010306 RESO Approving AA Mutual Release-Jt Exrow Inst Vinci Invest_

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Resolution Approving Acquisition Agreement, Mutual Release and Joint Escrow Instructions with Vinci Investment Co., Inc. January 3, 2006 Page 2 Agency would proceed with the potential acquisition of the underlying fee interest in the property. The entire property would then be conveyed back to Vinci in exchange for Vinci's agreement to expand and redevelop the Honda Santa Ana dealership. However, the Johers breached their agreement with Vinci, triggering over a year of litigation. As a result, no negotiations were ever undertaken and no DDA has yet been approved by the parties. At one point Vinci was awarded $15 Million in damages for the breach, resulting in the Johers seeking bankruptcy protection. When it appeared that Vinci would be unable to consummate their agreement with the Joher family, the Agency chose to terminate the March 2004 acquisition agreement. Vinci disputed the legality of the Agency's action. Vinci has concluded its litigation with the Johers and has successfully acquired the Mr. J's property. The Agency and Vinci desire to resolve their differences and, in doing so, carry out the intent of the Purchase Agreement and the Term Sheet. Part of the Vinci -Joher settlement included a significant discount of the original purchase price in exchange for waiver by Vinci of that $15 Million judgment. Under the proposed Acquisition Agreement, the Agency will purchase the Mr. J's assets including the lease, buildings & business goodwill for originally agreed $4,247,897 (This amount will result in Vinci receiving approximately $2.1 Million of the $15 Million judgment) and then license the property back to Vinci for two years. During that time, Vinci is required to demolish all of the Mr. J improvements (including free- standing signs)and to integrate the premises into the Honda Dealership and make substantial improvements to bring it into full compliance with the Santa Ana Auto Mall specific development standards. To assist in that, the Agency will contribute $367,000 to Vinci to partially offset those costs, plus pay to Vinci $385,103 as an advance against the rental subsidy proposed in the Term Sheet. Finally, the Agency will pay Vinci $1,025,000 as a full and complete settlement and compromise of Vinci's claim for extraordinary expenses incurred in the Joher litigation and for all other disputes and potential claims against the Agency by Vinci. The Agreement calls for demolition of the former Mr. J's improvements to begin within 30 days of close of escrow. The first step in demolition will be removal of the +40 foot pole sign. Demolition is anticipated to be complete in as little as a week. At the end of the two years, if all of the improvements are made, the Agency will re- assign the lease back to Vinci. In the meantime, Vinci and the Agency will sign a new Term Sheet to guide negotiations on a DDA. � � a