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2. VOLVO OBLIGATIONS, <br />2.1 Operating Agreement Continuous Operation. Volvo hereby covenants and <br />agrees to continuously conduct or cause to be conducted Required Operations within the City <br />during the entire Operating Period. Such continuous operations shall be subject to the force <br />majeure provisions of Section 5.11 hereof. <br />2.2 Maximization of Sales Tax. At all times during the Operating Period, Volvo shall <br />designate its dealership and sales office in the City as the point of sale for sales and use tax <br />purposes in all automotive retail sales and service operations that originate from within the City. <br />2.3 Payment of Taxes. Volvo shall pay or cause to be paid any and all taxes <br />applicable to or arising out of Volvo's lease, operation and /or use of its dealership and sales <br />office in the City, including, without limitation, all taxes attributable to sales occurring at such <br />office, except that Volvo retains its right to protest and contest County of Orange decisions <br />related to the value of its interest in any property or leasehold. Volvo shall make or cause to be <br />made timely sales and use tax payments to the State Board of Equalization, except that Volvo <br />retains its right to protest and contest State Board of Equalization assessments or decisions that <br />Volvo believes to be erroneous. <br />2.4• Compliance with Laws. Subject to Volvo's right to contest same, Volvo shall <br />conduct or cause to be conducted all activities within the City and shall perform its obligations <br />under this Agreement in conformity with all applicable federal, state, and local laws, ordinances, <br />and regulations. Nothing in this Agreement is a representation or warranty by City that any <br />tenant improvement or other construction work performed by Volvo within the City on or after <br />the date of this Agreement is not a public work as defined in Labor Code Sections 1720, et seq., <br />including but not limited to Sections 1771 and 1781. <br />3. CITY CONSIDERATION PAYMENTS, <br />3.1 Payment of City Consideration to Volvo. <br />3.1.1 Calculation of City Consideration. In consideration for Volvo's <br />undertakings pursuant to this Agreement, City shall make payments of City Consideration to <br />Volvo after the end of each Contract Year, as follows: <br />3.1.1.1 Subject to Paragraph 3.1,1.2 below, for Required <br />Operations conducted by Volvo in the Operating Period, City shall pay Volvo the City <br />Consideration based on the actual net amount of Sales Tax directly received by the City from <br />the State Board of Equalization during that Contract Year. Subject to the terms of Section 3.1.2, <br />the payment of City Consideration for each Contract Year shall be made in a single lump sum <br />payment within one hundred and twenty (120) days following the end of that Contract Year. <br />3.1.1.2 City Consideration shall be payable from any source of <br />funds legally available to City. In this regard, it is understood and agreed that the Sales Tax <br />from Volvo's Required Operations in the City is being used merely as a measure of the amount <br />of City Consideration payments that are periodically owed by City to Volvo, and that City does <br />not and legally cannot pledge any portion of that Sales Tax to Volvo. <br />25B -5 <br />