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HomeMy WebLinkAbout24-10 Resolution No. 24-10 RESOLUTION AUTHORIZING EXECUTION OF AN ECONOMIC INCENTIVE AGREEMENT WITH MCGRATH NISSAN, INC. (Lot 6 of the Randall Rose Auto Mall Subdivision) BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that David J. Kaptain, Mayor, and Kimberly A. Dewis, City Clerk, be and are hereby authorized and directed to execute an Economic Incentive Agreement on behalf of the City of Elgin with McGrath Nissan, Inc., for economic development assistance in connection with the development of Lot 6 of the Randall Rose Auto Mall subdivision, a copy of which is attached hereto and made a part hereof by reference. s/David J. Kaptain David J. Kaptain, Mayor Presented: January 10, 2024 Adopted: January 10, 2024 Omnibus Vote: Yeas: 9 Nays: 0 Attest: s/Kimberly Dewis Kimberly Dewis, City Clerk ECONOMIC INCENTIVE AGREEMENT This Economic Incentive Agreement (the "Agreement") is made and entered into as of the January 24 , 2024, by and between the City of Elgin, an Illinois municipal corporation (hereinafter referred to as the "City"), and McGrath Nissan, Inc., an Illinois corporation (hereinafter referred to as the "Developer"). WHEREAS, the Developer has been operating a Nissan automobile franchise dealership at 945 East Chicago Street since 1990 and employs approximately fifty (50) employees and generates approximately $27 million in annual revenues from its 27,500 square-foot facility; and WHEREAS, the Developer is unable to continue owning and operating its automobile dealership in Elgin without certain economic development assistance from the City as hereinafter described; and WHEREAS, the Developer is the contract purchaser of the property known as Lot 6 of the Randall Rose Auto Mall Subdivision on north Randall Road in the City of Elgin (the "Subject Property"); and WHEREAS, the Developer is agreeing to construct a new, multi- million dollar Nissan automobile dealership on the Subject Property(the "New Dealership")and to thereafter operate the New Dealership at the Subject Property as a Dealership that engages in New Vehicle Sales at the Subject Property, in return for a percentage share of the sales tax generated by the automobile dealership and received by the City for fifteen years as hereinafter specified, along with "fast-track" permitting, a waiver of building and development permit fees and the rebate of certain real estate taxes for its New Dealership improvements; and WHEREAS, the City has previously entered into a development agreement with Randall 90 LLC, dated December 5, 2007, which provides for the development of an auto mall in the Randall Rose Auto Mall Subdivision which includes the Subject Property; and WHEREAS,the development agreement dated December 5,2007,was amended pursuant to a First Amendment dated February 28, 2008, a Second Amendment dated October 8, 2008, a Third Amendment dated November 4, 2009, and a Fourth Amendment dated January 27, 2016 (such development agreement, as amended, is hereinafter referred to as the "Auto Mall Development Agreement"); and WHEREAS, the Auto Mall Development Agreement provides for certain incentives to Dealerships which locate and operate in the Randall Rose Auto Mall Subdivision including Dealership Sales Tax Rebates and Dealership Real Estate Tax Rebates; and WHEREAS, the City and Developer wish to set forth in this Agreement the various economic incentives the City is willing to provide to the Developer in connection with the development of the Subject Property as a Dealership conducting New Vehicle Sales at the Subject Property; and WHEREAS, Section 8-11-20 of the Illinois Municipal Code (65 ILCS 5/8-11-20) authorizes municipalities including the City to enter into economic incentive agreements relating to the development or redevelopment of lands within the corporate limits of a municipality and under such agreements the municipality may agree to share or rebate a portion of any Retailer's Occupation Taxes received by the municipality that were generated by the development or redevelopment over a finite period of time; and WHEREAS, the City is a home rule unit authorized to exercise any power and perform any function relating to its government and affairs; WHEREAS, economic incentive agreements including the economic incentive agreement as provided for in this Agreement pertain to the government and affairs of the City; and WHEREAS, the New Dealership is expected to maintain and create job opportunities within the City; and WHEREAS, the New Dealership will serve to further the development of adjacent areas; and WHEREAS, without this Agreement the development of the New Dealership would not be possible; and WHEREAS, the Developer meets high standards of credit worthiness and financial strength; and WHEREAS, the New Dealership will stabilize and strengthen the commercial sector of the City; and WHEREAS, the New Dealership will enhance the tax base of the City;and WHEREAS, this Agreement is made in the best interests of the City. NOW, THEREFORE, for and in consideration of the mutual promises and undertakings contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Recitals. The foregoing recitals are incorporated into this Agreement in their entirety. 2 2. Definitions. For the purposes of this Agreement, the capitalized terms used shall have the following meanings and otherwise shall have the meanings as set forth in the Auto Mall Development Agreement. In the event of any conflict between the definitions set forth herein and in the Auto Mall Development Agreement, the definitions set forth herein shall supersede and control. A. "Commencement Date" means the first day of January immediately following the date on which all the construction work associated with City of Elgin building and development permits issued to the Developer for the New Dealership on the Subject Project has been successfully completed as determined by the City of Elgin and the New Dealership has been opened for business and is operating at the Subject Property. B. "New Dealership" means the new Nissan automobile franchise that will be constructed at the Subject Property operating within an approximately 25,000 square-foot facility employing approximately 50 to 75 employees. The New Dealership is sometimes also referred to in this Agreement as the "Subject Dealership". C. "Developer" means McGrath Nissan, Inc. For the purposes of this Agreement and the Auto Mall Development Agreement, Developer shall be considered a Dealership as that term is defined in the Auto Mall Development Agreement and not the Developer as that term is used or defined in the Auto Mall Development Agreement. Without limiting the foregoing, Developer shall not be entitled to any incentives in the Auto Mall Development Agreement that are intended for the Developer as that term is used or defined in the Auto Mall Development Agreement. D. "Sales Tax Revenues" means for the fifteen (15) years following the Commencement Date, all revenues that the City receives from retail sales taxes from the State of Illinois pursuant to the Illinois Service Occupation Tax (35 ILCS 115/1 et seq.), the Illinois Retailer's Occupation Tax (35 ILCS 120/1 et seq.), and the Home Rule Municipal Retailer's Occupation Tax(65 ILCS 5/8-11-1) derived solely from the sale of automobiles and/or motor vehicles, parts and other related retail items, or from the provision of service/collision center labor sales in the event and to the extent that the State of Illinois begins taxing such sales, at the New Dealership on the Subject Property. E. "Subject Project" means the new Nissan automobile dealership to be constructed by the Developer at the Subject Property. 3 3. Development of the Subject Property. Developer shall develop the Subject Property with the New Dealership in conformance with the Planned Area Business (PAB) Zoning District Ordinance which has been adopted by the City for the Subject Property, as amended, and in conformance with the terms of this Agreement and as provided in the Auto Mall Development. Developer shall thereafter operate the New Dealership at the Subject Property as a Dealership that engages in New Vehicle Sales at the Subject Property as defined in the Auto Mall Development Agreement for a period of not less fifteen (15) years commencing with the Commencement Date. 4. Fast-Track" Permitting Process and Waiver of Building Permit Fees for the Subject Project. A. The City agrees to conduct a "fast-track" permitting process for the Developer's improvements at the New Dealership and agrees to waive and not require Developer to pay any building or development permit fees which would otherwise be due and payable to the City in connection with the redevelopment of the Subject Property with the New Dealership. B. Any and all impact fees or other fees which may be due and owing to the City and/or any other governmental entity other than the City shall be paid by Developer. 5. Rebate of a Portion of Sales Tax Revenues. A. The City hereby agrees to rebate and pay to the Developer a portion of the Sales Tax Revenues received by the City in accordance with this Agreement, in order to reimburse the Developer for a portion of the costs incurred by Developer in conjunction with the establishment of the New Dealership at the Subject Property. B. The City shall pay to the Developer a rebate of a portion of Sales Tax Revenues received by the City over the 15-year period following the Commencement Date. Such rebate of Sales Tax Revenues from the City to the Developer shall be paid in annual installments according to the following formula: Commencing with the calendar year of the Commencement Date through December 31, 2030,the City shall rebate to Developer 25%of the Sales Tax Revenues received by the City that have been derived solely from the sale of automobiles and/or motor vehicles, parts and other related retail items, or from the provision of service/collision center labor sales in the event and to the extent that the State of Illinois begins taxing such sales, at the New Dealership on the Subject Property. Commencing with the calendar January 1, 2031, through the fifteenth (15') year following the 4 Commencement Date, the City shall rebate to Developer 50%of the Sales Tax Revenues received by the City that have been derived solely from the sale of automobiles and/or motor vehicles, parts and other related retail items, or from the provision of service/collision center labor sales in the event and to the extent that the State of Illinois begins taxing such sales, at the New Dealership on the Subject Property. For the purposes of clarification and example, if the Commencement Date is January 1, 2025, the City shall rebate to the Developer 25% of the eligible Sales Tax Revenues received by the City for calendar years 2025 through 2030, and the City shall rebate to the Developer 50% of the eligible Sales Tax Revenues received by the City for calendar years 2031 through 2039. C. Notwithstanding any other provision of this Agreement to the contrary, it is agreed and understood that the amount of the rebates of Sales Tax Revenues provided herein have been agreed to be based upon the current share of sales taxes received by the City in the amount of 2.50 percent, being 1 percent from the State of Illinois and 1.50 percent of the City's home rule tax. It is further agreed and understood that in the event the City's share of sales taxes is reduced from the current amount of 2.50 percent following the Commencement Date that the subsequent rebate of Sales Tax Revenues from the City to the Developer shall be reduced proportionately. For the purposes of clarification and example, in the event the City's share of sales taxes currently in the amount of 2.50 percent is reduced by 10 percent, then the amount of the subsequent rebate of a portion of Sales Tax Revenues from the City to the Developer will also be reduced by 10 percent. In the event of any conflict between the provisions of this paragraph and any other provisions of this Agreement, the provisions of this paragraph shall supersede and control. D. The City shall pay to the Developer the annual installments of the rebates of Sales Tax Revenues provided for herein within 180 days of each of the first 15 annual anniversaries of the Commencement Date and the City having determined the amount of sales and Sales Tax Revenues generated by the Dealership in the preceding year. In the event the State of Illinois fails to distribute documentation to the City providing for the sales and Sales Tax Revenues generated by the Subject Dealership in sufficient time for the City to make the annual payments, then the City shall provide notice of such fact to the Developer. In such event, the City shall make the required Sales Tax Revenue rebate payment to the Developer within 60 days after the date on which the City actually receives the supporting documentation for the applicable payment. E. Developer, as a condition of the City's obligation to pay to such Sales Tax Revenue rebate, shall be required to perform and observe the following 5 covenants, collectively referred to as the "Dealership Reporting and Compliance Obligations": (i) Make written request that the Local Tax Division of the Illinois Department of Revenue ("LTD-IDOR"), or such successor to such agency, supply to the City on a semi-annual basis a letter certifying the amount of Sales Tax Revenues received by the City for the Subject Dealership operations during the preceding twelve (12) month period, with such letter from the LTD-IDOR certifying the amount of sales tax revenue received by the City from the Dealership being hereinafter referred to as a "IDOR Sales Tax Revenue Certification Letter." (ii) Take all additional actions as may reasonably be necessary in order for the City to obtain the information to insure the accurate calculation of Sales Tax Revenues from the Dealership; (iii) Supply or cause to be supplied to the City appropriate authorizations for the Illinois Department of Revenue to provide such information, including copies of filings with the Illinois Department of Revenue made by the Developer and/or the Dealership. (iv) Upon written request of the City, provide a power of attorney in favor of the City in a form reasonably satisfactory to the LTD-IDOR, authorizing the City to request and retrieve gross revenue and other information necessary to allow the City to compute the Sales Tax Revenues. (v) Upon the request of the City, provide to the City copies of any form ST-1 or form ST-556, or any successor reporting forms, filed with the Illinois Department of Revenue by the Dealership. (vi) Allow the City the right, upon reasonable notice to the Developer and/or Dealership, to audit Subject Dealership records in order to confirm Sales Tax Revenues being generated by the Subject Dealership. F. Developer and the City agree to cooperate and take all additional actions as may reasonably be necessary in order to obtain the necessary information and to insure the accurate collection of deposits of Sales Tax Revenues. The City agrees to take all actions necessary to provide for the systematic receipt of sales tax information for the Dealership from the Illinois Department of Revenue.To assist the City, Developer will supply or 6 cause to be supplied to the City appropriate authorizations for the Illinois Department of Revenue to provide such information, including copies of filings with the Illinois Department of Revenue made by Dealership. Developer shall cause the Subject Dealership, upon written request of the City, to provide a Power of Attorney in a form reasonably satisfactory to the Illinois Department of Revenue, authorizing the City to request and receive gross revenue and other information necessary to allow the City to compute the amount of Sales Tax Revenues. G. Notwithstanding any other provision of this Agreement to the contrary, it is agreed and understood that the City's obligation under this Agreement to rebate a portion of Sales Tax Revenues shall not be a general debt of the City on or a charge against its general credit or taxing powers, and shall constitute a special limited obligation payable solely and only out of the Sales Tax Revenues received by the Dealership. The Developer shall have no right, and agrees that it shall not, compel any exercise of the taxing power of the City to pay the Sales Tax Revenues rebates, and no execution of any claim, demand, cause of action, or judgment shall be levied upon or collected from the general credit, general funds, or any other property of the City. The payments of a rebate of a portion of Sales Tax Revenues by the City to the Developer as provided for in this Agreement shall not constitute an indebtedness of the City or a loan or a liability of the City within the meaning of any constitutional or statutory provision. No interest shall be due, owing or paid by the City with respect to the rebate of any Sales Tax Revenues. Notwithstanding same, nothing herein shall bar the Developer from enforcing the terms and obligations of this Agreement in the event of non-compliance by the City. H. It is agreed and understood that the rebate of a portion of Sales Tax Revenues to be paid by the City to the Developer as provided in this Agreement shall be in lieu of and not in addition to Dealership Sales Tax Rebates as provided in the Auto Mall Development Agreement, it being agreed and understood that the rebates of a portion of Sales Tax Revenues provided for in this Agreement shall be the only payments by the City with respect to sales tax sharing and/or rebates to the Developer in connection with the Subject Property and Developer shall not be entitled to and shall not receive any Dealership Sales Tax Rebates as provided in the Auto Mall Development Agreement. 6. Real Estate Tax Rebate. A. In consideration of the Subject Property being developed with the New Dealership and the Developer operating the New Dealership on the Subject Property as provided in this Agreement, the City hereby agrees 7 that the City will rebate to the Developer the following percentage of the City's share of real estate taxes received by the City from the Subject Property during each of the following periods (the "Dealership Real Estate Tax Rebate"): Percentage of City Share of Real Estate Taxes to be Rebated Real Estate Tax Year First full calendar tax year following the calendar year in which the Dealership receives a 100% certificate of occupancy for its principal Dealership building on the Subject Property (hereinafter "Year 1). See example below. 80% Next calendar tax year("Year 2") 60% Next calendar tax year("Year 3") 40% Next calendar tax year ("Year4") 20% Next calendar tax year ("Year 5" Sixth calendar year and thereafter 0% ("Year 6 and thereafter") By way of example, if a Certificate of Occupancy for the Developer's Nissan New Dealership on the Subject Property is issued September 1, 2024, for the purposes of this Section 6A, Year 1 would refer to 2025 real estate taxes (payable in 2026). The City shall make Dealership Real Estate Tax Rebate payments to the Developer annually and within sixty (60) days following the City's receipt of the second installment real estate payments from Kane County. B. It is agreed and understood that the Dealership Real Estate Tax Rebate provided for in this Agreement to the Developer is in lieu of and not in addition to the Dealership Real Estate Tax Rebate provided for Dealerships in the Auto Mall Development Agreement, it being agreed and understood that the only real estate tax rebate to be paid by the City to the Developer in connection with the Subject Property is the Dealership Real Estate Tax Rebate provided for in this Agreement and the Developer shall not be entitled to and shall not receive any Dealership Real Estate Tax Rebate provided for in the Auto Mall Development Agreement. 7. Additional Contingencies. Notwithstanding any other provision of this Agreement to the contrary, but subject to delay caused by Force Majeure, it shall also be conditions precedent to the obligations of the City under this Agreement that (1) the Developer shall have acquired fee simple title to the Subject Property 8 on or before April 14, 2024, said title to be acquired under the name of 2635 Auto Mall Drive, LLC, an Illinois limited liability company; (2) the Developer shall complete all work associated with the Subject Project at the New Dealership, receive final approval from the City for the Subject Project and commence operations of the New Dealership at the Subject Property on or before August 6, 2025 unless said date is extended per the Terms of the Agreement between Developer and it's seller of the Subject Property with the approval of the City in its reasonable discretion; and (3) that the New Dealership continues with its operations at the New Dealership at the Subject Property for a period of not less than 15 years after the Commencement Date. In the event that any of the foregoing contingencies are not satisfied,then the City, upon written notice to the Developer, may elect to terminate this Agreement, and thereupon other than the Refund Obligations of the Developer as set forth in Section 9J below, neither party shall have any obligation to the other hereunder. 8. Miscellaneous. A. That this Agreement shall not be deemed or construed to create an employment, joint venture, partnership, or other agency relationship between the parties hereto. B. That all notices or other communications hereunder shall be made in writing and shall be deemed given if personally delivered or mailed by registered or certified mail, return receipt requested, to the parties at the following addresses, or at such other addressed for a party as shall be specified by like notice,and shall be deemed received on the date on which said hand delivered or the second business day following the date on which so mailed: TO THE CITY: TO THE DEVELOPER: City of Elgin McGrath Nissan, Inc. 150 Dexter Court 945 East Chicago Street Elgin, IL 60120-5555 Elgin, IL 60120 Attn: Richard G. Kozal Attn: Scott McGrath City Manager With a copy of any such notice to: City of Elgin James Bolz 150 Dexter Court Law Office of James M. Bolz, LLC Elgin, IL 60120-555 707 West Main Street Attn: Corporation Counsel West Dundee, IL 60118 9 C. That the failure by a party to enforce any provision of this Agreement against the other party shall not be deemed a waiver of the right to do so thereafter. D. That this Agreement may be modified or amended only in writing signed by both parties hereto,or their permitted successors or assigns,as the case may be. E. That this Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter as set forth herein, all prior agreements and understandings having been merged herein and extinguished hereby. In the event of any conflict between the terms of this Agreement, and the terms of the Auto Mall Development Agreement, the terms of this Agreement shall supersede and control. Without limiting the foregoing, it is agreed and understood that this Agreement provides for all of the incentives, rebates or payments to be received by the Developer from the City in connection with the Project and are in lieu of and not in addition to any incentives, rebates or payments from the City provided for in the Auto Mall Development Agreement and that Developer shall not be entitled to and shall not receive from the City any incentives, rebates or payments from the City pursuant to the Auto Mall Development Agreement. F. That this Agreement is and shall be deemed and construed to be a joint and collective work product of the City and the Developer and, as such, this Agreement shall not be construed against the other party, as the otherwise purported drafter of same, by any court of competent jurisdiction in order to resolve any inconsistency, ambiguity, vagueness or conflict, if any, in the terms or provisions contained herein. G. That this Agreement is subject to and shall be governed by the laws of the State of Illinois. H. That this Agreement shall be binding on the parties hereto and their respective successors and permitted assigns. This Agreement and the obligations herein may not be assigned without the express written consent of each of the parties hereto, which consent may be withheld at the sole discretion of either the parties hereto. Notwithstanding the foregoing, in the event that the Developer sells its Nissan dealership, or substantially all of the assets thereof to a successor dealer who operates on the Subject Property (a "Successor-Dealer"), then the Developer shall have the right, without the consent of the City to assign its rights under this Agreement to the Successor-Dealer, and such assignment shall 10 become effective as against the City only from and after the date that the City receives written notice of same. I. The City and Developer agree that, in the event of a default by the other party, the other party shall, prior to taking any such actions as may be available to it, provide written notice to the defaulting party stating that they are giving the defaulting party thirty (30) days within which to cure such default. If the default shall not be cured within the thirty (30) days period aforesaid, then the party giving such notice shall be permitted to avail itself of remedies to which it may be entitled under this Agreement. J. If either party fails or refuses to carry out any of the material covenants or obligations hereunder, the other party shall be entitled to pursue any and all available remedies as specified herein or otherwise available at law, equity or otherwise. Notwithstanding the foregoing or anything else to the contrary in this Agreement, with the sole exception of an action to recover the monies the City has agreed to pay pursuant to the preceding Sections 5 and 6 hereof, no action shall be commenced by the Developer against the City for monetary damages. In the event the Developer is found to be in default of this Agreement beyond any expiration of any applicable cure period, in addition to any other remedies available to the City, the Developer shall refund to the City the amount of the building permit and other development permit fees waived by the City pursuant to Section 4 hereof, the future rebate of a portion of Sales Tax Revenues pursuant to Section 5 hereof shall terminate and the Dealership Real Estate Tax Rebate shall terminate, and the Developer shall refund to the City the amount of any Dealership Real Estate Tax Rebate previously paid by the City to the Developer pursuant to Section 6 hereof(the "Refund Obligation"). For the avoidance of doubt, the City shall have no right to recover from the Developer any Sales Tax Revenues previously paid and rebated by the City to the Developer prior to the occurrence of any Event of Default. Venue for the resolution of any disputes or the enforcement of any rights pursuant to this Agreement shall be in the Circuit Court of Kane County, Illinois. In the event any action is brought by the City against the Developer or its permitted assigns with respect to this Agreement and the City is the prevailing party in such action, the City shall also be entitled to recover from the Developer reasonable interest and reasonable attorney's fees. K. Time is of the essence of this Agreement. L. This Agreement shall be construed, and the rights and obligations of the City and the Developer hereunder shall be determined in accordance with the laws of the State of Illinois without reference to its conflict of laws rules. 11 M. No past, present or future elected or appointed official, officer, employee, attorney, agent or independent contractor of the City shall be charged personally or held contractually liable under any term or provision of this Agreement including, but not limited to, because of their negotiation, approval, execution or attempted execution of this Agreement. N. Notwithstanding any other provisions of this Agreement, it is expressly agreed and understood by the Developer and the City that in connection with the performance of this Agreement, including, but not limited to, providing for improvements to the Dealership,that Developer shall comply with all applicable federal, state, city and other requirements of law. Developer shall also at its expense secure all permits and licenses, pay all charges and fees and give notices necessary and incident to the due and lawful prosecution of the work necessary to provide for the improvements to the Dealership. As to the Prevailing Wage Act, the City has advised the Developer that a person constructing or demolishing public works where such work is paid for wholly or in part out of public funds, must comply with the Illinois Prevailing Wage Act,820 ILCS 130/0.01 et seq., as amended (the "Act"). The Developer has determined and advised the City (the "Developer Determination") that (i) the Subject Project (including the Subject Project components of both demolition and construction) is being funded entirely by the Developer using Developer's private funds, including funds borrowed by the Developer from a commercial bank and with funds made available to the Developer by Nissan, and (ii) to the best of the Developer's knowledge and belief after consulting with counsel, regardless of the identity of the payee of such Sales Tax Rebates, Real Estate Tax Rebates and the other economic development incentives provided to the Developer herein, under current Illinois statutory and case law, and on the currently published advice of the Illinois Department of Labor, the Sales Tax Rebates, Real Estate Tax Rebates and the other economic development incentives provided to the Developer herein, to be paid by the City hereunder are not "public funds" and therefore do not cause the Act to become applicable to the Subject Project. The Developer agrees to indemnify, hold harmless, and defend the City, its governing body members, officers, and agents, including independent contractors, consultants and legal counsel, servants and employees thereof (collectively, the "Indemnified Parties") from and against all loss, cost, damage, judgments, awards, fines, penalties, interest, liabilities, liens, judgments, and reasonable attorney's fees sustained by any of the Indemnified Parties (collectively, "Damages") notwithstanding (i) the exercise of the Developer's Right to Defend, or (ii) as a result of the Developer's failure to do so, and in any event which results from or arises in connection with the assertion (the "Legal Challenge") made against any 12 of the Indemnified Parties of any regulatory action, complaint, claim, or suit (A) challenging the Developer Determination and (B) in any way related to or result from noncompliance with the Act under the Agreement and/or Agreement with respect to the Subject Project, including, but not limited to any complaint by the Illinois Department of Labor under Section 4(a-3) of the Act. The Developer shall reimburse the City within fifteen (15) days after receipt of written notice by the City to the Developer of Damages incurred by the City. The Developer shall have the right ("Right to Defend"),at its own expense, to defend any such Legal Challenge with competent counsel of its choosing, and, in that event, the Developer shall assume, fully and vigorously, the entire defense of such Legal Challenge and shall be responsible for all expenses of whatever nature relating thereto. The Developer's Right to Defend is subject to the following: (i) Without the prior approval of the City, the Developer shall not make any settlement or compromise of the Legal Challenge, nor fail to pursue any available avenue of appeal of any adverse judgment, which would impose any liability on the City. (ii) If, in connection with the defense of any Legal Challenge, the City, in its sole and absolute discretion, determines there is, or may probably be, a conflict of interest between the Developer and the City on a material issue related to a potentially substantial adverse economic effect on the City, then the City shall have the option of being represented by its own legal counsel, at the Developer's expense. If any such Legal Challenge results in any Damages not otherwise promptly reimbursed to the City by the Developer pursuant to this Agreement, the Developer,jointly and severally,agree to promptly reimburse the City and/or pay and discharge same within fifteen (15) days of notice by the City to the Developer, and failing to do so, the City shall have the right(in addition to all other rights hereunder or under Illinois law, but specifically excluding the right to terminate this Agreement and the right to impose Rebate Suspension as provided in Section 8T below) to set off its Damages against the future Sales Tax Rebates and Real Estate Tax Rebates that thereafter become payable to the Developer hereunder (such remedy being herein referred to as "City Set-Off"). The indemnification obligations of this Section on the part of the Developer shall survive the termination or expiration of this Agreement. 0. To the fullest extent permitted by law, Developer agrees to and shall indemnify, defend and hold harmless, the City, its officials, officers, 13 employees, attorneys, agents, boards and commissions from and against any and all claims, suits, judgments, costs, attorney's fees, damages or other relief, including but not limited to workers' compensation claims, in any way resulting from or arising out of or alleged to be resulting from or arising out of negligent actions or omissions of the Developer in connection herewith, including negligence or omissions of employees, agents or subcontractors of the Developer arising out of the performance of this Agreement, or in any way resulting from or arising out of or alleged to be resulting from or arising out of any violation and/or breach of the terms or provisions of this Agreement by the Developer, including any violation and/or breach by employees, agents or subcontractors of the Developer. In the event of any action against the City, its officials, officers, employees, agents, attorneys, boards or commissions covered by the foregoing duty to indemnify, defend and hold harmless such action shall be defended by legal counsel of the City's choosing the costs of which shall be paid by the Developer. The provisions of this paragraph shall survive any termination, completion and/or expiration of this Agreement. P. To the fullest extent permitted by law, Developer agrees to and shall indemnify, defend and hold harmless the City, its officials, officers, employees, attorneys, agents, boards and commissions, from and against any and all third party claims, suits, judgments, costs, attorneys' fees, expert witness fees and expenses, damages or other relief, in any resulting from or arising out of or alleged to be resulting from or arising out of the existence of this Agreement, the provisions of this Agreement, the performance of this Agreement, and/or any other actions to the parties hereto provided for or arising from this Agreement. In the event of any action against the City, its officials, officers, employees, agents, attorneys, boards or commissions, covered by the foregoing duty to indemnify, and defend and hold harmless, such action shall be defended by legal counsel of the City's choosing and the costs of which will be paid for by the Developer. Additionally, in the event of such third-party action the Developer to the extent permitted by law shall upon the request of the City attempt to intervene in such proceedings and join the City in the defense thereof. Q. Developer agrees prior to the commencement of operations of the New Dealership at the Subject Property to and shall provide to the City written reports on the status of the Dealership. Such written reports shall be provided to the City upon request of the City. Such written reports shall contain a status report on construction activities and such other information as may be requested by the City. 14 R. Developer, on behalf of itself and its respective successors, assigns and grantees of the Dealership hereby acknowledges the propriety, necessity and legality of all of the terms and provisions of this Agreement and does hereby further agree and does waive any and all rights to any and all legal or other challenges or defenses to any of the terms and provisions of this Agreement and hereby agrees and covenants on behalf of itself and its successors, assigns and grantees of the Dealership, not to sue the City or maintain any legal action or other defenses against the City with respect to any challenges of the terms and provisions of this Agreement. The provisions of this paragraph shall survive any termination, completion and/or expiration of this Agreement. S. This Agreement may be executed in counter-parts, each of which shall be an original and all of which shall constitute one in the same Agreement. This Agreement may be executed electronically and any signed copy of this Agreement transmitted by fax machine or e-mail shall be treated in all manners and respects as an original document. The signature of any party on a copy of this Agreement transmitted by fax machine or e-mail shall be considered for these purposes as an original signature and shall have the same legal effect as an original signature. T. Should the Developer, for any reason, fail to remain and continue to be in compliance with the terms of this Agreement, in addition to other remedies available to the City, the City's duty to make Sales Tax Rebates or Real Estate Tax Rebates during such period of noncompliance shall be suspended (with such remedy herein referred to as a "Rebate Suspension"). If, at any time during the balance of the term of Sales Tax Rebates or Real Estate Tax Rebates, the Developer shall reestablish compliance with all of the standards set forth herein and the City shall acknowledge that such compliance exists,the City's duty to make Sales Tax Rebates and Real Estate Tax Rebates as herein provided shall resume; provided, however, that a Sales Tax Rebate or Real Estate Tax Rebate for a month during which the Developer was out of compliance shall not be made except as provided in connection with the City Set-off as provided in Section 9N above. Months during which the Developer was out of compliance with the standards set forth herein and for which the Developer was properly noticed shall be counted in the maximum fifteen (15) year term of the Sales Tax Rebate Period and the five (5) year Real Estate Tax Rebate Period. Notwithstanding the foregoing, however, for the purposes of this Agreement, the Developer shall not be deemed to be out of compliance with the standards set forth herein if, following the Developer's receipt of written notice from the City of noncompliance, the Developer cures such noncompliance to the reasonable satisfaction of the 15 (15) year term of the Sales Tax Rebate Period and the five (5) year Real Estate Tax Rebate Period. Notwithstanding the foregoing, however, for the purposes of this Agreement,the Developer shall not be deemed to be out of compliance with the standards set forth herein if, following the Developer's receipt of written notice from the City of noncompliance, the Developer cures such noncompliance to the reasonable satisfaction of the City within the provisions and time constraints set forth in Section 91 herein. U. Force Majeure. Performance by either Party hereunder shall not be deemed to be in default as a result of unavoidable delays or defaults due to war, insurrection, strikes, lockouts, riots, extreme adverse weather conditions (such as, by way of illustration and not limitation, severe rain storms or below freezing temperatures, tornadoes or cyclones), earth- quakes, fires, casualties, acts of God, acts of a public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, or any other like event or condition beyond the reasonable control of the Party affected thereby which in fact interferes with the ability of such Party to discharge their respective obligations hereunder and which by the exercise of reasonable diligence the party affected was unable to prevent or mitigate (collectively, "Force Majeure Events"); provided, however, that unavoidable delays shall not include (i) economic hardship or impracticability of performance, (ii) commercial or economic frustration of purpose, or (iii) a failure of performance by a contractor (unless caused by Force Majeure Events), and the party claiming a Force Majeure Event shall notify the other party in writing within twenty-one (21) days of the claimed Force Majeure Event, specifying, in sufficient detail, the Force Majeure Event and the reasons preventing performance of its obligations under this Agreement and then the performance time for such act or action shall be extended for a period equivalent to the period of such delay approved by the other party of the Force Majeure Event. Upon cessation of the Force Majeure Event, the party affected must as soon as reasonably practicable recommence its delayed performance under this Agreement. IN WITNESS WHEREOF, the City and McGrath Nissan, Inc., have executed this Agreement on the date first set forth above. CITY OF ELGIN, MCGRATH NISSAN, INC., an Illinois municipal corporation an Illinois corporation By: L2fiu By: David Kaptai , May r Scott McGrath, President 16