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EXHIBIT 1 2.4 Compliance with Laws. Subject to TAC's right to contest same, TAC shall conduct or cause to be conducted all activities within the City and shall perform its obligations under this Agreement in conformity with all applicable federal, state, and local laws, ordinances, and regulations. Nothing in this Agreement is a representation or warranty by City that any tenant improvement or other construction work performed by TAC within the City on or after the date of this Agreement is not a public work as defined in Labor Code Sections 1720, et seq., including but not limited to Sections 1771 and 1781. 3, CITY CONSIDERATION PAYMENTS. 3.1 Payment of City Consideration to TAC. 3.1.1 Calculation of City Consideration. Inconsideration for TAC's undertakings pursuant to this Agreement, City shall make payments of City Consideration to TAC after the end of each Quarter, as follows: 3.1.1.1 Subject to Paragraph 3.1.1.2 below, for Required Operations conducted by TAC in the Operating Period, City shall pay TAC the City Consideration based on the actual net amount of Sales Tax directly received by the City from the State Board of Equalization during that Quarter. Subject to the terms of Section 3.1.2, the payment of City Consideration for each Quarter shall be made in a single lump sum payment within ninety (90) days following the end of that Quarter. 3.1.1.2 City Consideration shall be payable from any source of funds legally available to City. In this regard, it is understood and agreed that the Sates Tax from TAC's Required Operations in the City is being used merely as a measure of the amount of City Consideration payments that are periodically owing by City to TAC, and that City does not and legally cannot pledge any portion of that Sales Tax to TAC. 3.1.2 Payment Procedure. 3.1.2.1 After the end of each Quarter, and no later than thirty-five (35) days after TAC's payment of the Sales Tax to the State Board of Equalization for that Quarter, TAC shall submit to City the Sales Tax Reports for the preceding Quarter and a written request for payment of the City Consideration owing to TAC. Any delay shall not constitute either s breach of this Agreement or a waiver of TAC's right to receive the City Consideration under this Agreement, but may result in a delay in the City's payment of City Consideration to the extent that such delay by TAC causes the City to be unable to meet its payment obligations on a timely manner. 3.1.2.2 Payment of the amount determined by City to be owing to TAC for each Quarter shall be made by City within thirty (30) days after the later of the following: (i) TAC's submission of its completed payment request; and, (ii) City's verification (based upon corroborating information provided to City by either the State Board of Equalization and/or a sales tax consultant retained by City) that City has received the Sales Tax attributable to sales from all 75B-7