP, and subject to the consent of Agency pursuant to the Lease, Owner shall have the right to cure such default to the same extent allowed by Agency hereunder. 10.2 Default by Agency. The failure to perform any of Agency's agreements or obligations hereunder, where such default shall continue for a period of thirty (30) days after written notice thereof from VIP to Agency, shall constitute a default and breach of this Sublease by Agency, except for such defaults Agency demonstrates to VIP's reasonable satisfaction will take longer than thirty (30) days to cure so long as Agency has commenced to cure within the thirty (30) day period after notice from VIP. In the event of any such default or breach by Agency, VIP shall have the right (i) to continue this Sublease in full force and effect and enforce all of its rights and remedies under this Sublease, or (ii) VIP shall have the right at any time thereafter to elect to terminate this Sublease. 11. MISCELLANEOUS. 11.1 VIP Compliance With Laws. It shall be the sole responsibility of VIP to comply with all federal, state, and local laws, regulations, and rules regarding environmental compliance subsequent to execution of this Sublease. 11.2 Right of Access. For the purpose of assuring that VIP is complying with the terms of this Sublease, representatives of Agency shall have the right upon reasonable notice to VIP to enter upon the Site, without charge, during normal business hours. 11.3 Legal Actions. In the event of a dispute between the parties arising out of or related to this Sublease, legal actions shall be instituted in the Superior Court of the County of Riverside, State of California, in any other appropriate court in that county, or in the United States District Court for the Central District of California. VIP agrees to submit to the personal jurisdiction of such court. The laws of the state of California shall govern the interpretation and enforcement of this Sublease. 11.4 Merger of Prior Agreements and Understandings. This Sublease, the Lease and the DDA, and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged herein and shall be of no further force or effect. 627/014084-0006/3304734 3 -16- 11111 II 1 �� 1 II 1II II II 04/0a16 of0a5 11.5 Notices, Demands, and Communications Between the Parties. Formal notices, demands, and communications between Agency and VIP shall be sufficiently given if: (i) personally delivered; (ii) delivered by overnight courier (acknowledged by receipt); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: CITY: City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director A copy to: RUTAN & TUCKER, LLP 611 Anton Blvd., Suite 1400, P.O. Box 1950 Costa Mesa, CA 92628 Telecopier No. (714) 546-9035 Attn: David J. Aleshire, Esq. VIP: VIP MOTORS Jerry G. Johnson 1300 Rodney Parham Road, Suite 300 Little Rock AR 72212 All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States Postal System in the manner described in this Section. 11.6 Acceptance of Service of Process. In the event that any legal action is commenced by VIP against Agency, service of process on Agency shall be made by personal service upon Executive Director or the Secretary of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against VIP, service of process on VIP shall be made by personal service upon VIP or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. 11.7 Attorney's Fees. In the event of litigation between the Parties arising out of this Sublease, the prevailing Party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, including attorneys' fees on appeal and all other reasonable costs and expenses for investigation of such action, including the conducting of discovery, in addition to whatever other relief to which it may be entitled. 11.8 Conflicts of Interest. No member, official, or employee of Agency shall have any personal interest, direct or indirect, in this Sublease nor shall any such member, official, or employee participate in any decision relating to this Sublease which affects his or her personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. 627/014084-0006/3304734.3 -17- 11111111111111111111111111111111111111111111111111111111111111194,z�ee1? cl' 25 17 0£ 25 11.9 Due Execution. The person(s) executing this Lease on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Lease on behalf of said party, (iii) by so executing this Lease, such party is formally bound to the provisions of this Lease, and (iv) the entering into this Lease does not violate any provision of any other agreement to which said party is bound. IN WITNESS WHEREOF, Agency and VIP have caused this instrument to be executed on their behalf by their respective officers or agents herein duly authorized as of the date first written above. "AGENCY" ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body corporate and politic Fl Agency Secretary Executive Director APPROVED AS TO FORM: a .AAA Agency Counsel "VIP" VIP MOTOR CARS, LTD, a California corporation wholly owed by VIP MOTOR CARS ACQUISITION, INC. By: S�✓ Tit By: Title: II II III IIII IIIIII III PI IIIIIII III III 04 0� 8 of08500R 627/014084-000613304734.3 -18- ,92.KgNSA-s STATE OFC^-��irF.z-m ) pu I ) ss. COUNTY OF P,4NLERSkHE ) On Ma-- (- , a.000 before me, personally appeared J Sa Lj sorj personally known to me (or proved to me on the b sis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. NO7q �� R y : _ Notary Publi [SEAL] A06LIC c FS Ste � f}12 ILFI-�LI SAS STATE OF GAHF cna"viti ) A) ss. COUNTY OF4UVE-� E ) On fY\cL, G, a v before me, personally appeared T a=a ft J--Z�(ti,Js 0 A/ personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL]_ Notary y Pub =s C co �2r 627/014084-0006/3304734.3 -1I9- I III II III III III III IIIII III II III IIIIIII 04 e00� 00008 9 £ 5 STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) /- On ✓�1 , "c before me, Z, inl la6'ua etior 1 personally appeared P i�i�op; <� ��0% �e� �e.«f�;l E�'��- — , personally known to me (or proved-ro-me-on--the-basis_o_f satisfactory_evidence)-to be the person0 whose name,O,)is• 6 subscribed to the within instrument and acknowledged to me that he/she�hey executed the same in his/here i7i authorized capacityCG),!and that by his/he€Cthe r signatur,3 on the instrument the persou(s)'or the entity upon behalf of which the persouns)acted, executed the instrument. Witness my hand and official seal. / Notary Public v [SEAL] altc��' LLbINEL. WEDEKINCOMM.91206994 NOTARY PUBLIC-CALIFORNIARIVERSIDE COUNTY O - COMM.EXP.FEB.3,2003 - 627/014084-0006/3304734.3 -20' I II II III III I I I I II AI IIII III 04 e00 or as5 STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE ) On before me, personally appeared personally known to me(or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 627/014084-0006/3304734.3 -21- 11111111111111111111111111111111111aaree0 21 0 08 0 c5 EXHIBIT "A" LEGAL DESCRIPTION OF SITE [SEE FOLLOWING PAGE] 627/014084-0006/3304734 3 -22- II IIII I II III lill 111111111111111111111111111111 I 04 /0©00 98 GOA 22 of 25 LEGAL DESCRIPTION AND IDENTIFICATION OF PROPERTY Location: Southwest corner of E. Palm Canyon Drive and Cherokee Way. Palm Springs. Riverside County. CA. Assessors Parcel Numbers: Riverside County Tax Assessor's Parcel Numbers: 681 070 008 - 010 Common Address: 3919,4057. and 4095 E. Palm Canyon Drive. Palm Springs. CA 92264 Legal Description: • APN: 681 070 008 2.31 Acres MIL in PAR 1 PM O11/005 • APN: 681 070 009 1.53 Acres WL in PAR 2 PM O11/005 • APN: 681 070 010 0.66 Acres MIL in PAR 3 PM O11/005 III II IIII I II III I III III IIIIII I II III III 04,200030of' 25 OR EXHIBIT "B" FINANCIAL ASSISTANCE SCHEDULE [SEE FOLLOWING PAGES] II II III III II I II I I I I AI II IIII I II III 04 2 00 a or 25 627/014094-0006/3304734.3 - -23- _ - Exhibit"B" FINANCIAL ASSISTANCE SCHEDULE VIP Motorcars,Ltd. Sales Tax Analysis,Lease/Sublease 28-Feb-00 Normal Adjusted Actual Sales New Before CPI Before CPI City Share of City Share of Tax Base(1998) Incremental Lease Lease Fiscal Taxable Sales Tax Sales Tax plus 3%,grow Sales Tax Payment to Payment from Available Tax Cumulative m m Year Year Sales (1%of Sales) 90%of Normal 1 5%/vear (Gross) FDH VIP Increment Savings to VIP m e 1 1999-00 $ 25,765,854 $ 257,659 S 231,893 $ 222,814 $ 9,079 $ 349,500 $ 349,500 2000-01 $ 33,622,888 $ 336,229 $ 302,606 $ 226,156 $ 76,450 $ 699,000 $ 622,550 $ 45,600 $ 76,450 3 2001-02 $ 34,631,575 $ 346,316 $ 311,684 $ 229,548 $ 82,136 $ 699,000 $ 616,864 $ 46,512 $ 158,586 N N 4 2002-03 $ 38,000,000 $ 380,000 $ 342,000 $ 232,991 $ 109,009 $ 699,000 $ 589,991 $ 47,442 $ 267,594 5 2003-04 $ 39,140,000 $ 391,400 $ 352,260 $ 236,486 $ 115,774 $ 699,000 $ 583,226 $ 48,391 $ 383,368 6 2004-05 $ 40,314,200 $ 403,142 $ 362,828 $ 240,034 $ 122,794 $ 699,000 $ 576,206 $ 49,359 $ 506,162 7 2005-06 $ 41,523,626 $ 415,236 $ 373,713 $ 243,634 $ 130,078 $ 699,000 $ 568,922 $ 50,346 $ 636,241 8 2006-07 $ 42,769,335 $ 427,693 $ 384,924 $ 247,289 $ 137,635 $ 699,000 $ 561,365 $ 51,353 $ 773,876 9 2007-08 $ 44,052,415 $ 440,524 $ 396,472 $ 250,998 $ 145,474 $ 699,000 $ 553,526 $ 52,380 $ 919,350 10 2008-09 $ 45,373,987 $ 453,740 $ 408,366 $ 254,763 $ 153,603 $ 699,000 $ 545,397 $ 53.428 $ 1,072,953 11 2009-10 $ 46,735,207 $ 467,352 $ 420,617 $ 258,584 $ 162,032 $ 699,000 $ 536,968 $ 54,496 $ 1,234,985 12 2010-11 $ 48,137,263 $ 481,373 $ 433,235 $ 262,463 $ 170,772 $ 699,000 $ 528,228 $ 55,586 $ 1,405,757 = $ 1,414,836 $ 8,038,500 $ 6,632,743 $ 554,893 �� • w LEASE AGREEMENT THIS LEASE AGREEMENT("Lease") is entered into as 2000 ("Effective Date") by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), and FDH ENTERPRISES, INC., an Arkansas corporation ("Lessor"). RECITALS A. VIP Motor Cars, Ltd, and VIP Motor Cars Acquisition, Inc. (collectively "VIP"), Lessor and Agency have entered into that certain Disposition and Development Agreement ("DDA"), which DDA is incorporated herein by this reference as though fully set forth, pursuant to which the parties have established the terms and conditions for the improvement, occupancy, and use of the property located in the City of Palm Springs, State of California, commonly known as 3919, 4057 and 4095 E. Palm Canyon Drive, and more particularly described in the legal description attached hereto and incorporated herein as Exhibit "A" ("Site") B. Under the terms of the DDA, the Agency has agreed to provide financial assistance to VIP for the redevelopment of the Site, which financial assistance is to be provided through the lease of the Site from Lessor to Agency, pursuant to the terms provided in this Lease, and sublease from Agency to VIP, with a land write-down of sublease payments made from VIP to Agency based on the sales tax increment generated from the Site, pursuant to the terms of a sublease agreement entered into by and between VIP and Agency concurrently with the DDA and this Lease ("Sublease"). D. The parties hereto understand and acknowledge that the sole purpose for this Lease and the Sublease is to effectuate the DDA. The Agency shall not have physical possession of the Site, shall not be responsible for performing any of the obligations VIP may have for the use and occupation of the Site under the Sublease, and shall not be liable for any breach under any mortgage, deed of trust, or other agreement, instrument or arrangement upon the Site by which Lessor or the Site are bound (collectively "Mortgage Agreement"). C. In order to effectuate the DDA, Lessor desires to lease the Site to Agency pursuant to the terms of this Lease. NOW, THEREFORE, the parties hereto agree as follows: 1. Lease. Lessor hereby leases the Site to Agency upon the terms and conditions set forth herein. In leasing the Site to Agency, Lessor represents that it is the current owner of the Site and is entitled to lease the Site to Agency pursuant to the terms herein. 627/014084-0006/3310236.3 a02/29/00 I 2. Consideration for Lease. In consideration for the lease of the Site, Agency agrees to pay to VIP lease payments of Fifty Five Thousand and 00/100 Dollars ($55,000.00) per month for the Term of this Lease ("Rent"), payable in the manner set forth at Section 3 below. 3. Payment of Rent. Agency shall pay to Lessor the Rent, beginning on or before the fifth (5th) day of each month of the Term, subject to the following conditions: a. Agency shall not be required to pay any portion of the Rent for any given month of the Term unless and until Agency receives the sublease rental payment from VIP for such month under the terms of the Sublease; and b. Agency shall not be required to pay Rent hereunder in the event that VIP fails to operate the New Dealerships, as those terms are defined in the DDA, upon the Site pursuant to the terms of the Sublease, regardless of whether VIP is in default of the payment of the sublease rental payments under the Sublease. Lessor agrees that it shall have no recourse against Agency for non-payment of Rent for any given month of the Term for which VIP fails to pay agency the sublease rental payment under the Sublease, or if VIP fails to operate the site pursuant to the terms of the Sublease, and that Lessor's only recourse for nonpayment of Rent shall be against VIP, as provided under Section 7 herein. 4. Tenn. This Lease shall commence on the date of the Notice of Release of Construction Covenants pursuant to the terms of the DDA, and shall terminate on the date that is the earlier of (i) twelve (12) years after the date of the Notice of Release of Construction Covenants; (ii) Lessor's or VIP's breach of any provision in the DDA or Sublease, after the expiration of the time to cure, as set forth in the DDA or Sublease, respectively, (iii) expiration of the term of the Sublease; or (iv) Lessor's breach of any provision in this Lease, after the expiration of the time to cure, as set forth herein. Notwithstanding anything herein to the contrary, all of the terms, covenants, agreements, or conditions set forth in this Lease shall extend for the duration of this Lease, except as applicable to the interpretation and enforcement of particular matters, which terms, covenants, and conditions shall survive as stated with reference to those matters. 5. No Possessory Interest Obligations. Other than as specifically stated elsewhere in this Lease, Lessor and Agency agree that Agency shall not have any usual obligations or responsibilities of a tenant with a possessory interest in property with respect to the Site, including, but not limited to, the performance of any maintenance, repairs or alterations of the Site, including the improvements thereon, or payment of any taxes, assessments, utilities or insurance premiums of any kind (collectively "Possessory Interest Obligations") in comiection with the Site or any improvement thereon.. Lessor agrees and acknowledges that VIP shall be solely responsible for any and all Possessory Interest Obligations pursuant to the terms of the Sublease. 627/014084-0006/3310236.3 a02/29/00 2 6. Performance of Terms of Any Mortgage Agreement. Lessor hereby covenants to Agency that Lessor shall perform all of the duties and obligations of any Mortgage Agreement including, but not limited to, payment of principal or interest thereunder, taxes, insurance premiums, and utility costs and maintaining the Site. Lessor and Agency covenant and agree that Agency shall not be responsible for the performance of any duties or obligations of Lessor under any Mortgage Agreement upon the Site. Notwithstanding the foregoing, during the term of this Lease, Agency shall have the right, but not the obligation, to cure any monetary and non- monetary defaults by Lessor of any Mortgage Agreement. In such event, Lessor shall immediately reimburse Agency for any and all reasonable expenses incurred by Agency, including attorneys' fees, upon presentation of an invoice therefor. Such sums shall bear interest from the date expended until repaid by Lessor at the rate of ten percent (10%) per annum or the maximum non-usurious rate permitted by law, whichever is less. 7. Subrogation of Agency's Rights Under Sublease. Lessor and Agency agree that, should VIP be in default of any term under the Sublease, Lessor shall have the right, subject to the written consent of Agency, to enforce the terms of the Sublease on behalf of Agency, and the rights of Agency shall be subrogated to Lessor for the purpose of any action by Lessor against VIP to enforce the terms of the Sublease. 8. Indemnity. Lessor, as a material part of the consideration to be rendered to Agency under this Lease, hereby waives all claims against Agency for damage to equipment or other personal property, trade fixtures and leasehold improvements in, upon or about the Site, for any liability of Lessor under any Mortgage Agreement and for injuries to persons in or about the Site, from any cause arising at any time. Lessor shall indemnify the Agency, its officers, agents and employees against, and shall hold and save them and each of them harmless from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities, (hereinafter "claims or liabilities") that may be asserted or claimed by any person, firm or entity arising out of or in connection with the use of the Site, by Lessor or its employees and customers, for any liability of Lessor under any Mortgage Agreement or arising from the failure of Lessor or VIP to keep the Site in good condition and repair or arising from the negligent acts or omissions of Lessor or VIP hereunder, or arising from Lessor's or VIP's negligent performance of or failure to perform any term, provision covenant or condition of this Lease, and in connection therewith: (a) Lessor shall defend any action or actions filed in connection with any of said claims or liabilities and will pay all costs and expenses, including legal costs and attorneys' fees incurred in connection therewith; (b) Lessor shall promptly pay any judgment rendered against the Agency, its officers, agents or employees for any such claims or liabilities arising out of or in connection with the negligent performance of or failure to perform such work, operations or activities of Lessor or VIP hereunder; and Lessor shall save and hold the Agency, its officers, agents, and employees harmless therefrom; 627/014084-0006/3310236.3 a02/29/00 3 (c) In the event the Agency, its officers, agents or employees is/are made a party to any action or proceeding filed or prosecuted against Lessor or VIP for such damages or other claims arising out of or in connection with the negligent performance of or failure to perform the work, operation or activities of Lessor or VIP hereunder, Lessor or VIP shall pay to the Agency, its officers, agents or employees, any and all costs and expenses incurred by the Agency, its officers, agents or employees in such action or proceeding, including but not limited to, legal costs and attorneys' fees. 9. Insurance. (a) During the term of this Lease, Lessor shall maintain without any period of lapse, the policies of insurance specified in any Mortgage Agreement. Said policies of insurance shall name, by endorsement, the Agency and City, and their respective officials, officers, employees, and agents as additional insureds. In addition, Lessor shall maintain policies of worker's compensation insurance to the extent required by the Laws of the state of California. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days' prior written notice by certified or registered mail to Agency. Prior to the commencement date of this Lease and within at least thirty (30) days after the renewal of any such policy, Lessor shall provide Agency with certificates of insurance evidencing the required coverages and the naming of the Agency and City and their respective officials, officers, employees, and agents as additional insureds, and shall additionally provide Agency with a copy of the endorsements) naming the Agency and City and their respective officials, officers, employees, and agents as additional insureds. In addition, Lessor, upon reasonable notice by Agency, shall make available for inspection by Agency at Lessor's office in Palm Springs, California, copies of said insurance policies. 10. Hazardous Substances. Lessor represents and warrants that there exists no "Hazardous Materials" (as such term is herein defined) nor oil wells, underground storage tanks, or pipelines in, on, under, or about the Site. Lessor understands and agrees that in the event Lessor incurs any loss or liability concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines whether attributable to events occurring prior to or following the date this Lease is executed, Lessor may look to the prior owners of the Site, but under no circumstances shall Lessor look to Agency or City for any liability or indemnification regarding Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines. Further, Lessor shall have the sole responsibility for complying with all Environmental Laws during the term of this Lease. Lessor hereby waives, releases, acquits and forever discharges Agency, City, and their officers, officials, employees, and agents, and their respective heirs, successors, personal representatives and assigns, of and from any and all Environmental Claims, Environmental Cleanup Liability and Environmental Compliance Costs, as those terms are defined below, and from any and all actions, suits, legal or administrative orders or proceedings, demands, actual damages, punitive damages, loss, costs, liabilities and expenses, which concern or in any way 627/014084-0006/3310236.3 a02/29/00 4 relate to the physical or environmental conditions of the Site, the existence of any Hazardous Material thereon, or the release or threatened release of Hazardous Materials therefrom, whether existing prior to, at or after the date this Lease was executed. It is the intention of the parties pursuant to this release that any and all responsibilities and obligations of Agency, and any and all rights, claims, rights of action, causes of action, demands or legal rights of any kind of Lessor, its successors, assigns or any affiliated entity of Lessor, arising by virtue of the physical or environmental condition of the Site, the existence of any Hazardous Materials thereon, or any release or threatened release of Hazardous Material therefrom, whether existing prior to, at or after the date this Lease was executed, are by this release provision declared null and void and of no present or future force and effect as to the parties. In connection therewith, Lessor and each of the entities constituting Lessor, expressly agree to waive any and all rights which said party may have under Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." Lessor and each of the entities constituting Lessor, shall, defend, indemnify and hold harmless Agency, City, and their respective officers, directors, employees, agents and representatives (collectively, the "Indemnified Parties") from and against any and all Environmental Claims, Environmental Cleanup Liability, Environmental Compliance Costs, and any other claims, actions, suits, legal or administrative orders or proceedings, demands or other liabilities resulting at any time from the physical and/or environmental conditions of the Site whether before or after the date this Lease was executed or from the existence of any Hazardous Materials or the release or threatened release of any Hazardous Materials of any kind whatsoever, in, on or under the Site occurring at any time whether before or after the date this Lease was executed, including but not limited to, all foreseeable and unforeseeable damages, fees, costs, losses and expenses, including any and all attorneys' fees and environmental consultant fees and investigation costs and expenses, directly or indirectly arising therefrom, and including fines and penalties of any nature whatsoever, assessed, levied or asserted against any Indemnified Parties to the extent that the fines and/or penalties are the result of a violation or an alleged violation of any Environmental Law. Lessor further agrees that in the event Lessor obtains, from former or present owners of the Site or any other persons or entities, releases from liability, indemnities, or other forms of hold harmless relating to the subject matter of this Section, Lessor shall use its diligent efforts to obtain for Agency the same releases, indemnities, and other comparable provisions. For purposes of this Section, the following terms shall have the following meanings: (a) "Environmental Claim" means any claim for personal injury, death and/or property damage made, asserted or prosecuted by or on behalf of any third party, 627/014084-0006/3310236.3 a02/29/00 5 including, without limitation, any governmental entity, relating to the Site or its operations and arising or alleged to arise under any Environmental Law. (b) "Environmental Cleanup Liability" means any cost or expense of any nature whatsoever incurred to contain, remove, remedy, clean up, or abate any contamination or any Hazardous Materials on or under all or any part of the Site, including the ground water thereunder, including, without limitation, (i) any direct costs or expenses for investigation, study, assessment, legal representation, cost recovery by governmental agencies, or ongoing monitoring in connection therewith and (ii) any cost, expense, loss or damage incurred with respect to the Site or its operation as a result of actions or measures necessary to implement or effectuate any such containment, removal, remediation, treatment, cleanup or abatement. (c) "Environmental Compliance Cost" means any cost or expense of any nature whatsoever necessary to enable the Site to comply with all applicable Environmental Laws in effect. "Environmental Compliance Cost" shall include all costs necessary to demonstrate that the Site is capable of such compliance. (d) "Environmental Law" means any federal, state or local statute, ordinance, rule, regulation, order, consent decree, judgment or common-law doctrine, and provisions and conditions of permits, licenses and other operating authorizations relating to (i) pollution or protection of the environment, including natural resources, (ii) exposure of persons, including employees, to Hazardous Materials or other products, raw materials, chemicals or other substances, (iii) protection of the public health or welfare from the effects of byproducts, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities, or (iv) regulation of the manufacture, use or introduction into commerce of chemical substances, including, without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal. (e) "Hazardous Material" is defined to include any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California, or the United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is: (i) petroleum or oil or gas or any direct or derivative product or by-product thereof; (ii) defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (iii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (iv) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Sections 255010) and (k) and 25501.1 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (v) defined as a "hazardous substance" under 627/014084-0006/3310236.3 a02/29/00 6 Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (vi) "used oil" as defined under Section 25250.1 of the California Health and Safety Code; (vii) asbestos; (viii) listed under Article 9 or defined as hazardous or extremely hazardous pursuant to Article 1 of Title 22 of the California Code of Regulations, Division 4, Chapter 30; (ix) defined as waste or a hazardous substance pursuant to the Porter-Cologne Act, Section 13050 of the California Water Code; (x) designated as a "toxic pollutant" pursuant to the Federal Water Pollution Control Act, 33 U.S.C. § 1317; (xi) defined as a "hazardous waste" pursuant to the Federal Resource Conservation and Recovery Act, 42 U.S.C. S 6901 et M. (42 U.S.C. § 6903); (xii) defined as a "hazardous substance" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (42 U.S.C. § 9601); (xiii) defined as "Hazardous Material" pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et sea.; or (xiv) defined as such or regulated by any "Superfund" or "Superlien" law, or any other federal, state or local law, statute, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines, as now, or at any time hereafter, in effect. Notwithstanding any other provision of this Lease, Lessor's release and indemnification as set forth in the provisions of this Section, as well as all provisions of this Section shall survive the termination of this Lease and shall continue in perpetuity. 11. No Indemnification for AjZency Active Negligence or Willful Misconduct. Notwithstanding anything in this Sublease to the contrary, Lessor and Agency acknowledge that Lessor shall not indemnify Agency for any claims or liabilities caused by or arising out of the willful misconduct of Agency. 12. Assignment and Subletting. Lessor understands and acknowledges that Agency entered into the DDA, this Lease and the Sublease based upon Lessor's experience, knowledge, capability and reputation. For this reason, Lessor shall not assign this Lease, or further sublet the Site or otherwise transfer the Site or this Lease without the prior written consent of Agency, which consent may be given or withheld in Agency's sole and absolute discretion, except for the following transfers and assignments which Agency's prior written consent shall be given or withheld in Agency's reasonable discretion: (i) transfers/assignments resulting from death or incapacity of an individual; (ii) transfers/assignments resulting from a reorganization, merger, or sale of assets or stock, as long as Lessor retains majority ownership and managerial control; in the event of (i) or (ii) above, the transferee or assignee shall agree in writing to Agency's reasonable satisfaction to undertake Lessor's responsibilities and obligations under this Lease. Any assignment, subletting or other transfer without the prior written consent of Agency shall be void. The consent by Agency to one assignment, subletting or other transfer shall not be deemed to be a consent to any subsequent assignment, subletting, or other transfer. 627/014084-0006/3310236.3 a02/29/00 7 13. Non Discrimination. Lessor covenants by and for itself, its successors, assigns and for all persons claiming under or though it that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Site nor shall Lessor or any person claiming under or through it 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 Site. Lessor acknowledges that this Lease was made and accepted upon and subject to the provisions of this Section. 14. Default. a. Default by Lessor. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Lessor: (a) the failure to perform any obligation under any Mortgage Agreement that constitutes such Mortgage Agreement; (b) the failure to perform any of Lessor's material agreements or obligations hereunder where such default shall continue for a period of thirty (30) days after written notice thereof from Agency to Lessor, except for such defaults that Lessor demonstrates to Agency's reasonable satisfaction will take longer than thirty (30) days to cure, so long as Lessor has commenced to cure within the thirty (30) day period after notice from Agency; (c) the breach by Lessor of any of the DDA after expiration of the time cure, as set forth in the DDA (d) the vacation or abandonment of the Site by Lessor; (e) the making by Lessor of a general assignment for the benefit of creditors to avoid bankruptcy; (f) the filing by Lessor of a voluntary petition in bankruptcy or the adjudication of Lessor as a bankrupt; (g) the appointment of a receiver to take possession of all or substantially all the assets of Lessor located at the Site or of Lessor's leasehold interest in the Site; (h) the filing by any creditor of Lessor of an involuntary petition in bankruptcy which is not dismissed within sixty (60) days after filing; or (i) the attachment, execution or other judicial seizure of all or substantially all of the assets of Lessor or Lessor's leasehold where such an attachment, execution or seizure is not discharged within sixty (60) days. In the event of any such default or breach by Lessor, Agency may at any time thereafter, without further notice or demand, rectify or cure such default, and any sums expended by Agency for such purposes shall be paid by Lessor to Agency upon demand and as additional compensation hereunder. In the event of any such default or breach by Lessor, Agency shall have the right to recover from Lessor any amount necessary to compensate the Agency for all the detriment proximately caused by Lessor's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. Agency shall also have the right but not the obligation upon the breach by Lessor of any Mortgage Agreement, to sublease the Site to a third party. Efforts as Agency may make to mitigate damages caused by Lessor's breach of this Lease shall not constitute a waiver of Agency's right to recover damages against Lessor hereunder, nor shall anything herein contained affect Agency's right to indemnification against Lessor for any liability arising prior to the termination of this Lease. Failure of Agency to terminate this Lease shall not prevent Agency from later terminating this Lease or constitute a waiver of Agency's right to do so. 627/014084-0006/3310236.3 a02/29/00 8 b. Default by Agency. The failure to perform any of Agency's agreements or obligations hereunder, where such default shall continue for a period of thirty (30) days after written notice thereof from Lessor to Agency, shall constitute a default and breach of this Lease by Agency, except for such defaults Agency demonstrates to Lessor's reasonable satisfaction will take longer than thirty (30) days to cure so long as Agency has commenced to cure within the thirty (30) day period after notice from Lessor. In the event of any such default or breach by Agency, Lessor shall have the right (i) to continue this Lease in full force and effect and enforce all of its rights and remedies under this Lease, or (ii) Lessor shall have the right at any time thereafter to elect to terminate this Lease. 15. Miscellaneous. a. Lessor Compliance With Laws. It shall be the sole responsibility of Lessor to comply with all federal, state, and local laws, regulations, and rules regarding environmental compliance subsequent to execution of this Lease. b. Legal Actions. In the event of a dispute between the parties arising out of or related to this Lease, legal actions shall be instituted in the Superior Court of the County of Riverside, State of California, in any other appropriate court in that county, or in the United States District Court for the Central District of California. Lessor agrees to submit to the personal jurisdiction of such court. The laws of the state of California shall govern the interpretation and enforcement of this Lease. C. Merger of Prior Agreements and Understandings. This Lease, the DDA, the Sublease, and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged herein and shall be of no further force or effect. d. Notices, Demands, and Communications Between the Parties. Formal notices, demands, and communications between Agency and Lessor shall be sufficiently given if: (i) personally delivered; (ii) delivered by overnight courier (acknowledged by receipt); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: CITY: City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Executive Director 627/014084-0006/3310236.3 a02/29/00 9 A copy to: RUTAN & TUCKER, LLP 611 Anton Blvd., Suite 1400, P.O. Box 1950 Costa Mesa, CA 92628 Telecopier No. (714) 546-9035 Attn: David J. Aleshire, Esq. Lessor: FDH ENTERPRISES, INC. Jerry G. Johnson 1300 Rodney Parham Road, Suite 300 Little Rock AR 72212 All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States Postal System in the manner described in this Section. e. Acceptance of Service of Process. In the event that any legal action is commenced by Lessor against Agency, service of process on Agency shall be made by personal service upon Executive Director or the Secretary of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Lessor, service of process on Lessor shall be made by personal service upon Lessor or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. f. Attorney's Fees. In the event of litigation between the Parties arising out of this Lease, the prevailing Party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, including attorneys' fees on appeal and all other reasonable costs and expenses for investigation of such action, including the conducting of discovery, in addition to whatever other relief to which it may be entitled. g. Conflicts of Interest. No member, official, or employee of Agency shall have any personal interest, direct or indirect, in this Lease nor shall any such member, official, or employee participate in any decision relating to this Lease which affects his or her personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. h. Due Execution. The person(s) executing this Lease on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Lease on behalf of said party, (iii) by so executing this Lease, such party is formally bound to the provisions of this Lease, and (iv) the entering into this Lease does not violate any provision of any other agreement to which said party is bound. 627/014084-0006/3310236.3 a02/29/00 10 IN WITNESS WHEREOF, the parties hereto have executed this Lease to be effective as of the date first written above (the "Effective Date"). "AGENCY" ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body corporate and politic Q (\O Agency Secretary Executive Director APPROVED AS TO FORM: k r aqa _ Agency Counse "Lessor" FDH ENTERPRISES, INC., an Arkansas corporation ,,//�� 1 B tl /-rCLAf D uJ I� -'t-2� yA-0- yyiirrrpBYE 2000 Title: IF/ �. .. - LY "'r3miiinmr�o• 627/014084-0006/3310236.3 a02/29/00 I1 CALIFORNIA ALL-PURPOOPACKNOWLEDGMENT :s State of ,9Gr County of V ✓-.[ iL ,�f� LSO On s� before me, .' Date I Name alil of Officer(e.g "JanA Yoe,Notary Public") personally appeared ��'_,� �/ �/. S/�r .: P- i( t;i� , �/L,2 1 Names)of Signori, = "' -personally known to me--OR—0 proved-to-me on-the-basis-of satisfactory-evidence to be the personasy whose name is�:subscribed to the within instrument and acknowledged to me that he/sh the executed the " same in his/he(({ePauthorized capaci f �, and that by his/hetheir_signatur2iN on the instrument the persorr ss� ELAINE L.WEDEKIND g or U COMM.LI1206984 the entity upon behalf of which the persorQ(s�acted, 10 `u x ^ executed the instrument.(fJ, ++� ;�NOTARY PUBLIC-CALIFORNIA Ill ' RIVERSIDE COUNTY 0 +,ror.M w COIdM.EXP.FEB.3,2003 -` WITNESS my hand and official seal. Signature of Notary Public OPTIONAL Though the information below 1s not required by law, it may prove valuable to persons relying on the document nd could prevent fraudulent removal and reattachment of this form to another document. ' Description of Attached Document Title or Type of Document: Document Date: Number of Pages: f , Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Individual ❑ Individual ❑ Corporate Officer ❑ Corporate Officer Title(s): Title(s): ❑ Partner—❑ Limited ❑ General ❑ Partner—❑ Limited ❑ General ❑ Attorney-in-Fact ❑ Attorney-in-Fact ❑ Trustee ❑ Trustee ❑ Guardian or Conservator ❑ Guardian or Conservator ❑ Other: Top of thumb here ❑ Other: Top of thumb here i an Signer Is Representing: Signer Is Representing: ©1994 National Notary Association•8236 Remmet Ave.,•P0 Box 7184•Canoga Park,CA 91309-7184 Protl No 5907 Reorder Call Toll-Free 1-800-876-6827 LEGAL DESCRIPTION .AND IDENTIFICATION OF PROPERTY Location: Southwest comer of E. Palm Canyon Drive and Cherokee Way. Palm Springs. Riverside County. CA. ; Assessors Parcel Numbers: Riverside County Tax Assessor's Parcel Numbers: 681 070 008 —010 i Common Address: 3919. 4057. and 4095 E. Palm Canyon Drive. Palm Springs. CA 92261 Legal Description: • APN: 681 070 008 2.31 Acres NI/L in PAR 1 PM 0111005 • APN: 681 070 009 1.53 Acres .ML'L in PAR 2 PM 0111005 • APN: 681 070 010 0.66 Acres M/L in PAR ') PM Ol 11005 �