Palo Alto City Council
November 27, 2023

SUBLEASE AGREEMENT FOR EXTENDED CHILD CARE SERVICES

AT PALO ALTO UNIFIED SCHOOL DISTRICT ELEMENTARY SCHOOL SITES

BETWEEN

CITY OF PALO ALTO
AND

KIDS CHOICE

This Sublease agreement (herein "Sublease") is made and entered into on _________________, by and bet ween the City of Palo Alto, a California chartered municipal corporation (herein "City") and Kids Choice (herein " Sublessee"). City and Sublessee may be referred to individually as a “ Party” or collectively as the “Parties” or the “Parties to this Suble ase." T he City Manager serves as Contract Administrator for this Sublease on behalf of the City Council.

RECITALS

A. These recitals are a substantive portion of this Sublease.

B. Effective July 1, 2023, City and the Palo Alto Unified School District (“District”) entered into a Lease Agreement for Extended Day Care Spaces (“Master Lease”). The Master Lease provides in part, that the District furnish space at various elementary school sites to be used for the purpose of providing child care services. The space provided shall meet the State standards for licensing and have all the utility connections in place except telephone.

C. Space has been provided by the District at various Palo Alto Elementary School Sites (“Sites”). City desires to Sublease the space to Sublessee for child care services.

D. Sublessee desires to Sublease said space for the purpose of providing child care services.

Now, therefore, in consideration of these recitals and the following covenants, terms, and conditions, Sublessee and City mutually agree as follows:

SUBLEASE PROVISIONS

1. PREMISES.

City hereby subleases to Sublessee, certain real property located in the City of Palo Alto, County of Santa Clara, State of California, at the Sites more particularly described in Exhibit A atta ched hereto and incorporated herein by reference (herein the " Premises"). Unless specifically provided, Sublessee accepts the Premises “as-is” on the date of execution of this Sublease.

Sublessee acknowledges that the Premises meets the State requirements for State Licensing or as an Exempt Provider according to the general licensing requirements of Title 22 of the Calif ornia Codes of Regulations as promulgated by the Department of S ocial Services. Sublessee shall notify City’s Child Care Coordinator immediately if a site no longer qualifies for State Licensing as a child care facility.

2. TERM.

2.1 Original Term. T he term of this Sublease shall commence on July 1, 2023 and end on June 30, 2024. Sublessee shall, at the expiration of the term of this sublease, or upon its earlier termination, surrender the Premises in as good condition as it is now at the date of this sublease. The Parties expect reasonable wear and tear.

2.2 Early Termination by City. If City in its sole discretion determines that it requires the Premises for any public purpose, City may terminate this Sublease upon sixty (60) days written notice.

2.3 Renewed Terms. This Sublease may be renewed for additional one (1) year terms ("Renewed Terms") upon the mutual written agreement of the Parties but in no event shall this Sublease's Term and Renewed Terms, together, exceed a total of five (5) years.

If either party wishes to renew this Sublease, it shall notify the other party in writing at least ninety (90) days before the expiration of the Term.”

3. RENT.

3.1 Base Rent . The rent to be paid by Sublessee shall be in the amount identified on Exhibit A, per site, per month without deduction or offset. Rent shall be payable on the first day of each and every month commencing on July 1, 2023, at a place (or places) as may be designated in writing from time to time by City.

3.2 Annual Increase. During the Term of this Sublease, the Base Rent shall be increased 3% effective on each July 1 st. The sum shall be adjust ed an nually resulting in a compound rate of increase.

3.3 Late Charge. Sublessee acknowledges late payment of rent will cause City to incur costs not contemplated by this Sublease, the exact amount of such costs being extremely difficult and impractic able to fix. Such costs include, without limitati on, processing, accounting and late charges that may be imposed on City. Therefore, if City does not receive any installment of rent due from Sublessee postmarked within ten (10) days after the date such r ent is due, Sublessee shall pay to City an additi onal sum of five percent (5%) of the overdue rent as a late charge. The parties agree this late charge represents a fair and reasonable estimate of the costs City will incur by reason of late payment by Sublessee. Acceptance of any late charge shall not constitute a waiver of Sublessee’ s default with respect to the overdue amount, nor prevent City from exercising any of the other rights and remedies available to City.

3.4 Rent Payment Procedures . Su blessee’s obligation to pay rent shall com mence upon the com mencement of this Sublease. Rent payment for any fractional calendar month shall be prorated. Rent payments shall be delivered to City’s Revenue Collections Division, 250 Hamilton Avenue, PO Box 10250, Palo Alto, CA 94303. The designa ted place of payment may be changed at any time by City upon ten (10) days’ written notice to Sublessee. Sublessee specifically agrees that acceptance of any late or incorrect rentals

submitted by Sublessee shall not constitute an acquiescence or waiver b y City and shall not prevent City from enforcing Section 3.3 (Late Charge) or any other remedy provided in t his Sublease. A cceptance of rent shall not constitute approval of any unauthorized sublease or use, nor constitute a wa iver of any non-monetary breach. Payments shall be effective upon receipt. City may apply any payment received from Sublessee at any time against any obligation due and owing by Sublessee under this Sublease, regardless of any statement appe aring on or r eferred to in any remittance from Sublessee or any prior application of such payments.

3.5 Partial Payment. The receipt by City of a pa rtial payment of any amount due t o City endorsed as payment in full will be deemed to be a partial payment only. City may accept and deposit said check without prejudice to its right to recover the balance. Any endorsements or statements on the check or any l etter accompanying the check shall not be deemed an accord and/or satisfaction. Sublessee's obligation (without prior not ice or demands) to pay rent and all other amounts due hereunder shall be absolute and unconditional, and not subject to any abate ment, set off, defense, recoupmen t or reduction.

4. LIMITATION OF THE SUBLEASEHOLD.

Pursuant to the Master Lease, District leased to City the Sites in accordance with the terms of the Master Lease. Sublesse e acknowledges that it has received a copy of the Ma ster Lease.

Capitalized terms used in this Sublease and not otherwise defined shall have the meaning given them in the Master Lease. This Sublease and the rights and privileges granted Sublessee in and to the Premises are subje ct to all covenants, conditions, restrictio ns, and physica l or legal encumbrances, including but not limited to those listed out in Exhibit A. Nothing contained in this Sublease or in any document related hereto shall be construed to imply the conveyance to Sublessee of rights in the Premises whic h exceed those owned by City. Except as otherwise specifically provided herein, where this Sublease requi res Sublessee to obtain City’ s consent or approval, Sublessee understands that City may be required to first obtain t he consent or approval of District. If District should refuse such consent or approval, through no fault of City, City shall be released o f any obligation to grant its consent or approval, whe ther or not such refusal, in Sublessee’s opinion, is arbitrary or unreasona ble. Sublessee acknowledges that City is not in a position nor obligated to render any of the services or to perform any of the obligations required of District under the Master Lease.

5. USE OF PREMISES.

5.1 Required and Permitted Uses. Throughout the t erm of this Sublease, Sublessee shall provide child care related uses, services and activities as set forth in Exhibit C which is attached and incorporated by reference. Premises may not be used for any other purposes without C ity's prior written consent, which consent may be withheld in t he s ole and absolute discretion of the City.

5.2. Use By City. U pon written approval by S ublessee, which approval shall not be unreasonably withheld, the City may use any of the Premises, at no cost, during the summer months that they are not used as set forth in Exhibit A.

5.3 Prohibited Uses . Sublessee shall not use Premises for any pur pose not expressly permitted hereunder. Sublessee shall not create, cause, maintain or permit any nuisance or waste in, on, or about the Premises, or permit or allow the Premises to be used for any unlawful or immoral purpose. Sublessee shall not do or p ermit to be done anything in any manner which unreasonably disturbs the users of the Sites . Specifically, and without limiting the above, Sublessee agrees not to cause any unreasonable odor, noise, vibration, power emission, or other item to emanate from th e Premises. No materials or articles of any nature shall be permanently stored outside upon any portion of the Premise s, unless approved in writing by the City. Sublessee will not use Sites in a manner that increases the risk of fire or cost of fire insurance. No unauthorized sign or placard shall be painted, inscribed or placed in or on said Sites ; and no tree or shrub thereon shall be destroyed or removed or other waste committed of said Si tes. No motorcycles, automobiles or other mechanical means of transportation shall be placed or stored anywhere on the Sites except for the parking lot. No repair, overhaul or modification of any motor vehicle sh all take place on the Sites or the street in front of said Sites . Sublessee, at his/her expense, shall keep the Premises in as good condition as it was at the beginning of the terms hereof, except damage occasioned by ordinary wear and tear, and excep t damage to the roof, sidewalks and underground plumbing, which is not the fault of Sublessee.

5.4 Condition, Use of Premises. City makes no warranty or representation of any kind concerning the condition of the Premises, or the fitness of the Pr emises for the use intended by Sublessee, and hereby disclaims any personal knowledge with respect thereto, i t being expressly understood by the parties that Sublessee has personally inspected the Premises, knows its condition, finds it fit for Subless ee’s int ended use, accepts it as is, and has ascertained that it can be used exclus ively for the limited purposes specified in Section 5.1.

6. HAZARDOUS MATERIALS.

6.1 Hazardous Materials Defined . The term “ Hazardous Material(s)” shall mean any toxic or h azardous substance, material or waste or any pollutant or contaminant, or infectious or radioactive m aterial, including but not limited to, those substances, materials, or wastes regulated now or in the future under any of the following statutes or regulations and any and al l of those substances included within the definitions of “hazardous substances, ” “hazardous waste, ” “hazardous chemical substance or mixture,” “imminently hazardous chem ical substance or mixture,” “toxic substances,” “hazardous air p ollutant,” “toxic pollut ant” or “solid waste” in the (a) CERCLA or Superfund as amended by SARA, 42 U.S.C. Sec. 9601 et seq., (b) RCRA, 42 U.S.C. Sec. 6901 et seq., (c) CWA., 33 U.S.C. Sec. 1251 et seq., (d) CAA, 42 U.S.C. 78401 et seq., (e) TSCA, 15 U.S.C. S ec. 2601 et seq., (f) The Refuse Act of 1899, 33 U.S.C. Sec. 407, (g) OSHA, 29 U.S.C. 651 et seq. (h) Hazardous Materials Transportation Act, 49 U.S.C.

Sec. 1801 et seq., (i) USDOT Table (40 CFR Part 302 and amendments) or the EPA Table (40 CFR Part 302 and amendments), (j) California Superfund, Cal. Health & Safety Code Sec. 25300 e t seq., (k) Cal. Hazar dous Wa ste Control Act, Cal. Health & Safety Code Section 25100 et seq., (l) Porter -Cologne Act, Cal. Water Code Sec. 13000 et seq., (m) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety Code Sec. 25220 et

seq., (n) Proposition 65, Cal. Health and Safety Code Sec. 25249.5 et seq., (o) Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety Code Sec. 25280 et seq., (p) California Hazardous Substance Ac t, Cal. Health & Safety Code Sec. 28740 et seq., (q) Air Resources Law, Cal. Health & Safety Code Sec. 39000 et seq., (r) Hazardous Materials Resublease Response Plans and Inventory, Cal. Health & Safety Code Secs. 25500-25541, (s) T CPA, Cal. Health and Sa fety Code Secs. 25208 et seq., and (t) regulations promulgated pursuant to said la ws or a ny replacement thereof, or as similar terms are defined in the federal, state an d local laws, statutes, regulations, orders or rules.

Hazardous Materials shall also me an any and all other substances, materials, and wastes which are, or in the futur e become, regulated under applicable local, state or federal law for the protection of health or the environment, or which are classified as hazardous or toxic substances, ma terials or wastes, pollutants or contaminants, as defined, listed or regulated by any fed eral, state or local law, reg ulation or order or by common law decision, includi ng without limitation: (i) trichloroethylene, tetracholoethylene , perchloroethylene and other chlorinated solvents; (ii) any petroleum products or fractions thereof; (iii) asbestos, (iv) polychlorinated biphenyls; (v) flammable explosives; (vi) urea formaldehyde; and, (vii) radioactive materials and waste.

6.2. Compliance with Laws. Sublessee shall not cause or permit any Hazardous Material (as defined above) to be brought upon, kept or used in or about the Premises or Sites by Sublessee, its agents, employees, contractors or invitees.

6.3 Termination of Subleas e. City sh all have the ri ght to terminate the Sublease in City’s sole and absolute discretion i n the event that : (i ) any anticipated use of the Premises by Sublessee involves the generation or storage, use, treatment, disposal , or release of Hazardous Material in a manner or for a purpose prohibited or regulated by any governmental agency, authority, or Hazardous Mate rials Laws; (ii) Sublessee has been required by any lender or governmental authority to take remedial action in connection with Hazardous Material contaminating the Premises, if the contamination resulted from Sublessee’s action or use of the Premises; or ( iii) Sublessee is subject to an enforcement order issued by any governmental authority in connection with the re lease, use, disposal, or storage of a Hazardous Material on the Premises.

6.4 Reserved.

6.5 Hazardous Mate rials Indemnity . Sublessee shall indemnify, defend (by counsel reasonably acceptable to City), protect, and hold City harmless from and against any and all claims, liabilities, penalties, forfeiture s, losses , and/or expenses, including without limitation, diminution in value of the Prem ises, damages for the loss or restricti on on use of the rentable or usable space or of any amenity of the Premises, damages arising from any adverse impact or marketin g of the Premises and sums paid in settlement of claims, response costs, cleanup costs, site assessment costs, attorneys’ fees, consultant and expert fees, judgments, administrative rulings or orders, fines, costs of death of or injury to any person, or da mage to any property whatsoever (including, without l imitation, groundwater, sewer system s, and atmosphere), arising from, caused, or resulting, either prior to or during the Sublease Term, in whole or in part, directly or indirectly, by the presence or di scharge in, on, under, or about the Premises by Suble ssee, Sublessee’s

agents, employees, licensees, or invitees or at Sublessee’s direction, of Hazardous Material, or by Sublessee’ s failure to comply with any Hazardous Materials Law, whether knowingly or by strict liability. For purposes of the indemnity provided herein, any acts or omissions of Sublessee or its employees, agents, c ustomers, sub-sublessees, assignees, contractors, or subcontractors of Sublessee (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributa ble to Sublessee . Sublessee’s indemnification obligations sh all include, with out limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary Hazardous Ma terials management plan, investigation, repairs, cleanup or detoxification or decontamination of the Pre mises, and the presence and implementation of any closure, remedial action or other required plans, and shall survive the expiration of or early termination of the Sublease Term.

6.6 City’s Right to Perform Tests . A t any time prior to the expiration of the Sublease Term, City shall have t he right to enter upon the Premises in order to conduct tests of water and soil.

7. UTILITIES AND OPERATING EXPENSES.

Sublessee acknowledges that City is not in a position nor obligated to render any of the services or to perform any of the obligations required of District under Section 5.1.6 of the Master Lease with respect to the furnishing of any services or ut ilities to the Premises. Sublessee shall pay the cost for utilities and provide and pay for any telephone equipment or services at the Premises .

However, as separate meters are not provided for these services and it would be uneconomical to separately meter these services, Sublessee agrees t o pay to City an estimate of Sub lessee’s consumption for these utilities. The monthly utility amount is se t forth in Exhibit A hereto and shall be rem itted by Sublessee to City at the same time as the Rent paymen ts are due under Section 3.

If C ity is required to construct new or addi tional utility installations, in cluding, without limitation, wiring, plumbing, conduits, and mains, resulting from Sublessee’s special requirements, Sublessee shall on demand pay t o C ity the total cost of such items or pay and contract for such installations directly.

8. TAXES.

8.1 Re al Property Taxes Defined. The term “real property taxes” as used herein shal l mean a ll taxes (including possessory interest taxes) , as sessments, l evies and other charges, general and special, foreseen and unforeseen, now or hereafter impo sed by any governmental or quasi -governmental authority or special district having the direct or indirect power to tax or levy assessments, which are levied or assesse d against or with respect to: (i) value, occupancy, use or possession of the Premises and /or the improvements; (ii) any improvements, fixtures, equipment and other real or personal property of Sublessee that are an integral part of the Premi ses; or, (ii i) use of the Premises, improvements public utilitie s or energy within the Premises. The te rm “real property taxes” shall also mean al l charges, levies or fees imposed by reason of environmental regulation or other governmental control of the premises and /or the improvements, new or altered excise, transaction, sales, privilege, assessment, or o ther

taxes or charges now or hereafter impo sed upon City as a result of this Sublease, and a ll costs and fees (including attorneys’ fees) incurred by City in contes ting any real property taxes and in negotiating with public authorities as to any real prope rty taxes affecting the Premises. If any real property taxes are based upon property or rents unrelated to the Premises and/or the improvements , then only that par t of such tax that i s fairly allocable to the Premises and/or the improvements , as determine d by City, on th e basis of the assessor’s w orksheets or other available information, shall be included within the meaning of the term “real property taxes.”

8.2 Payment of Real Pr operty Taxes. Sublessee shall pay Sublessee’ s share of all real property taxes (as defined in Section 8.1 above ) which become due and payable to City on or before the later of ten (10) days prior to the delinquency thereof or t hree (3) day s after the date on which Sublessee receives a copy of the tax bill and notice of Cit y’s determination hereunder. Sublessee’s liability to pay real property taxes shall be prorated on the basis of a three hundred sixty- five (365) day year to account for a ny fraction or portion of a tax year included in the Sublease term at the commencement or expiration of the Sublease.

8.3 Revenue and Taxation Code. Sublessee specifically acknowledges it is familiar with section 107.6 of the California Revenue and Taxa tion Code . Sublessee realizes that a possessory interest subject to property taxes may be c reated, agrees to pay any such tax, and hereby waives any rights Sublessee may have under said California Revenue and Taxation Code section 107.6.

8.4 Personal Property Taxes. Suble ssee shall pay before delinquent , or if requested by City, reimburse City for, any and a ll taxes, fees, and assessments associated with the Premises, the personal property contained in the premises and other taxes, fees, and assessments regarding any activities which take place at the Sites . Sublessee recognizes and understands in accepti ng this Sublease that its interest therein may be subject to a possible possessory interest tax that City or County may impose on such inte rest and that such tax payment shall not reduce any rent due City hereunder and any such tax shall be the liability of and be paid by Sublessee.

9. MAINTENANCE.

9.1 City and Sublessee Responsibilities . Sublessee acknowledges that City is not in a position nor obligated to perform any of the obligations required of District under Sections 5.3.2 of the Maste r Lease with respect to the maintenance, repair, or restoration of the Premises. Sublessee shall not be granted relief from rent or b e given other consideration if and when District pe rforms maintenance and repair obligations as required t herein. Sublessee at Sublessee’s expense, shall perform a ll remaining maintenance and repairs that are not the res ponsibility of District, including but not limited to: plumbing, pa inting, light bulb and ba llast replacement, window glass replacement, floor treatme nt, drape ry and carpet cleaning, door and window hardware replacement, space heater or any other Sublessee installed heating/air conditioning system, interior pest control a nd any special secu rity d evices. Sublessee shall provide janitorial service to the Premise s and shall clean the windows inside and outside as

needed. Sublessee shall keep the P remises and all improvements thereto in first- class order, repair, and condition, and shall keep the Premises in a safe, clean, wholesome, and sanitary condition to the c omplete satisfaction of C ity, and in com pliance with all applicable laws, throughout the term of this Sublease. In addi tion, Sublessee shall maintain, at Sublessee’s expense, all equi pment, furnishings and trade fixtures upon the Premises required for the maintenance and operation of a first -class business of the type to be conducted pursuant to this Sublease. Sublessee f urther agrees to provide approve d containers for trash, g arbage and recycling and to keep the Premises free and clear of rubbish, litter and recyclable materials. City shall h ave the right to enter upon and inspect the Premises at any time for cleanliness and safety. Notwithstanding the above provisions, Sublessee shall be responsible for damage or repair to the Premises or any of its support systems resulting from Sublessee’s use of the Premises and not occasioned by normal wear and tear, including plumbing and glass breakage.

Sublessee shall desi gnate in wri ting to C ity an on -site representative who shall be responsible for the day -to-day operation and level of maintenance, cl eanliness and general order.

9.2 Waiver of Civil Code . Sublessee expressly waives the benefit of any statute now or hereinafter in effect, i ncluding the provisions of S ections 1941 and 1942 of the Civil Code of California, which would otherwise afford Su blessee the right to make repairs at City’s expense or to terminate this Suble ase because of City’s failure to keep Premises in good order, conditio n and repair. Sublessee further agrees that if and when any repai rs, alterations, additions or betterment s shall be made by Sublessee as required by this paragraph, Sublessee shall promptly pay for all labor done or m aterials furnis hed and shall keep the P remises free and clear of any lien or encumbrance of any kind whatsoever. If Sublessee fails to make any repairs or perform any maintenance work for which Sublessee is responsible with in a reasonable time (as determi ned by the City Manager in the City Manager’s sole discretion) after demand by the C ity, City shall have the right, but not the obligation, to m ake the repairs at Sublessee’s expense; within ten (10) days of receipt of a bil l, Sublessee shall reimburse City for the cost of such repairs, including a fifteen percent (15%) administrative overhead fee. The maki ng of such repairs or performance of maintenance by City shall in no event be construed as a waiver of the duty of Suble ssee to make repairs or perform maintenance as pr ovided in this section.

9.3 Reserved.

10. CONSTRUCTION BY SUBLESSEE.

10. 1 Construction Standards. All design and construction performed by or on behalf of Sublessee shall conform to the approved plans, specifications, construction and architectural standards approved by the C ity Council if require d by Palo Alto ordinances or procedures or otherwise by the City Manager. Once the work is begun, Sublessee shall with reasonable diligence prosecute all construction to completion. All work shall be p erformed in a good and workmanlike manner, shall substantia lly comply with any plans and s pecifications approved by C ity and shall comply with all applicable

governmental permits, laws, ordinances and regulations, and shall meet all other requirements contained in this Sublease.

10.2 Cost of Improvements . Sublessee shall pay all costs for c onstruction done or caused to be done by Sublessee on the Premises as permitted or required by this Sublease.

Sublessee shall keep the Premises free and clear of all c laims and liens resulting from construction done by or for Sublessee. Promptly after com pletion of construction, Sublessee shall provide to the City Manager a state ment of the reasonable and actual costs of construction for the initial improvements, which statement shall be certified as to accuracy and signed by Sublessee under penalty of perjury.

10.3 Ownership of Improvements. All improvements constructed, erected, or installed upon the P remises must be free and clear of all liens, claims , or liability for la bor or material and shall become the property of C ity, at its election, upon expira tion or earlier termination of this sublease and upon City's election, shall r emain upon the P remises upon termination of this Sublease. Title to all e quipment, furni ture, furnishings, and trade f ixtures placed by Subl essee upon the P remises shall remain in Sublessee, and replacements, substitutions and modifications thereof may be made by Sublessee throughout the term of this Sublease. Sublessee may remove such fixtur es an d furnishings upon termination of this Sublease if Sublessee is not then in default under this Sublease, provided that Sublessee shall repair to the satisfaction of City any damage to the P remises and improvements caused by such remova l an d provided t hat usual and customary lighting, plumbing and heating fixtures shall remain upon the P remises upon termination of this Sublease.

10.4 Indemnity for Claims Arising O ut of Construction. Sublessee shall defend and indemnify City against all claims, liabilities, and losses of any type arising out of work performed on the Premises by Sublessee, together with reasonable attorneys' fees and all costs and expenses reasona bly incurred by C ity in negotiating, settling, defending or otherwise protecting against such claims.

10.5 Assurance of Completion. Prior to commencement of any construction or al teration expected to cost more than $5,000.00, Sublessee shall furnish the City Manager evidence that assures City that sufficient monies will be availa ble to complete the proposed work.

The amount of such assurance shall be at least the total estimated c onstruction cost.

Evidence of such assurance shall take one of the forms set out below and shall guarantee Sublessee’s full and faithful performance of all of the terms, covenants, and conditions of this Sublease:

A. Completion Bond;
B. Performance, lab or and material bonds, supplied by Sublessee’s contractor or contractors, pr ovided the bonds are issued jointly to Sublessee and City;
C. Irrevocable letter of credit from a financial institution; or D. Any combination of the above.

All bonds and letter s of credit must be issued by a company qualified to do business in

the State o f California and be acceptable to the City Manager. All bonds and letter s of credit shall be in a form acceptable to the City Manager, and shall in sure faithful and full observance and performance by Sublessee of all of the terms, conditions, covenants, a nd agreements relating to the construction of improvements or alterations in accordance with this Sublease.

10.6 As Built Plans . Sublessee shall provide the City Manager with a complete set of reproducible “as built plans” reflecting actual constructi on within or upon the Premises upon completion of any: (i) new construction; (ii) structural alterations; or, (iii) n on- structural alterations costing more than $25,000.

11. ALTERATIONS BY SUBLESSEE

Sublessee shall not make any alterations or improvements to the Premises without obtaining the prior written consent of the City M anager. Sublessee may, at any time and a t its sole expense, install and place business fixtures and equipment within the Premises, provided such fixtures and installation have been reviewed and approved by the City Manager. Prior to commencement of any work, Sublessee shall pay the amount of any increase in premiums on insurance policies provided for herein because of endorsements to be made covering the risk during the course of the work and shall pay for any and all permits which may be required.

12. H OLD HARMLESS/INDEMNIFICATION.

12.1 Indemnification. To the exte nt permitted by law, Sublessee agrees to protect, defend, hold harmless and indemnify City, its City Council, com missions, officers, agents, volunteers, and employees from and against any cl aim, injury, liability, loss, cost, and/or expense or damage, howe ver same may be caused, including all c osts and reasonable attorney's fees in providing a defense to any claim arising therefrom for which City shall become legally liable arising from Suble ssee's, its off icers’ agents’ subcontractors’ or employees’ negligent, reck less, willful, or wrongful ac ts, errors, or omissions, or conduct for which applicable law may impose s trict liability on Sublessee, with respect to or in any way connected with this Sublease or in connection with Sublessee’s performance of or fa ilure to perform its obligations under this Sublease, including but not limited to Exhibit C . Sublessee shall give City immediate notice of any claim or liability hereby indemnified against. Th is indemnity shall be in addition to the Hazardous Materials i ndemnity contained in this Sublease and shall survive the expiration of or early termination of the Sublease Term.

12.2 Waiver of Claims . Sublessee waives any claims against C ity for in jury to Sublessee’s business or any loss of income therefrom, for damage to Sublessee’ s property, or for injury or death of any person in or about the Premises or Sites , from any cause whatsoever, except to the extent caused by Ci ty’s active negligence or willful misconduct.

13. DAMAGE, DESTRUCTION AND TERMINATION.

13.1 Nontermination and Nonabatement. Ex cept as provided herein, no destruction or

damage t o the Premises by fire, windstorm or other casualty, whether insured or uninsured, shall entitle Su blessee to terminate this Sublease. City and Sub lessee waive the provisions of any statutes which relate to termination of a sublease when subleased property is destroyed and agree that such event shall be governed by the terms of thi s Sublease.

13.2 Fo rce Majeure. Pr evention, delay or stoppage due to strikes, lockouts, labor disputes, Acts of God, inability to obtain labor, inability to obtain materials o r reasonable substitutes, governmental restrictions, governmental regulati on, governmental controls , judicial order s, enemy or hostile governmental actions, civil commotion, fire or other casualty, and other causes beyond the reasonable control of Sublessee (financial inability excepted), shall excuse the performance by Sublessee for a period equal to t he prevention, delay, or stoppage, except the obligations imposed with regard to rent to be paid by Subles see pursuant to this Sublease. In the event any work performed by Sublessee or Sublessee’s contractors results in a strike, lockout, and/or labor dis pute, the strike, lockout, and/or labor dispute shall not excuse the performance by Sublessee of the provisions of this Sublease.

13.3 Restoration of Premis es by Sublessee.

13.3.1 Destruction Due to Risk Covered by Insurance . If, during the term, the Premises are total ly or partially destroyed from a risk covered by the insurance described in Section 20 (Insurance), rendering the Premises totally or partially inaccessible or u nusable, Sublessee shall restore the Premises to subs tantially the same condit ion as it was in i mmediately before destruction, whether or not the insurance proceeds are sufficient to cover the actual cost of restoration. Such destruct ion shall not termina te this Sublease. If the laws existing at that time do not permit the restoration, either party can terminate this Sublease immediately by giving notice to the other party.

If the cost of the restoration exceeds the amount of proceeds received from the insurance required under Section 20 (Insurance), C ity can elect to terminate this Sublease by gi ving notice to Sublessee within thirty (30) days after determining that the restoration c ost will exceed the insurance proceeds. In the case of destruction to the Premises only, if C ity elects to terminate this Subleas e, Sublessee, within th irty (30) days a fter receiving City’s notice to terminate, can ele ct to pay to C ity, at the time Sublessee notifies C ity of its election, the difference between the amount of insurance proceeds and the cost of restoration, in which c ase C ity shall restore the Premises. C ity shall give Sublessee satisfactory evidence that all sums contributed by Sublessee as provided in this paragraph have been expended by City in paying the cost of restoration.

If City elects to terminate this Sublease, and Sublessee do es not elect to contribute toward the cost of restoration as provided in this section, this Sublease shall terminate.

13.3.2 Destruction D ue to Risk Not Covered by Insurance . If, during the term, the Premises are t otally or partially destr oyed from a risk not covered by the insurance described in Secti on 20 (Insurance), rendering the Premises totally or par tially inaccessible or unusable, Sublessee shall res tore the Premises to su bstantially the same condition as it was in immediately before destruction, whether or not t he insurance proceeds are suffici ent to cover the actual cost of restoration. Such destr uction shall not terminate this Sublease. If the la ws existing at that time do not permit the restoration, either party can terminate this Sublease immediately by giving notice to the other party.

If the cost of res toration exc eeds ten percent (10%) of t he then replacement value of the Premises totally or partially destroyed, Sublessee can elect to terminate th is Sublease by giving no tice to C ity within sixty (60) days after determining the restoration cost and replacement value.

In the case of destruct ion to the Premises only, if City elects to termina te this Sublease, Suble ssee, within thirty (30) days afte r receiving C ity's notice to terminate, can elect to pay t o City at the time Sublessee noti fies City of its election, the difference between ten per cent (10%) of the then replacement value of the Premises and the actual co st of restoration, in which case C ity shall restore the Pr emises. C ity shall give Sublessee satisfactory evidence that all sums contributed by Sublessee as provided in this paragrap h have been expended by C ity in paying the cost of restoration.

If City elects to terminate this Sublease and Sublessee cannot or does not elect to contribute towar d the cost of restoration as provided in this section, this Sublease shall terminate.

13.3.3 Extent of City’s Obligation to Restore . If City is required or elects to restore the Premises as prov ided in this section, C ity shall not be required to restore alterations made by Sublessee, S ublessee's improvements, Sublessee's trade fixtures, and S ublessee's personal property, such excluded items being the sole responsibility of Sublessee to restore. City shall have no obligation to restore, replace or compens ate Sublessee for any loss of Su blessee’s improvements, trade fixtures or personal property in the event of partial damage to Premises due t o floor or ceiling water leaks, electrical damage, fire damage or smoke damage.

14. SIGNS.

Sublessee shall not pl ace, construct, maintain, or al low any signs upon the Premises without prior written consent of City , which consent shall not be unreasonably withheld. All signs must comply with the City’s Sign Ordinance unless exempt therefrom.

15. ASSIGNMENT AND SUBLETTING.

15.1 Assignment & Suble tting Prohibited. The parties acknowledge that C ity has relied on the unique background, character and capa bilities of Sublessee in entering into this Sublease or in establishing the rent pa yable under this Su blease. Consequently, Sublessee shall not, either voluntarily or by operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Su blease or any interest herein, or any right or privilege appurtenant hereto, or al low any other person (the employees , agents and invitees of Subles see excepted) to oc cupy or use the Premises, or any portion thereof.

Any purported assignment or subletting shall be void, and shall, at the option of the C ity, constitute a default under this Sublease.

15.2 Assignment Defined. For purposes of this s ection, each of the following shall also be deemed an assignment subject to the provisions hereof: (i) if Sublessee is a partnership or joint venture, a withdrawal, addition, or change (voluntary, involuntary, by operation of law, or otherwise) of any of the partners or vent urers thereof; (ii) if Sublessee is a limited liability company, a withdrawal, addition, or change (voluntary, involuntary, by operation of law, or otherwise) of any of the members or manager s thereof; (iii ) if Sublessee is composed of more than one person, a purported assignment or transfer (voluntary or involuntary, by operation of law, or otherwise) from one thereof to the other or others thereof; (iv) if Sublessee is a corporation, a change in the owners hip (voluntary or involuntary, by operation of law, or otherwise) of 25% or more of its c apital stock or members (or, in the case of a nonprofit corporation without members, of 25% or more or its directors); or (v) a chan ge in Sublessee ’s st atus as a non -profit, charitable organization.

16. DEFAULTS; REMEDIES.

16.1 Defaults . The occurrenc e of any one or more of the following events shall constitute a material default, or breach of this Sublease, by Sublessee:

16.1.1 Abandonment of the Premises by Subl essee as defined by California Civil Code section 1951.3;

16.1.2 Failure by Sublessee t o make any payment of rent or any other payment required to be made by Sublessee hereunder, as provided in this Sublease, where such failure shall continue for a peri od of ten (10) business days af ter written notice thereof from City to Sublessee. In the event City serves Sublessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph;

16.1.3 Failure by Sublessee to observe or pe rform any of the covenants, conditions or provisions of this Sublease in any material respect where such failure shall continue for a period of thirty ( 30) days after w ritten notice thereof from Cit y to Sublessee; pro vided, however, that if the nature of Sublessee’ s default is such that more than thirty ( 30) days are reasonably required for its cure,

then Sublessee shall not be deemed to be in default if Sublessee commenced such cure within said thir ty (30) day period and thereafter diligently prosecutes such cure to completion;

16.1.4 Making by Sublessee of any general arrangement or assignment for the benefit of creditors; Sublessee’ s becoming a “debtor” as defined i n 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition file d against Sublessee, the same is dismissed within sixty (60) days); the appointment of a bankruptcy truste e or receiver to take poss ession of all or substantially all of Sublessee’s assets located at or on the Premise s or of Sublessee’s interest in this Sublease where possession is not restored to Sublessee within thirty (30) days; or the attachment, execution or other judicial seizure of all or substanti ally all of Sublessee’s assets located at or o n the Premises or o f Sublessee’s interest in this Sublease, where such seizure is not discharged within thirty (30) days.

16.2 Remedies. In the event of any material default or breach by Sublessee , City may at any time thereafter, following any notice required by statute, and without limiting City in the exercise of any right or remedy which City may have by reason of such default or breach:

16.2.1 Terminate Sublessee ’s right to possessi on of the Premises b y any lawful means, in which case this Subleas e shall terminate a nd Sublessee shall immediately surrende r possession of the Premises to City. In such event, City shall be entitled to recover from Sublessee all damages incurred by City by reason of Sublessee’s default in cluding but not limited to : the cost of recovering possession of the Premises and Improve ments; expenses of reletting, inc luding necessary renovati on and alteration of the Premises and Improvements ; reasonable attorneys’ fees; the worth at t he time of the a ward of the u npaid rent that had been earned at t he time of termination of this Sublease and the worth at the time of awa rd of the amount by which the unpaid rent for the balanc e of the term after the tim e of such award exceeds the amount of such rental l oss for the same period that Sublessee proves could be reasonably avoided.

16.2.2 Maintain Sublessee’s right to possession, in which case this Su blease shall continue in effect whether or not Sublessee s hall have abandoned the Premises.

In such event, C ity shall be e ntitled to enforce all of City’ s rights and remedies under this Sublease, including the right to recover rent and other payments as they become due hereunder.

16.2.3 Pursue any other remedy now or hereafter available to City under the laws or judicial decisions of the State of California. City shall have all remedies provided by law and equity.

16.3 No Relief from Forfeiture After Default. Sublessee waives all rights of redemption or re lief from forfeiture under California Code of Civil Procedure sections 1174 and 1179, and any other present or future law, in the event Subles see is evicted or City otherwise lawfully takes possession of the Premises by reason of any default or breach of

this Sublease by Sublessee.

16.4 Dis position of Aba ndoned Personal Property. If the Sublessee fails to remove any personal property belonging to Sublessee from the Premises after forty -five (45) days of the expiration or termination of this Sublease, such property shall at the option of C ity be deemed to h ave been transferred to C ity. C ity shall have the right to remove and to dispose of such property without liability to Sublessee or to any person claiming under Sublessee, and the City shall have no need to account for such property.

17. I NTEREST ON PAST-DUE OBLIGATIONS.

Except as expressly provided herein, any amount due City when not paid when due shall bear interest at the lesser of ten percent (10%) per year or the maximum rate then allowable by law from the date due.

18. HOLDING OVER.

If Sublessee remains in possession of the Premises or any part thereof after the expiration of the term or option term hereof, such oc cupancy shall be a tenancy from month to month with all the obligations of this Su blease applicable to Sublessee and at City's prevailing monthly rate of rent for the Premises at the time of expiration. The rent under a m onth-to-month tenancy is subject to increase on thirty (30) days prior written notice from City. Nothing contained in this Sublease shall give to Sublessee the right to occupy the Permises after the expiration of the term, or upon an earlier termination for breach.

19. CITY’S ACCESS.

19.1 Access for Inspection. City and Ci ty’s agents shall have the right to enter the Premises at reasonable times, upo n not less than twenty-four (24) hours prior notice to Sublessee, for the purpose of inspecting same, showing same to prospective purchas ers, lenders or sublessees, and making such alterations, repairs, improvements, or additions to the Premises as City ma y deem necessar y. City may at any time place on or about the Premises any ordinary “ For Sale” signs and City may at any time during the last one hundred twenty (120) days of the term hereof place on or about the Premises any ordinary “For Sublease” signs, all without rebate of rent or liability to Sublessee.

19.2 Security Measures. City shall have the ri ght to require a reasonable secur ity system, device, operation, or plan be installed and implemented to protect the Premises or the Improvements. Shoul d City, in its s ole discretion, require Sublessee to install such a security system, Sublessee agrees to bear the sole cost and expense o f any security system, device, operation or plan and the installation and implement ation thereof.

Sublessee shall obtain City’s prior approval before installing, implementing or changing any City approved security system, device, operation or plan.

19.3 New Locks. Sublessee may install new locks on all exterior doors. Sublessee shall advise City of such action and shall provide City with keys to said locks. Sublessee shall also deliver to City the old locks with keys. Upon termination, Sublessee shall leave new

locks that shall become the property of City.

20. INSURANCE.

Sublessee's responsibility for the Premises begins immediately upon delivery and Sublessee, at its sole cost and expense, and at no cost to City, s hall purchase and maintain in full force and effect during the en tire term of this Sublease insurance coverage in am ounts and in a form acceptable to City as set forth in Exhibit C attached hereto and incorporated herein by reference.

Said policies shall be maintained with respect to Sublessee’s employees, if any, and all vehicles operated on t he Premises. The policies shall include the required endorse ments, certificates of insurance and coverage verifications as described in Exhibit C. Sublessee also agrees to secure renter's liability insurance.

Sublessee shall deposit with the City Manage r, on or before the effec tive date of this Sublease, certificates of ins urance necessary t o satisfy City that the insurance provisions of this Sublease have been com plied with, and to keep such insurance in effect and the c ertificates therefore on deposit with City during the entire term of this Sublease. Should Sublessee not provide evidence of such required coverage at least t hree (3) days prior to the expiration of any existing insurance coverage, City may purchase such insuran ce, on behalf of and at the expense of Sublessee to provide six months of coverage.

City shall retain the right at any time to review the coverage, for m, and amount of the insurance required hereby. If, in the opinion of t he C ity’s Risk Manager (or comparable official), the insurance provisions in this S ublease do not provide adequate protection for C ity and for members of the public using the P remises, the City Manager may require Sublessee to obtain insurance sufficient in coverage, form, and amount to provide adequate protection as determined by the Risk Manager. C ity's requirements shall be reasonabl e and shall be designed to assure protection from and against the kind and extent of risk that exists at the time a change in insurance is required.

The City Manager shall notify Sublessee in writing of changes in the insurance requirements . If Sublessee does not deposit copies of acceptable insurance p olicies with C ity incorporating such changes within sixty (60) days of receipt of such notice, or in the event Sublessee fails to maintain in effect any required insurance coverage, Sublessee shall be in de fault under this sublease without further notice t o Sublessee. Such failure shall consti tute a material breach and shall be grounds for immediate termination of this Sublease at the option of City.

The p rocuring of such required policy or policies of ins urance shall n ot be construed to limit Sublessee’s liability hereunder nor to fulfill the indemnification provision and requirements of this Sublease. Notwithstanding the policy or policies of insurance, Sublessee shall be obligated for the full and total amount of any damage, injury, or loss caused by or connected with this Sublease or with use or occupancy of the Premises.

21. RESERVATION OF AVIGATIONAL EASEMENT.

City hereby reserves for the use and benefits of the public, a right of avigation over the Premises for the passage of aircraft landing at, taking off, or operating from the adjac ent airport operated

by the Count y of Santa Clara. Subles see resubleases the City from all liability for noise, vibration, and any other related nuisance.

22. EMINENT DOMAIN.

22.1 If all or any part of the P remises (or the building in which the Premise s are located) is condemned by a public entity in the lawf ul exercise of its power of emin ent domain, this Sublease shall cease as to the part condemned. The date of s uch termination shall be the effective date of p ossession of the whole or part of the Pr emises by the condemning public entity.

22.2 If only a part is condemned and the condemnation of that part does not substantially impair the capacity o f the remainder to be used for the purposes required by this Sublease, Sublessee shall continue to be bound by the terms, covenants, and conditions of this Sublease. However, the then monthly rent shall be reduced in proportion to the diminution in value of the P remises. If the cond emnation of a part of the P remises substantially impairs the capacity of th e remainder to be used for the purposes required by this Sublease, Sublessee may:

A. Terminate this Sublease and thereby be absolved of obligations under this Sublease which have not accrued as of the date of posses sion by the condemning public entity; or

B. Continue to occupy the remaining P remises and thereby cont inue to be bound by the terms, covenants and conditions of this Sublease. If Sublessee elects to continue in possession of the remainder of the Premises, the monthly rent shall be reduced in proportion to the diminution in value of the Premises.

C. Suble ssee shall provide C ity with written notice advising C ity of Sublessee’s choice within thirty (30) days of possession of the part condemned by the condemning public entity.

22.3 C ity shall be e ntitled to and shall receive all compensation related to the condemnation, except that Su blessee shall be entitled to: (a) that portion of the compensation which repr esents the val ue for the remainder of the Sublease term of any Sublessee-constructed impr ovements taken by the condemning public entity, which amount shall not exceed the actual cost of such improvements reduced in proportion to the relation ship of the rem aining Sublease term to the original Sublease term, using a straight line approach; and (b) any amount specifically designated as a moving allowanc e or as compensation for Sublessee’s personal property. Su blessee shall have no claim against City for the value of any unexpired term of this Sublease.

23. POST-ACQUISITION TENANCY.

Sublessee hereby acknowledges that Sublessee w as not an occupant of the P remises at the time the Premises were acquired by C ity. Sublessee further understands and a grees that as a post- acquisition Sublessee, Sublessee is not eligible and furthermore waives all claims f or relocation

assistance and benefits under federal, state or local law.

24. DISPUTE RESOLUTION.

24.1 Unless otherwise mutually agreed to, any controversies between Sublessee and City regarding the construction or application of this Sublease, and clai ms arising out of this Sublease or its breach shall be submitted to mediation with in thirty (30) days of the written request of one Party after the service of that request on the other Party.

24.2 The Parties may agree on one mediator. If they cannot agr ee on one mediator, the Party demanding mediation shal l r equest the Superior Court of Santa Clara County to appoint a mediator. The mediation meeting s hall not exceed one day (eight (8) hours).

The Parties may agree to extend the time allowed for mediation under this Sublease.

24.3 The costs of mediation shall be borne by the Parties equally.

24.4 Mediation under this section is a condition preceden t to filing an a ction in any court. In the event of litigation arising out of any dispute related to thi s Sublease, the Parties shall each pay their respective attorney's fees, expert wi tness costs and cost of suit, regardless of the outcome of the litigation.

25. NON-LIABILITY OF OFFICIALS AND EMPLOYEES OF THE CITY.

No official or employee of City shall be personally liable for any defau lt or liability under thi s agreement.

26. NON-DISCRIMINATION

26.1 Non-discrimination in Sublease Activities. Sublessee agrees that in the performance of this Sublease and in connec tion with all of the activities Sublessee conducts on the Premises, it shall not discriminate a gainst any employee or pers on because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Subless ee acknowledges that is familiar with the provisions set forth in Section 2.30.510 of the Palo Alto Municipal Code relating to nondisc rimination in employment and Section 9.73 of the Palo Alto Municipal Code relating to City policy against arbitrary discrimination.

26.2 Human Rights Policy. In connecti on with all activities that are co nducted upon the Premises, Sublessee agrees to accept and enforce the statements of policy set forth in Section 9.73.010 which provides: “It is the policy of the City of Palo Alto to affirm, support and protect the human rights of every person within its jurisdiction. These rights include, but are not lim ited to, equal economic, political, and educational opportunity; equal accommodations in a ll business establishments in th e city; and equal serv ice and protection by all public agencies of the city.”

27. INDEPENDENT CONTRACTOR.

It is agreed that Sublessee shall act and be an independent contractor and not an agent nor employee of City.

28. CONFLICT OF INTEREST.

Sublessee shall at all times avo id conflict of interest or appearance of conflict of interest in performance of this agreement. Sublessee warrants and covenants that no official or employee of City nor any business entity in which a ny official or employee of C ity is interested: (1) has been employed or retained to solicit or aid in the procuring of this agreement; or (2) will be employed in the pe rformance of this agreement without the divulgence of such fact to C ity. In the event t hat City determines that the employment of any such off icial, employee or business entity is not compatible with suc h official's or employee's duties as an official or employee of City, Sublessee upon request of City shall immediately terminate such employment. Violation of this provision constitutes a serious b reach of this Sublease a nd City may terminate this Sublease as a result of such violation.

29. MEMORANDUM OF SUBLEASE.

Neither this Sublease, nor any memorandum, affidavit, or other writing with re spect thereto , shall be recor ded by Sublessee or by anyone acting through, under, or on behalf of Sublessee.

City shall have the right to record a memorandum of this Sublease, and Sublessee shall execute, acknowledge , and deliver to City for recording any memorandum prepared by City.

30. ESTOPPEL CERTIFICATE.

Sublessee shall, from time to time, upon at least thirty (30) days prior written notice from City, execute, acknowledge and deliver to City a statement in wr iting: (i) certifying this Sublease is unmodified and in full force and effect, or, if modified, stating the nature of the modifi cation and certifying that the Su blease, as modified, is in ful l force and eff ect, and the date to which the rental and other charges, if any, have been paid; and, (ii ) acknowledging that there are not to Sublessee’s knowledge, any defaults, or stating if any defaults are claimed, any statement may be relied upon by any prospective purchaser or encumbrancer of the Premises.

31. LIENS.

Sublessee agrees at its sole cost and expense to keep the Sites free and clear of any and all claims, levies, liens, encumbrances or attachments.

32. VACATING.

Upon termination of the tenancy, Subless ee shall completely vacate the Sites , including the removal of any and all of its prope rty. Before departure, Sublessee shall return keys and personal p roperty listed on the inventory to City in good, clean and sanitary condition, reasonable wear and t ear excepted. Sublessee shall allow City to inspect the Premises to verify the condition of the Premises and its contents.

33. ABANDONMENT.

Sublessee's absence from t he Premises for three (3) consecutive days, without prior notice, during w hich time rent or other charges are delinquent, shall be deemed abandonm ent of the Premises. Such abandonment will be deemed cause for im mediate termination without notice.

City shall thereupon be authorized to enter and take possession and to remove and dispose of the property of Sublessee or its guests without any liability whatsoever to City.

34. NOTICES.

All notices to the Parties shall, unless otherwise requested in writing, be sent to City addressed as follows:

City of Palo Alto
Real Estate Manager
250 Hamilton Avenue
Palo Alto, CA 94301

and

Office of Human Services
Cubberley Community Center
4000 Middlefield Road #T2
Palo Alto, CA 94303

And to Sublessee addressed as follows:

Kids Choice
132 Brenton Court
Mountain View, CA 94043
Attn: Lorene Scatena
Telephone: (650) 290-2040
Email: [email protected]

Notices may be served upon Sublessee in person, by first class mail, or by certified mail whether or not said mailing is accepted by Sublessee.

35. TIME.

Time shall be of the essence in this Sublease.

36. AMENDMENTS.

It is mutually agreed that no oral S ubleases have been entered into and that no alteration or variation of the terms of thi s Sublease shall be v alid unless mad e in writing and signed by the Parties to this Sublease.

37. SIGNING AUTHORITY.

If this Sublease is not signed by all Sublessee s named herein, the person actually signing warrants that he/she has the authority to sign for the others.

38. CAPTIONS.

The captions of the various sections, paragraphs and subparagraphs of this Sublease are for convenience only and shall not be considered or referred to in resolving questions of interpretation.

39. SURRENDER OF SUBLEASE NOT MERGER.

The voluntary or other surr ender of this sublease by Sublessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of City, te rminate all or any existing subsubleases or subtenancies, or may, at the option of City, operate as an assig nment of any and all such subsubleases or subtenancies.

40. INTEGRATED DOCUMENT.

This Sublease, including any exhibits attached hereto, embodies t he entire agreement between City and Sublessee. No other understanding, agreem ents, conversations or otherwise, with any officer, agent or employee of City prior to execution of thi s Sublease shall affect or mod ify any of the terms or obligations contained in any documents comprising this Sublease. Any such verbal agreement shall be considered as unofficial in formation and in no way binding upon City.

All agreements with City are s ubject to approval of the City Council before City shall be bound thereby.

41. WAIVER.

Waiver by City of one or more conditions of performance or any breach of a condition under this Sublease shall not be construed as a waiver of any other condition of performance o r subsequent breaches. The subsequent acceptance by a Party o f the performance of any obligation or duty by another Party shall not be deemed to be a waiver of any term or condition of this Sublease. The exercise of any remedy, right, option or privilege hereunder by City shall not preclude City from exercising the same or any and all other remedies, rights, options and pri vileges hereunder an d City's failure to exercise any remedy, right, option or privilege at law or equity, or otherwise which City may have, shall not be construed as a waiver.

42. INTERPRETATIONS.

In construing or interpreting this Sublease, the word "o r" shall not be construed as exclusive and the word "including" s hall not be li miting. The Parties agree that this Subleas e shall be f airly interpreted in accordance with its terms without any str ict construction in favor of or against any other Party.

43. SEVERABILITY CLAUSE.

If any provision of this Sublease is held to be illegal, invalid or unenforceable in full or in pa rt, for any reason, then such provision shall be modified to the minimum e xtent necessary to make the provision legal, valid and enforceable, and the other provisions of this Subleas e shall not be affected thereby.

44. GOVERNING LAW.

This Sublease shall be governed and construed in ac cordance with the statutes and laws of the State of California.

45. VENUE.

In the event that suit shall be brought by any Party to this Sublease, the Parties agree t hat venue shall be exclusively vested in the state courts of the County of Santa Clara.

46. COMPLIANCE WITH LAWS.

The Parties hereto shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local g overnments in t he performance of their rights, duties and obligations under this Sublease.

47. B ROKERS.

Each Party represents that is has not had dealings with any real estate broker, finder, or other person, with respect to thi s sublease in any manner. Each Party shal l hold harmless the other Party from all damages resulting from any claims that may be asserted against the other Party by any broker, finder, or other person with whom the indemnifying Party has or purportedly has dealt.

49. PREVAILING WAGE.

As require d by law, a ll contractors and subcontractors performing work on the Pre mises are required by pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and section 160000 et seq. an d Labor Code Section 1773.1. Before entering into a construction contract to perform work on the Pre mises and at all times w hile performing work on the Premises , all contractors and subcontractors must be re gistered with the California Department of Industr ial Relati ons t o perform pu blic work under Labor Code Section 1725.5.

Pursuant to Labor Code Section 1773, the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to perform the work for this Premises may be obtained at the Purcha sing Office of the City of Palo Alto. All contractors and subcontractors for t he Project must comply with the provisions of Labor Code Sections 1775, 1776, 1777.5, 1810, and 1813.

48. ATTACHMENTS TO SUBLEASE.

The following exhibits are attached to and made a part of this Agreement:

“A” – Description of Premises and Rents

“B” – Standard Insurance Requirements
“C” – Scope of Required Childcare Services

IN WITNESS WHEREOF, the parties have executed this Sublease the day and year first above written.

CITY: TENANT:

CITY OF PALO ALTO (LESSOR) KIDS CHOICE

By: __________ By:___________________________ City Manager or Designee
Its: ___________________________
ATTEST:

_________________ By:___________________________
City Clerk
Its: ___________________________

APPROVED AS TO FORM:

By: _______________________
City Attorney or Designee

RECOMMENDED FOR APPROVAL:

By: _______________________
Manager, Operating Department

PAUSD SITE TRAILER # OR ID*SQ. FT.

BASE
MONTHL
Y RENT

MONTHLY

UTILITIES
($0.24 PER SQ.

FT.)
TOTAL

MONTHLY

RENT AND

UTILITIES
TOTAL

ANNUALIZED

RENT AND

UTILITIES
1 NIXON DAYCARE 1,440 $ 615.01 345.60$ 960.61 $ 11,527.37$

EXHIBIT A

DESCRIPTION OF PREMISES AND RENTS
* See attached maps for graphi c descri pti on of Premi ses. Note that these si te l ocati ons may change from ti me to ti me pursuant to Section 5 of the Lease Agreement between the City of Palo Alto and the Palo Alto Unified School District dated 7/1/2022.

EXHIBIT B

STANDARD INSURANCE REQUIREMENTS

Insurance Requirements for Sublessee:

Sublessee shall purchase and maintain the insurance policies set forth below on all of its operations under this Sublease at its sole cost and expense. Such policies shall be maintained for the full term of this Sublease and the related warranty period (if applicable). For purposes of the insurance policies required under this Sublease, the term "City" shall include the duly elected or appointed council members, commissi oners, officers, agents, employees and volunte ers of the City of Palo Alto, California, individually or collectively.

Coverages (RL 28.1A) S

Minimum Scope of Insurance

Coverage shall be at least as broad as:

1) Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001).
2) Insurance Services Office form number CA 00 01 (Ed. 1/87) covering Automobile Liability, code 1 (any auto).
3) Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance (for sublessees with employees). 4) Property insurance against all risks of loss to any tenant improvements or betterments

The policy or policies of insurance maintained by Sublessee sha ll provide the following limits and coverages:

POLICY MINIMUM LIMITS OF LIABILITY

(1) Commercial General Liability $2,000,000 per each occurrence for bodily injury, personal injury and property damage

(2) Abuse and Molestation Liability $1,000,000 per person, per occurrence

(3)Automobile Liability $ 1,000,000 Combined S ingle Limit Including Owned, Hired and
Non-Owned Automobiles
(4) Workers’ Compensation Statutory
Employers Liability $1,000,000 per accident for bodily injury or disease

(5) Sublessee’s Property Insurance
Sublessee shall procure and maintain property insurance coverage for:
all office furniture, trade fixture, office equipment, merchandise, and all other items of Sublessee’s property in, on, at, or about the premises and the building, include property installed by, for, or at the expense of Sublessee;
(b) all other improvements, better ments, alterations, and additions to the premises.

Sublessee’s property insurance must fulfill the following requirements:
(a) it must be written on the broadest available “all risk” p olicy form or an equivalent form acceptable City of Palo Alto, including earthquake spr inkler leakage.
(b) for no less than ninety percent (90%) of the full
replacement cost (new without deduction for depreciation) of the covered items and property; and
(c) the amounts of coverage must meet any coinsurance
requirements of the policy or policies.

(RL 28.2)

Deductibles and Self-Insured Retentions

Any deductibles or self-insured retentions must be declared to and approved by the C ity. At the option of the C ity either: the insurer s hall reduce or eliminate such deductibles or self-insured retentions as respects the C ity, its officers, officials, employees and volunteers; or the Sublessee shall procure a bond guaranteeing payment of losses and re lated investigations, claim administration and defense expenses.

Insurance shall be in full force and effec t commencing on t he f irst day of the term of this Sublease.

Each insurance policy required by this Sublease shall:

1. Be endorsed to state that coverage shall not be suspe nded, voided, canceled by either party, reduced in cover age or in limits except after t hirty (30) days ' prior written notice by certified mail, return receipt requested, has been given to the City.

2. Include a waiver of all ri ghts of subrogation a gainst the City and the members of the City Council and elective or appointive officers or employees, and each party shall indemnify the other against any loss or expense including reasonable attorney fees, resulting from the failure to obtain such waiver.

3. Name the City of Palo Alto as a loss payee on the property policy.

4. Provide that the City, its offi cers, officials, employees, agents an d volunteers are to be covered as insureds as respects: liability arising out of activities performed

by or on behalf of the Subl essee; products and completed operations of the Sublessee; pr emises o wned, occupied or use d by the Sublessee; or automobiles owned, subleased, hired or borrowed by the Sublessee. The coverage shall contain no special limitations on the s cope of protection afforded to the City, its officers, officials, employees, agents or volunteers.

5. Provi de that for any claims related to this Sublease, the Sublessee's insurance coverage shall be primary insurance as respects the C ity, its officers, o fficials, employees, agents and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents o r volunteers shall be excess of the Sublessee's insurance and shall not contribute with it.

6. Provide t hat an y failure t o comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees, agents or volunteers.

7. Provide that Suble ssee's insurance shall apply separately to each insured against whom claim is made or su it is brought, exce pt with respect t o the limits of the insurer's liability.

8. Sublessee agrees to promptly pay to City as Additional Rent, upon demand, the amount of any increase in the rat e of insurance o n the Premises or on any other part of Building tha t results b y reason of Sublessee’s act(s) or Sublessee’s permitting certain activities to take place.

Acceptability of Insurers

All insurance policies shall be issued by California -admitted carriers having current A.M. Best's ratings of no lower than A-:VII.

EXHIBIT C

SCOPE OF SERVICES FOR PROVIDERS OF EXTENDED CHILD CARE SERVICES

AT PALO ALTO UNIFIED SCHOOL DISTRICT ELEMENTARY SCHOOL SITES

SERVICES: Under this Agreement, Kid’s Choice shall provide extended child care services to the child(ren) of families enrolled at Nixon Elementary School located on the Palo Alto Unified School District (PAUSD) property lease by the city of Palo Alto.

Services shall be furnished as specified in this Exhibit C: Scope of Services for Providers of Extended Child Care Services at Palo Alto Unified School District Elementary School Sites.

The extended child care program shall be limited to children currently enrolled in Grades Kindergarten through Grade Five (5) in the Palo Alto Unified School District schools and children
(age K-5th Grade) whose parent is on staff of either PAUSD or the child care provider.

PROGRAM GOALS:

la. To offer affordable child care services to children of families enrolled in PAUSD Elementary schools; and

lb. Children (age K-5th grade) whose parent is on staff of either PAUSD or the child care provider.

Eligibility for Extended Child Care Services:

The extended child care program shall be limited to:

a. Children currently enrolled in Grades Kindergarten through Grade Five (5) in the Palo Alto Unified School District (PAUSD) schools.

b. Children (age K-5th grade) whose parent is on staff of either PAUSD or the child care provider.

Priority for the Extended Child Care Services:

Priority shall always be given to children currently enrolled in Grades Kindergarten through Grade Five (5) in the Palo Alto Unified School District (PAUSD) schools (see a. above). The number of children allowed in b. (above) shall not exceed 10% of the enrollment, unless first priority children (a. above) cannot fill available spaces. Priority children may not be wait -listed in favor of non- priority children enrolled beyond 10% capacity.

1. To provide working parents with access to licens ed child care services year -round

including PAUSD school holidays, school vacations, and staff development days.

2. To provide a quality program, which seeks to maintain, standards set forth by the National Association for the Education of Young Children (NAEYC) and/or the Quality Matters, QRIS system of program quality assurance through WestEd.

PROGRAM SPECIFICATIONS:

1. Program Schedule
Services rendered shall include before-and after-school childcare for school age children in grades kindergarten through fifth grade. Before -school care shall be provided if such care is required by eight (8) or more children. The City will consider exceptions to the provision of before school care if PROVIDER can reasonably demonstrate the inability to find adequate staffing. Program schedule shall be operable daily throughout the year, including school holidays and vacation periods except for legal holidays, which are recognized by the City of Palo Alto as specified in Section 2.08.100 of the Palo Alto Municipal Code. Any exceptions to the provisions below must be approved by the City’s Contract Manager.

a. Regular School Days
The designated hours of operation for extended child care services on regular school days shall commence not earlier than 6:30 a.m. but not later than 7:00 a.m. and shall operate until the scheduled start of school at the site. The provider shall reopen at the earliest scheduled end of the school day and shall remain open until at least 6:00 p.m. but not later than 6:30 p.m.

Regular school days are defined as Monday through Friday except legal holidays recognized by the City of Palo Alto, PAUSD school holidays, PAUSD school vacations, and PAUSD staff development days.

It is understood that the provider shall have exclusive use of the site. When the site is not in use by the provider, the City, PAUSD, its agent or assigns, may use the site for academic curriculum or other City purposes.

b. Legal Holidays
Services shall be offered as outlined in this Exhibit C with the only exception being legal holidays recognized by the City of Palo Alto, as defined and specified in Section 2.08.100 of the Palo Alto Municipal Code.

c. School Holidays
The designated hours of operation for extended child care services on school holidays that are not recognized by the City of Palo Alto as specified in Section 2.08.100 of the Palo Alto Municipal Code (including winter and spring breaks and summer vacation) shall be 7:30 a.m. to 6:00 p.m. The City will consider exceptions to the operational hours

if PROVIDER can reasonably demonstrate that the designated times are not needed by the participants in their programs.

d. Consolidation of Services
The provider may consolidate services with another licensed or legally exempt school age provider during school vacations and summer periods when enrollment is low. Programs may close for the purpose of offering staff development or in-service training. All such closings are subject to approval by the City's Project Manager which for purposes of this Agreement shall be the City Manager or designee.

e. Other Uses
The provider may use the contracted site(s) outside of the normal hours of operation for staff, parent, and/or student meetings.

2. Licensing and Exemptions
The provider shall operate a school age child care program that is licensed by the California Department of Social Services, Community Care Licensing Division, unless the provider qualifies for exemption from licensure as stated in the general licensing requirements of Title 22 of the California Code of Regulations as promulgated by the Department of Social Services/Community Care Licensing Division. All licensed programs shall maintain a current non-ambulatory license.

3. Licensing Reports
The provider sha ll forward to the City's Project Manager, within ten (10) days of all licensing visits, copies of all licensing reports issued by the California Department of Social Services, Community Care Licensing Division.

4. Staffing Ratios and Requirements
The provider shall meet or exceed the staffing ratios and requirements for school age children as specified in the licensing requirements of Title 22 of the California Code of Regulations: 1 teacher to 14 children
1 teacher and 1 aide to 28 children
For any group over 28 and up to 42, 2 teachers plus 1 aide are required to be present and within eye contact of enrollees. ·
For any group over 42, 2 teachers and 2 aides are mandated.

Job descriptions shall be developed and maintained for all positions including staff employed on a substitute or temporary basis.

5. Health and Safety Standards
The provider shall enforce health and safety standards that are consistent with state regulations, State and County health orders, and PAUSD policies and regulations in such areas as administration of medications, emergency information forms, and exclusion of sick children. The providers shall ensure that staff members receive ongoing training in

the areas of basic first aid and cardiopulmonary resuscitation (CPR).

6. Emergency Preparedness
The provider shall implement and follow emergency procedures and drills that are consistent with state laws and PAUSD elementary school site policies and regulations, and the Emergency Preparedness Plan for School Age Child Care Centers located at PAUSD Elementary School Sites. Compliance and implementation will be the responsibility of the provider and will be documented in the Emergency Preparedness Plan Notebook. The provider shall ensure that staff members receive on going emergency preparedness training. The provider shall also, on an annual basis, inform the parents of enrolled children about the program's policies and procedures regarding the Emergency Preparedness Plan.

7. Sign In/Sign Out Procedures
The provider shall offer appropriate sign-in and sign-out procedures in accordance with state licensing requirements.

8. Staff Development
The provider shall offer appropriate staff development activities on an ongoing basis, including staff training, in order to fully meet the child development needs of children enrolled in the program.

9. Written Schedules
The provider shall at all times maintain a written schedule setting forth the operating hours and operating procedures for each required and optional use provided on or from the elementary school site. A fee schedule for prices charged for all services related to the required and optional uses set forth in this Contract shall be maintained.

10. Children with Special Needs
The provider shall identify children with special needs at the time of enrollment to ensure adequate staffing levels. Children with special needs who require assistance during an emergency evacuation shall be accommodated.

11. Equipment and Supplies
The provider shall assume responsibility for program implementation, and shall provide furniture, equipment, and supplies except as otherwise agreed upon with the City and PAUSD.

12. Collaboration with Local Agencies and Programs
The provider shall coordinate wit h local agencies and programs to enable children to participate in extra-curricular activities including sports, scouts, recreational activities, and community service projects. The Provider shall seek to ensure collaboration with other agencies and progra ms in order to maximize access to existing services and to

avoid duplication.

13. Waiting Lists
The provider shall maintain a current waiting list when program is at licensed capacity and shall grant priority enrollment status to working parents and to non -ambulatory children when a non-ambulatory space becomes available.

14. Provider Parent Feedback mechanism
The provider shall establish a regular mechanism to solicit and receive parent feedback related to program operations and quality at each PAUSD elementary site. The feedback mechanism shall be shared with the City’s Project Manager by September 30 th of each year.

15. City Annual Parent Survey
The provider shall distribute an annual parent survey provided by City.

16. Materials to be Kept on File
The following materials will be submitted to the City's Office of Human Services for each contract period and resubmitted within the same period in the event of any changes. The Annual Financial Statement is due upon its completion. The remaining materials are due by September 30.

Annual Financial Statement
Calendar of days open and
closed
Operating Procedures and Policies (Parent Handbook)
Licensing reports issued by the California Department of Social Services (within 10 days of visit)
Summary sheet of annual parent
evaluations Tuition schedule

In addition to the above, the following materials shall be available at each Center for examination by the City's Office of Human Services.

Current operating license
Completed and up to date copy of the Emergency Preparedness Plan for School Age Child Care Centers located at PAUSD Elementary School Sites.

17. Annual Site Evaluation
The provider shall participate in an annual site evaluation conducted by the City's Project Manager to determine that the program continues to satisfactorily meet the City's requirements as stated in this Exhibit C- Scope of Services for Providers of Extended Child Care Services at Palo Alto Unified School District Elementary School Sites.

18. Reports to the City
All correspondence relating to this Exhibit C: Scope of Services for Providers of Extended Child Care Services at Palo Alto Unified School District Elementary School Sites shall be

sent to the following address:

City of Palo Alto
Office of Human Services
4000 Middlefield Road #T2
Palo Alto, CA 94301

PROVIDER QUALIFICATIONS, STATUS, AND DUTIES

1.1 PROVIDER represents and warrants that it has the expertise and professional qualifications to furnish or cause to be furnished the Services. PROVIDER further represents and warrants that the project director and every individual charged with the performance of the Services under this Contract are duly licensed or certified by the State of California, to the extent such licensing or certification is required by law to perform the Services.

1.2 In reliance on the representation and warranty set forth in Section 1.1, CITY hires PROVIDER to perform, and PROVIDER covenants and agrees that it will furnish or cause to be furnished, the Services.

1.3 PROVIDER will assign a project director to have supervisory responsibility for the performance, progress, and execution of the Services. If circumstances or conditions subsequent to the execution of this Contract cause the substitution of the project director for any reason, the appointment of a substitute project director will be subject to the prior written approval of the project manager.

1.4 PROVIDER represents and warrants that it will:

1.4.1 Procure all permits and licenses, pay all charges and fees, and give all notices which may be necessary and incident to the due and lawful prosecution of the Services;

1.4.2 Keep itself fully informed of all existing and future Federal, State of California, and local laws, ordinances, regulations, orders, and decrees which may affect those engaged or employed under this Contract, any materials used in PROVIDER's performance under this Contract, or the performance of the Services;

1.4.3 At all times observe and comply with, and cause its employees and providers (and consultants), if any, who are assigned to the performance of this Contract to observe and comply with, the laws, ordinances, regulations, orders and decrees mentioned above; and

1.4.4 Report immediately to the project manager, in writing, any discrepancy or inconsistency it discovers in the laws, ordinances, regulations, orders, and decrees mentioned above in relation to any plans, drawings, specifications or provisions of this Contract.

1.5 PROVIDER will be responsible for employing or engaging all persons necessary to perform the Services. All contractors of PROVIDER will be deemed to be directly controlled and supervised by PROVIDER, which will be responsible for their performance.

1.6 PROVIDER shall ensure that all services offered under this CONTRACT shall be secular in nature. PROVIDER shall further ensure that it shall refrain from offering
religious instruction, worship, or other religious activities while providing child care services, in accordance with the provision of the California and United States Constitution.

FINANCIAL CONTROL RESPONSIBILITIES OF PROVIDER

1.1 PROVIDER shall establish and maintain a system of accounts that shall conform with generally accepted principles of accounting. Such system of accounts shall be subject to the review of the Deputy City Manager, Administrative Services and the City Auditor .

1.2 In support of its system of accounts, PROVIDER shall maintain complete and accurate records of all financial transactions, including contracts, invoices, time cards, cash receipts, cancelled checks, and bank statements. Such records shall be preserved and made available upon request until the expiration of three (3) years following the termination of this CONTRACT .

1.3 Financial expense and revenue s ummary sheets for all of PROVIDER's operations under this Contract shall be submitted by PROVIDER on an annual basis to CITY .

1.4 PROVIDER shall provide for an independent audit of its fiscal transactions, records and financial reports relating to its obligat ions under this Contract. The audit shall be completed every two years and shall be conducted by a certified public accountant according to generally accepted audit procedures.

1.5 Income to the program in the form of fees, direct contributions, fundraising, and any other form of monetary program support must be shown in the records of the fiscal PROVIDER in a manner acceptable to the Project manager and PROVIDER.

1.6 On reasonable notice, PROVIDER shall grant the project manager access to all records, data, statements, and reports, but excluding any confidential records of personnel and client reports which tend to identify specific individuals, for purposes of financial or

operational audit or review of PROVIDER by CITY. PROVIDER shall permit CITY to audit, at any reasonable time during the term of this CONTRACT and for three (3) years thereafter, PROVIDER's records pertaining to matters covered by this CONTRACT. PROVIDER further agrees to maintain and retain such records for at least three (3) years after the expiration or earlier termination of this CONTRACT.

COST OF SERVICES OFFERED BY PROVIDER

1.1 The PROVIDER shall at all times maintain a written schedule setting forth operating hours and operating procedures for each required and optional use provided on or from the PREMISES. A schedule of prices charged for all services related to the required and optional use of this CONTRACT shall be maintained.

Upon written request, PROVIDER shall furnish the project manager a copy of the schedules and procedures. Should the project manager decide that any part of these schedules or procedures is not justified with regard to fairly satisfying the needs of the public, upon written notice from the project manager, the PROVIDER shall meet and confer to attempt to address the issue. This meeting may focus on the following data:

(1) The degree of public service involved in the sale of services; (2) The market prices charged by other competing and/or comparable businesses; and
(3) The degree to which salaries and benefits are at a commensurate level that ensures a quality program which minimizes staff turnover.