Watsonville City Council
June 25, 2024

6/20/2024 2:17:53 PM
C:\Program Files\eSCRIBE\TEMP\14175019546\14175019546,,,Report - Tow Service Agrmt Tow Fee Study.docx Agenda Report
MEETING DATE: Tuesday, June 25, 2024
TO: City Council
FROM: POLICE CHIEF ZAMORA

POLICE CAPTAIN RADICH
SUBJECT: TOW SERVICE AGREEMENT AND TOW FEE STUDY
RECOMMENDED ACTION:

Approve the form of the comprehensive Tow Service Agreement (“TSA”) between the tow companies listed on the Police Department’s Rotational Tow List and the City of Watsonville; Authorize the number of openings on the Rotational Tow List; authorize the City Manager to execute individual agreements with minor changes; and to allow for a “Tow Fee Study” to be completed to evaluate city tow-related fees to ensure they conform with current rates of other law enforcement agencies operating within Santa Cruz County.

BACKGROUND:

On February 1, 1992, Municipal Code section 4-11.01 (Selection and Towing Service Designation) became effective. To date, the three companies listed effectively meet the needs of the Police Department. The tow companies are used by the Police Department for the removal of vehicles in the following circumstances:
• The vehicle was involved in a traffic collision, and the owner requested a tow. • Storage of vehicles at arrest scenes.
• Storage of vehicles for evidence.
• Vehicles left unattended which block roadways or pose safety hazards. • Vehicles that are determined to be abandoned.
• Disabled Police Department vehicles.

The City of Watsonville’s last TSA expired in 2019, and the Police Department has been operating without one since then. To formalize a new agreement and compile a list of tow companies, the Police Department just completed a formal Request For Proposals (“RFP”) process. Only three tow companies submitted proposals under the new RFP.

These three respondents will be placed on the rotational list.

DISCUSSION:

Staff requests that the Council authorize a new TSA as well as, pursuant to Municipal Code Section 4-11.01, the number of openings on the list. Section 4-11.02 authorizes the City Manager to enter into separate agreements with each tow company for rotational tow service (all tow companies who submitted RFP’s are eligible), evidence

6/20/2024 2:17:53 PM
C:\Program Files\eSCRIBE\TEMP\14175019546\14175019546,,,Report - Tow Service Agrmt Tow Fee Study.docx towing and storage (only one company will be awarded for this service), police vehicle towing and roadside service (only one company will be awarded for this service), and oversized abandoned vehicle towing (only one company will be awarded for this service), so long as those tow companies are on the master rotational list. The term “rotational” means each tow company is sequentially selected for service to tow vehicles. In the past, up to five tow companies were on the rotational tow list. These companies are appointed by the Chief of Police to fill the rotation vacancies. Each tow company and their drivers must meet the minimum standards as required by the vehicle towing ordinance sections Municipal Code sections 4-11.01 through 4-11.30.

The current tow companies on the Rotational Tow List are:
• Auto Care Towing
• Chaz Towing
Two of our previous two companies on the rotational tow list are now out of business, and a third, Speed of Light Towing, which has new majority owners, wants to rejoin the Rotational Tow List.

In addition, staff recommends that the Council authorize a Tow Fee Study. Staff is requesting authorization to conduct a fee study to evaluate tow-related fees. While the fees have been updated throughout the years through a standard CPI increase, staff is concerned that these increases may be insufficient compared to current rates for other law enforcement agencies operating within Santa Cruz County.

STRATEGIC PLAN:

The TSA with the tow companies will obligate them contractually. This new TSA is similar to the previous version that expired in 2019, and the TSA which is utilized by the California Highway Patrol (CHP) to ensure compliance with the law. Safety and ethical standards are clearly stated in the TSA. Currently all of the tow companies that submitted proposals are on the CHP’s Rotational Tow List and have signed the CHP’s TSA. Implementation of this agreement will create uniformity and safeguard the City, the tow companies and our community members.

FINANCIAL IMPACT:

There is no financial impact on the city or the tow companies.

ALTERNATIVE ACTION:

The City Council may elect not to move forward with the approval of the TSA and Tow Fee Study at this time.

ATTACHMENTS AND/OR REFERENCES (If any):

None.

Reso No. (CM)
Meeting Date: 062524 SWZ ______ TV ______ WPD ______
1 RESOLUTION NO. (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE, APPROVING FORM OF TOW SERVICE AGREEMENT
AND AUTHORIZING THE CITY MANAGER TO EXECUTE SAME;

AUTHORIZING THE NUMBER OF OPENINGS ON THE TOWING
SERVICE ROTATION LIST PURSUANT TO CHAPTER 11 (VEHICLE
TOWING SERVICES) OF TITLE 4 (PUBLIC SAFETY) OF THE

WATSONVILLE MUNICIPAL CODE, AND AUTHORIZING STAFF TO

CONDUCT A TOW FEE STUDY TO CONFORM WITH RATES WITH

OTHER LAW ENFORCEMENT AGENCIES OPERATING WITHIN SANTA

CRUZ COUNTY
WHEREAS, the Chief of Police maintains a rotation list for vehicle towing services by the issuance of permits to qualified tow service operators; and WHEREAS, the Watsonville Police Department recently completed a formal Request for Proposals to compile a list of vehicle tow companies; and WHEREAS, the City Manager is authorized to execute agreements with operators holding permits under section 4-11.02 of the Watsonville Municipal Code wishing to be placed on a rotation list.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. This action does not meet CEQA’s definition of a “project”, because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

2. That the form of Tow Service Agreement between the City of Watsonville and tow service operators on the City’s rotation list, a copy of which Agreement is attached hereto and incorporated herein by this reference, is hereby approved.

Reso No. (CM)
Meeting Date: 062524 2

3. The Interim City Manager is hereby authorized and directed to execute such Agreements for and on behalf of the City of Watsonville, with minor revisions that may be approved by the Interim City Manager and the City Attorney.

4. That the three openings on the Rotational Tow List are hereby authorized.

5. City staff is hereby authorized and directed to conduct a “Tow Fee Study” in order to evaluate city tow-related fees to ensure they conform with current rates of other law enforcement agencies operating within Santa Cruz County. ************************************

1 TOW SERVICE

AGREEMENT BY AND

BETWEEN

THE CITY OF WATSONVILLE
AND
[***INSERT LEGAL NAME OF TOWING COMPANY***]
This TOW SERVICE AGREEMENT (“TSA”) is made and entered into this __ day of [***INSERT MONTH***], 2024 (“Effective Date”) between the City of Watsonville, a California municipal corporation, on behalf of the City of Watsonville Police Department (“City” or “WPD”) and [***INSERT LEGAL NAME OF COMPANY***] , a [***INSERT STATE***] [***INSERT TYPE OF COMPANY E.G. CORPORATION, LLC, ETC.***] (“Operator”). City or WPD and Operator may collectively be referred to as “Parties” and individually referred to as “Party.”

RECITALS
WHEREAS, WPD requires the aid and assistance of towing services on a regular basis in the performance of its emergency response and traffic control duties, including response to investigations of vehicular accidents; and
WHEREAS, as a means for providing the necessary towing service, the City desires to retain towing companies to be used on call and on a rotational basis for any police emergency or response situation where the use of a tow truck is required; and WHEREAS, Operator owns or leases tow trucks and employs personnel that are capable of providing the desired vehicle towing and storage services to WPD pursuant to the terms and conditions contained in this TSA; and
WHEREAS, City desires to retain Operator and Operator desires to be retained by City, as an independent contractor, for purposes of providing police towing and vehicle impound and storage services for City.

AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated herein by reference, and the mutual promises, covenants, and conditions contained herein, the Parties agree as follows:

1. SCOPE OF SERVICES
A. To ensure the efficient performance of police towing services for the WPD, Operator hereby agrees to the following service provider requirements, specifications, performance criteria and terms and conditions:
i. Operator shall perform vehicle towing, impound, and storage services as

2 directed by the WPD and in addition such other services as provided in this TSA, and shall provide necessary storage facilities, tow services, labor materials, equipment, machinery, and tools.

Operator shall have a minimum of three (3) verifiable years of for-hire towing experience as an owner or principal.
ii. Specific services include but are not limited to: towing abandoned vehicles, improperly parked vehicles, vehicles that obstruct or impede the flow of traffic or emergency lanes, and vehicles that obstruct or impede walkways and handicapped parking spaces; WPD impounds; and seizure of evidence and motor vehicle accidents. iii. Operator is hereby designated as an authorized tow service provider for City by the Chief of Police. All trucks and equipment used by Operator in the performance of this TSA shall be owned or leased to Operator and shall be subject to all provisions herein. iv. Operator acknowledges and agrees that this TSA as set forth herein is nonexclusive. City intends to concurrently contract with other tow service providers. City shall utilize the service each Operator provides as City, in its sole discretion, deems appropriate. v. Operator further acknowledges and agrees that when, in the opinion of the WPD, an emergency exists or where Operator is either unable or unwilling for any reason to provide adequate or timely tow service, then the WPD shall have the right to call other qualified tow services, which may or may not be under contract with the City. Under such circumstances, the decision to call another tow service shall be at the exclusive discretion of the WPD.

B. Notwithstanding the provisions of this TSA, nothing contained herein shall deprive the owner or operator of vehicle from requesting and receiving towing services from a person or entity other than the Operator.

2. TERM
A. This TSA shall remain in effect for three (3) years from the Effective Date. This TSA may be reviewed at the conclusion of the initial three (3) year period and may be extended, at the sole discretion of City, for up to two (2) additional two (2) year periods.

3. TERMINATION
A. Termination Generally. In the event this TSA is terminated, the rights and remedies of the Parties provided in this Section are in addition to any rights and remedies provided by law.

B. Termination for Cause. This TSA may be terminated by City at any time. In the event of termination for cause by City, Operator shall be compensated for those services that have been fully and adequately completed and accepted by WPD as of the date of termination.

Termination of this TSA for cause may be considered by City in determining whether to enter into future contracts with Operator.

3 C. Termination without Cause. This TSA may be terminated without cause upon ninety (90) days written notice provided by either Party. In the event that City should terminate, or suspend Operator’s work, Operator shall be entitled to payment for services fully and adequately provided hereunder prior to the effective date of suspension or termination. Operator shall provide documentation deemed adequate by WPD to show the services actually completed by Operator prior to the effective date of termination.

4. SUSPENSION
A. The Chief of Police or his/her designee shall retain discretion regarding the length of any suspension imposed under this TSA.

B. The following breaches may be cause for suspension:
i. Violation of the equipment standards related to safety; ii. Overcharging the City or a person for the services or result of services
identified in this TSA. The period of suspension will remain in effect until the Operator has presented proof to WPD that reimbursement has been made. iii. Failure to satisfy a court order mandating reimbursement to the vehicle or
property owner for the damage or loss which occurred while the vehicle was in the Operator’s custody. The period of suspension will remain in effect until the Operator has presented proof to WPD that reimbursement has been made.
iv. Failure of the Operator to comply with the inspection requirements per Section 16.

5. OPERATIONAL STANDARDS; LOCATION OF OPERATOR TOW BUSINESS A. Operator shall display a sign which clearly identifies it to the public as a tow service. The sign shall have letters which are clearly visible to the public from the street and shall be visible at night.

B. Operator shall post business hours in plain view to the public.

C. Operator shall provide sufficient staffing to allow customers to talk face-to-face with a tow company’s owner, manager, or employee during normal business hours.

D. Operator shall maintain records of all tow services furnished at the Operator’s primary office. Invoices shall, at a minimum, include a description of each vehicle, nature of service, start time, end time, location of call, itemized costs of towing and storage, the tow truck company’s name, and truck used.

4 E. Operator shall maintain business records relating to personnel, insurance, personnel taxes, payroll, applicable operating authorities, local operating authorities, lien sale actions, Federal Communication Commission licensing (if applicable), and non-WPD tows.

F. WPD may inspect and make copies of Operator’s business records without notice during Operator’s normal business hours.

G. Operator shall maintain business records and make them available for inspection for a period of three (3) years.

H. All vehicles stored or impounded at the direction of WPD shall be towed directly to Operator’s impound and storage facilities, unless WPD requests that they be taken to some other location. If the vehicle is towed pursuant to a citizen request, then at the request of the citizen the vehicle can be stored at any business location of the Operator, which has been approved by the Chief of Police, or his/her designee.

I. Vehicles impounded as evidence shall be stored in a secure area that is protected against access by persons not authorized by WPD. WPD shall retain sole custody of the lock mechanism used to prevent unauthorized access to vehicles impounded as evidence. Operator shall take all reasonable precautions required to avoid damage to any evidence in or on vehicle.

J. Any proposed change in the Operator’s facility locations shall be reported in writing, to WPD at least sixty (60) days prior to making such change.

6. PERSONNEL
A. No person employed as a tow truck driver for the Operator shall have access to any WPD stored or towed vehicle until such time as that person has received written approval from the Chief of Police or his/her designee.

B. Tow truck drivers shall be proficient in the use of the tow truck they are driving and related equipment, including, but not limited to the procedure necessary for the safe towing and recovery of various types of vehicles.

C. It is the responsibility of the Operator to ensure its drivers are trained, qualified, and competent employees of the business per California Vehicle Code Section 12520. Operator shall ensure employees have completed a Tow Service Agreement Advisory Committee (“TSAAC”) approved tow truck driver training course within the past five (5) years.

Documentation of a completed tow truck driver training course shall be kept in the company’s training file and available for inspection. Tow truck driver training documentation should be for the appropriate class of tow truck (e.g., a Class D driver should have heavy duty tow company’s training documentation). A copy of the certificate of completion for each tow truck driver providing services pursuant to this TSA shall be provided by the Operator to WPD prior to commencement of each driver’s participation in this TSA.

5 D. All Operator tow truck drivers shall be required to have a safe driving record, be eighteen (18) years or older, and be subject to driving record and criminal background checks by WPD. No tow truck driver with a record of violations of the vehicle Code which has resulted in the suspension or revocation of their driver’s license or a second (2nd) driving under the influence or reckless driving convictions within three (3) years preceding the most recent violation shall be allowed to provide service to City under this TSA.

E. Operator shall have an alcohol and drug program that includes, at a minimum, a drug-free and alcohol-free workplace policy, and a tow truck driver controlled substance and alcohol testing (“CSAT”) program that complies with the U.S. Department of Transportation requirements to the extent allowed by law, including random drug and alcohol testing. Any tow truck driver found working under the influence of drugs or alcohol shall be immediately removed from operating a tow truck and from providing any service pursuant to this TSA. The alcohol and drug program shall meet the following requirements:
i. A contract with a program administrator and authorized lab certified by
the U.S. Department of Transportation; and
ii. Procedures and components substantially as in Part 40 of Title 49 of the
Code of Federal Regulations for pre-employment; and
iii. Procedures and components substantially as in Part 383 of Title 49 of the Code of Federal Regulations for rehabilitation, return-to-duty and follow up testing; and
iv. Procedures and components for random testing following U.S.

Department of Transportation guidelines, and additional tests as required following accidents, rehabilitation, return to service, and other circumstances providing reasonable suspicion to test; and
v. The Operator and program administrator’s drug and alcohol program
records shall be made available to WPD upon request; and vi. Drivers must show a valid California driver’s license at the time and place
of testing; and
vii. All test results are kept confidential except that WPD is authorized to
receive copies for its administrative purposes, and except as otherwise authorized or required by law.

6 F. Operator shall participate and be enrolled in the California Department of Motor Vehicles (“DMV”) Employer Pull Notice (“EPN”) Program. Upon the addition of a new company, the company shall be granted a maximum of thirty (30) days to enroll company employees in the EPN. The EPN shall be kept on file, signed, and dated.

G. Operator shall not employ in the performance of services pursuant to this TSA any tow truck driver convicted of or having pled nolo contendere to a crime involving a stolen vehicle, stolen property, violence, drugs or moral turpitude, fraud related to the towing business, or misdemeanor or felony driving while under the influence of alcohol or drugs, or the crimes listed in Vehicle Code Section 13377. If any tow truck driver is charged with any of the above listed crimes, Operator shall immediately suspend the driver from duties under this TSA pending the disposition of the criminal case.

H. Operator shall employ only capable and competent employees. Each company shall provide the Chief of Police with a current list of employees authorized to perform operations of each tow truck. The Chief of Police may remove a company from the rotation list if the company employs a driver who, within the five (5) years preceding employment, has been convicted of one or more of the following crimes:
i. Auto theft, burglary, possession of stolen property, grand theft, or any
other felony;
ii. A crime of violence on the person of another; iii. A violation of the Health and Safety Code relating to controlled substances; iv. A violation of Sections 4461, 4462b, 4463, or 5017a of Division 3 of the Vehicle Code;
v. A violation of any provision of Division 4 of the Vehicle Code; or vi. A crime relating to illegal acquisition of vehicles or vehicle parts or documents relating to vehicle registration or ownership.

I. Operator tow truck drivers shall fully cooperate with and abide by the instructions of WPD’s officers.

J. If the tow truck driver becomes ineligible to provide services under this TSA, the Operator shall immediately notify WPD in writing of such ineligibility and the reasons therefore within fifteen (15) days.

K. Operator shall provide to WPD the name of any tow truck driver no longer employed by the Operator. This notification shall be given to the WPD Traffic Division no later than ten (10) business days following the last date of such operator’s employment by Operator.

7 L. Operator shall wear an identifiable uniform displaying the Operator and personnel’s names while engaged in WPD rotation tow operations.

M. Operator’s personnel shall wear appropriate warning garments (e.g., vests, jackets, shirts, reflective clothing, etc.) for daylight and darkness in accordance with California Code of Regulations, Title 8, Section 1598. If the tow truck driver is working on a Federal-aid highway, the company shall comply with the guidelines contained in the Federal Code of Regulations, Title 23, Highways, Chapter 1, Federal Highway Administration, Department of Transportation, Part 634, Worker Visibility, which requires high-visibility personal protective safety clothing to be worn that meets the Performance Class 2 or 3 requirements of the ANSI/ISEA 107-2004.

7. OPERATOR TOW SERVICE DUTIES
A. After being requested to the scene by WPD, Operator tow truck drivers shall comply with the following:
i. Not move nor attach a tow truck to any vehicle until instructed to do so by the investigating officer of WPD.
ii. Cooperate with the investigating officer of WPD in removing unsafely and/ or illegally parked vehicles from the street, and in the storing or impounding of such vehicles as requested.
iii. On collision calls, clean- up and remove all debris from the accident scene, including but not limited to, clean- up and removal of all hazardous materials/vehicle fluids in the street with absorbent material, as directed by WPD officers and Section 27700 of the California Vehicle Code.
iv. Provide the owner or driver of towed vehicles, when present at scene, with a business card of Operator indicating where vehicle will be stored or impounded (including address and telephone number).

B. Operator shall be responsible and held accountable for personal property, vehicle accessories and the vehicle upon receipt of the vehicle from WPD. City, its officers, agents, or employees shall not be liable for loss of or damage to any vehicle, accessory, equipment, or personal property towed or stored upon the tow truck operator acknowledging receipt for the vehicle by his/her signature on the stored vehicle report form.

C. Operator shall not dispose of or otherwise relinquish control of any vehicle stored or impounded by WPD without a written approval from WPD to do so. The written approval is required for any vehicle stored or impounded by WPD.

D. The release of property from a vehicle will be handled in the same manner as a vehicle release. The person who authorizes the release of the property will make the modification and will be specific as to description of the property to be released.

8 E. Vehicles shall be released during the business hours of 8: 00 a.m. to 5: 00 p.m., Monday - Friday, excluding holidays and weekends. There will be, however, occasions arising that can require after hours releases of certain vehicles. When the circumstances appear to justify an after-hour release of a vehicle, approval of the release must be secured from the on -duty Watch Commander. Inoperable vehicles will not be released after hours.

F. For purposes of clarity, vehicles towed or stored at the request of citizens, for which no stored vehicle report is utilized, will not require a stored vehicle release.

G. When a Party obtains a WPD stored vehicle release and presents it to the Operator, the vehicle and/or property shall be released to that person upon verification of identity and the payment of the fees. An After Hours Release Fee will be paid to the Operator for "property only" or vehicle releases after the normal business hours of the Operator.

H. Once the tow service has received the WPD stored automobile release, the Operator is no longer obligated to WPD for the continued safe storage of the vehicle and/ or property taken.

I. Operator must advise the Department's Traffic Division in writing within ten (10) business days, if a person picking up a vehicle complains to Operator of damage to the vehicle or any missing vehicle accessories or personal property from the vehicle for which Operator denies responsibility.

8. RESPONSE TIME
A. Operator shall respond to calls twenty-four (24) hours a day, seven (7) days a week, and respond to the scene within a reasonable time. Reasonable response time shall be twenty (20) minutes.

B. Operator shall respond with a properly equipped tow truck of the class required to tow the vehicle and be in possession of the appropriate class of license and applicable endorsements. Any applicable permits (e.g., load variance, oversize, etc.) shall be valid and maintained in the tow truck.

C. Operator shall advise the Santa Cruz Regional 9-1-1 (“SCR911”) at the time of notification, if they are unable to respond within the reasonable response time outlined above. If, after accepting the call, Operator is unable to respond or will be delayed in responding, the company shall immediately notify SCR911.

D. A failure to respond to towing or service calls, and/or repeated failures to meet maximum response time requirements, may result in disciplinary action.

E. If service, other than towing and recovery is canceled by the vehicle’s registered owner or agent, no lien shall arise for the service unless the tow company has presented a written statement to the vehicle’s registered owner or agent for the signed authorization of services to be performed pursuant to section 3068, subdivision (a) of the Civil Code. Operator shall not attempt

9 to take possession of a vehicle in order to establish a lien for any non-towing services performed, begun, or subsequently canceled.

F. If two or more companies are called to the same incident, distribution of the vehicles shall be at the sole discretion of WPD.

G. When a company will be temporarily unavailable to provide services due to a preplanned or scheduled activity, the company shall notify WPD at least twenty-four (24) hours prior to the date that services will be unavailable, noting the times and dates of the unavailability.

H. Only tow truck personnel and equipment requested shall respond to a WPD call.

I. A company shall not respond to a WPD call assigned to another company or reassign a call to another company, unless requested to do so by WPD. i. Nothing would preclude the assigned company from responding to an incident to ascertain if additional assistance or equipment is required. ii. There shall be no additional charge for any personnel or equipment which is not necessary to perform the required service.

J. There may be times when the company/employee assigned to the initial call may require assistance from an additional company/employee. i. The assigned company/employee may, with the concurrence of the scene manager, request a specific company for additional assistance. ii. The company/employee’s request shall be routed through WPD.

K. There may be times when a company/employee, who was not called to the scene, comes upon a collision scene where a vehicle or vehicles are blocking a roadway and the onscene officer requests assistance in clearing the roadway.
i. In such a case, the company may be requested by the officer to move a vehicle to a safe location and leave it.
ii. There shall be no charge for this assistance and the assistance provided shall not change the company’s place in the rotation.

9. EQUIPMENT STANDARDS
A. Operator shall equip and maintain tow trucks covered under the TSA in accordance with the provisions set forth in the Vehicle Code, Watsonville Municipal Code 411.05, Title 13 of the California Code of Regulations, the specifications contained in this TSA, and in a manner consistent with industry standards and practices.

10 B. All towing equipment, recovery equipment, and carrier ratings are based on structural factors only. The criteria to determine the safe towing limits are:
i. The total weight of the truck, including the lifted load, must fall within the Manufacturer’s Gross Vehicle Weight Rating (GVWR) and not exceed either the Front or Rear Axle Weight Ratings (FAWR, RAWR).
ii. The truck must meet all applicable State and/or Federal standards. iii. A tow truck operator when towing a vehicle shall not exceed the GVWR and the Axle Weight Rating (AWR) for the tow truck.
iv. A violation of the GVWR and/or safe loading requirements of a tow truck may be cause for disciplinary action. This includes exceeding the tow truck’s GVWR, FAWR, RAWR, maximum weight tire ratings, or not maintaining fifty percent (50%) of the tow truck’s unladen front axle weight on the front axle when towing.

C. Operator vehicles shall be equipped as tow trucks in compliance with the provisions of the California Vehicle Code including, but not limited to, Sections 615, 24605, 25100, 27700 and 27907.

D. Any equipment used and maintained by Operator shall be available for inspection by WPD upon request. Operator vehicles shall be subject to random inspection by WPD.

E. Operator shall be equipped for, and have personnel proficient in, unlocking locked vehicles. Operator shall unlock locked vehicles when requested to do so by WPD.

F. Throughout the term of this TSA, Operator shall maintain in a neat and clean manner and in good working condition its storage facilities and improvements thereon, and all vehicles, facilities, equipment, and materials used by Operator in the performance of the services required under this TSA.

G. It shall be the responsibility of Operator to provide equipment and to perform the duties expressed in this TSA. Operator is hereby granted authority to utilize additional resources whenever deemed necessary to perform its tow service duties. This may include, but is not limited to, personnel and/or equipment of another tow operator. This, however, shall not relieve operator of its duties and responsibilities and any additional cost incurred shall not be charged to City.

H. All tow trucks shall have recovery and wheel lift capabilities meeting the specifications contained in this TSA.
i. Class D tow trucks used exclusively for salvage and recovery operations are
not required to possess wheel lift capabilities.

11 ii. A company who has a car carrier is exempted from the recovery, wheel lift,
and boom capability requirements. However, the car carrier must be an additional unit and shall not be used for recovery.

I. Tow truck and car carrier classifications: tow truck and car carrier classifications are based on the truck chassis GVWR and the classification system used by the American Trucking Association (ATA) and truck manufacturers. Tow truck and car carrier classifications shall meet all applicable state and/or federal standards.

J. Identification labels: each piece of towing equipment shall have a label or identification tag permanently affixed to the equipment in a prominent location to identify the manufacturer, serial number, model, and rated capacity.

K. Recovery equipment rating: the basic performance rating of the recovery equipment is the weight of the equipment can lift in a winching mode, when the boom is static at a thirty (30) degree elevation with the load lines vertical and the lifting cables sharing the load equally. i. The structural design of the recovery equipment must have a higher load capacity than the performance ratings.
ii. Winches shall conform to or exceed the specifications set forth by the Recovery Equipment Rating, Society of Automotive Engineers (SAE) Handbook, and SAE J706. iii. All ratings for cable and chain assemblies are for the undamaged assembly condition. All cable and chain assemblies should be the same type, construction, and rating as specified by the original equipment manufacturer (OEM) for the equipment. iv. Control/safety labels: all controls shall be clearly marked to indicate proper operation, as well as any special warnings or cautions.

10. COMMUNICATIONS EQUIPMENT
A. Operator, during the term of this TSA, shall maintain and have approved by the City, a continuous mean of communication between Operator and each Operator tow vehicle.

B. Telephone service maintained by Operator shall be adequate to receive WPD calls without delay. If a call from WPD is not answered by personnel within six (6) rings or the line is busy after two (2) attempts, or placed on hold for more than one (1) minute, the call will be terminated and Operator will be placed at the bottom of the rotation list and the tow service next in line will be called.

C. Operator shall provide a list of telephone numbers to be called in order of priority.

Changes to contact list shall be provided immediately in writing to the Chief of Police or his/ her designee along with the effective date of the change(s).

12 11. HOURS
A. Operator shall, at a minimum, maintain business operating hours of 8:00 a.m. to 5:00 p.m., Monday through Friday, except on the following holidays:
i. New Year’s Day; ii.

Martin Luther King Day; iii.

Lincoln’s Birthday; iv.

President’s Day;
v. Memorial Day; vi.

Independence Day; vii.

Labor Day; viii. Columbus
Day; ix. Veteran’s Day;
x. Thanksgiving Day; xi.

Day after Thanksgiving; and xii.

Christmas.

B. As stated above, Operator shall be available to provide City requested tows twentyfour (24) hours a day, seven (7) days per week, and respond to the scene within a reasonable time.

Reasonable response time shall be twenty (20) minutes.

12. VEHICLE IDENTIFICATION
A. Each Operator vehicle shall display identification signs, in compliance with Section 27907 of the California Vehicle Code. Operator shall not display any signs or advertising that indicate the Operator is an official towing service or garage of City.

B. Operator shall not, through their advertisements or otherwise, in any way publicize any official or other business connection with City, nor shall Operator advertise any address or telephone number of City as a location to call for vehicle towing and storage service.

13. IMPOUNDED VEHICLES AND STORAGE YARD
A. Operator shall be responsible for the safekeeping and prevention of vandalism of all vehicles and contents which are stored or impounded by WPD. i. Operator shall provide, at a minimum, a six (6) foot securely fenced or

13 enclosed storage yard capable of protecting stored vehicles and their contents from theft or tampering.
ii. The yard shall be reasonably screened from public view. iii. The yard shall be located within three (3) miles of City limits.

B. The primary storage yard shall be at the same location as the business address.

C. Operators shall maintain sufficient storage spaces.
i. A secondary storage yard shall only be utilized if the primary storage yard is full. A secondary storage yard shall be located within one (1) mile of City limits. Operator shall not charge the vehicle’s owner/agent for towing a vehicle from a secondary storage yard to the primary storage yard.

D. Storage yards shared by companies, or other business establishments not owned by the company shall be physically separated and secured from each other.

E. Prior to the utilization of new storage yards which were not listed with WPD, a company shall obtain WPD’s approval.

14. RELEASE OF VEHICLES
A. During business hours, Operator shall ensure that a company employee is available to conduct business transactions related to towing, storage, and release of vehicles/property.

B. Upon written approval from the Traffic Sergeant or the on-duty Watch Commander, the company shall release personal property from a vehicle which has been stored/impounded by WPD at the request of the vehicle’s registered owner or agent. Personal property is considered to be items which are not affixed to the vehicle. A receipt shall be provided for the removed property, with a copy placed in the stored vehicle. This procedure shall also apply to the removal of property by the tow company and/or its employee to a secured area within the business.

C. The requirement to obtain approval from WPD prior to the release or removal of property may be excused if it is determined proper safeguards and procedures are utilized by the company. This requirement may not be waived in cases where a vehicle has been impounded for evidence or investigation.

D. Personal property and/or the vehicle shall be released at the primary storage yard.

Personal property or vehicle release from a secondary storage yard shall only be allowed if consented to by the vehicle’s registered owner/agent
E. Pursuant to Vehicle Code section 22851, subdivision (b), no fee shall be charged for the release of personal property during normal business hours; the maximum charge for a nonPage 180 of 477 14 business hours release shall be one-half the hourly town rate charged, or less, for initially towing the vehicle; and no lien shall attach to any personal property in or on the vehicle.

F. Vehicles stored by shall be released within two (2) hours of the owner’s demand, or at such time as mutually agreed upon.

15. RECORD KEEPING AND REPORTING
A. Operator shall keep a written record of every vehicle stored for a period of longer than twelve (12) hours pursuant to Vehicle Code section 10650, subdivision (a). The record shall contain the name and address of the person storing or requesting the tow, the names of the owner and driver of the vehicle, a brief vehicle description (e.g., make, model, license plate number, VIN, and any vehicle damage) pursuant to Vehicle Code section 10650, subdivision (b).

B. Operator shall maintain complete accurate business records of the tow service including: a description of the vehicle, nature of service, time, location, tow truck operator handling the call, and an itemized total charge. These records shall be available for inspection by WPD, with or without cause, with twenty-four (24) hour notice, during normal business hours.

These records shall be kept for a minimum period of three (3) years.

C. Operator shall record video surveillance footage of the vehicle storage areas and retain records of the same for a seven (7) day period, and make such records available for inspection by WPD upon request.

D. Record systems must provide for immediate access, upon inquiry by the Chief of Police or his/her designee, to the following information:
i. Locate vehicle from the WPD’s report number.
ii. Locate vehicle from license number only. iii. Locate vehicle from make, color, date and location of impound.
iv. Date of filing of all lien sale documents with the California Department of Motor Vehicles.

E. Operator shall comply with all State law requirements for the disposal of unclaimed vehicles.

16. INSPECTION
A. All real property and improvements thereon, and all facilities, equipment, and materials used by Operator in the performance of this TSA shall, upon request by WPD, be open to immediate inspection by the Chief of Police or his/ her designee.

15 B. WPD reserves the right to conduct at least one (1) annual inspection of all tow trucks utilized on rotation calls. WPD may conduct additional inspections without notice during Operator’s business hours. WPD may honor annual inspections performed by the California Highway Patrol area office.

17. TOW COMPLAINTS
A. All WPD related tow service complaints received or initiated by the WPD against a tow company or tow company employee shall be accepted and investigated in a fair and impartial manner. The towing company and their employees shall cooperate with WPD investigators during the course of an investigation.

B. The company shall be notified in writing of the findings within thirty (30) days of the conclusion of any investigation.

C. Should the filing of criminal charges be a possibility, WPD or the designated law enforcement agency shall conduct the investigation to conclusion or assist the lead investigating agency and request prosecution if warranted.

D. Complaints for violations of the law not normally investigated by WPD shall be referred to the agency with investigatory jurisdiction.

E. Alleged violations of the TSA shall be investigated by WPD.

18. COMPLIANCE WITH LAW
A. Operator shall, at all times, comply with federal, state, and local laws.

B. Any conviction of the company involving a stolen or embezzled vehicle, fraud related to the towing business, stolen or embezzled property, a crime of violence, a drug-related offense, felony or misdemeanor driving under the influence of drugs or alcohol, or moral turpitude should be cause for suspension or removal of a company/employee, or denial of an application, or termination of the TSA.

C. Operator’s personnel shall neither solicit nor accept gratuities pursuant to Vehicle Code section 12110, subdivision (a).

D. No tow company or their employees shall accept any gratuities from a repair shop for the delivery of a vehicle not owned by the repair shop or tow company, for the purpose of storage or repair pursuant to Vehicle Code section 12110, subdivision (c).

E. Failure of a company to satisfy a court order mandating reimbursement to the vehicle or property owner for the damage or loss which occurred while the vehicle was in the company’s custody will result in the company being taken off the rotation list.

16 F. A company or employee arrested/charged for a violation involving any of the above crimes should be suspended until the case is adjudicated.

19. COMPLIANCE WITH TSA
A. The company agrees, as a condition of inclusion in the tow program, to comply with the terms and conditions of this TSA. Furthermore, the company agrees that failure to comply with these terms and conditions shall be cause for immediate disciplinary action.

B. A violation of the equipment requirements, related to safety, shall be cause for immediate suspension. The suspension shall remain in effect until the suspension period is completed and/or WPD has inspected the equipment and concluded the company is in compliance.

C. A violation of safe loading requirements of a tow truck may be cause for disciplinary action.

D. A violation of intentionally overcharging or a pattern of overcharging shall be cause for immediate suspension. The suspension shall remain in effect until the suspension period is completed or proof or reimbursement to the aggrieved customer has been provided to WPD.

E. Any unsatisfactory terminal evaluation rating issued by the Motor Carrier Safety Unit (MCSU) shall be cause for suspension. The suspension shall remain in effect until proof of a satisfactory compliance rating from the MCSU has been provided to WPD.

F. Allowing an incompetent tow truck driver to respond to a WPD call may be cause for disciplinary action on the Operator.

G. A company’s tow truck driver responding to a WPD call, for whom the following information has not been submitted and approved by WPD shall be cause for disciplinary action:
i. A valid City of Watsonville business license for the tow truck company. ii. Documentation indicating completion of a TSAAC approved tow truck driver training program within the past five (5) years. iii. Enrollment in an annual random drug testing program and EPN program. iv. Valid tow company permit issued by the City of Watsonville.

H. Tow companies shall not record (i.e., videotape, photograph, etc.) a scene unless it is for official use by the tow company for business-related reasons. i. The on-scene investigating officer or incident commander shall make the determination when a tow company may record a scene for tow related business reasons. ii. In the event a tow company is determined to be in violation of this

17 provision, the Operator shall immediately surrender any such recording device to WPD or the designated law enforcement agency.

20. DISCIPLINARY ACTION
A. The Chief of Police shall take disciplinary action against a company for violations investigated and sustained. The Chief of Police shall retain discretion regarding the length of any suspension imposed pursuant to the terms and conditions of this TSA.

B. Nothing shall preclude WPD from taking the appropriate enforcement or administrative action for any violations of law.

C. Nothing contained herein shall be deemed to prohibit WPD from immediately suspending, terminating, or denying an application of any company or employee whose conduct, in the sole discretion of the Chief of Police, is deemed to be a danger to the public or who has engaged in conduct constituting a flagrant violation of the TSA (e.g., registered sex offender). D.

Records of violations shall be retained by WPD for thirty-six (36) months.

21. TERMS OF DISCIPLINARY ACTION
A. Violations of the terms and conditions of the TSA may be cause for disciplinary action in the following manner:
i. First violation within a twelve (12) month period – suspension until violation has been corrected.
ii. Second violation within a twelve (12) month period – one (1) to thirty (30) day suspension.
iii. Third violation within a twelve (12) month period – sixty (60) to ninety (90)
day suspension.
iv. Fourth violation within a twelve (12) month period – termination of the TSA.

B. Violations of the terms and conditions of the TSA, which, in the opinion of the Chief of Police, are categorized as major violations may be cause for immediate termination.

C. A suspended or terminated company shall not be eligible for a rotation listing for the duration of the suspension or termination.

D. Any company serving a suspension shall be required to have complied with all terms and conditions of the current TSA at the time of reinstatement.

18 E. A company shall comply with all the terms of the suspension (i.e., restitution to victims, court orders) prior to reinstatement or re-application.

22. HEARING AND APPEAL
A. A hearing shall be granted, upon a company’s request, within ten (10) calendar days of notification of a disciplinary action. The hearing shall be conducted by the Chief of Police or designee, and the company shall be entitled to present all relevant facts and circumstances in support of the company’s position. Operator shall be entitled to present testimony of al least one qualified person. Operator shall be notified in writing of the Chief of Police or designee’s decision (s) within ten (10) days of the date of completion of the hearing.

B. Operator may appeal the Chief of Police or designee’s decision(s) by submitting a written request to the City Manager within ten (10) calendar days after receipt of the Chief of Police or designee’s decision(s). The appeal shall be conducted by the City Manager or designee and shall be held as soon as practicable. Operator shall be entitled to: reasonable notice of the time and place of the hearing, representation by an attorney, call witnesses, and examine responsible personnel and all witnesses called in support of the Chief of Police or designee’s decision(s). The appeal shall not be governed by the traditional rules of evidence. The decision of the City Manager or designee shall be final. Disciplinary action shall not take effect until the hearing and appeal process has been exhausted, with the exception of conduct deemed to be a danger to the motoring public.

23. RISK AND LIABILITY
A. Operator assumes all risk in the event of damage, theft, fire, or otherwise, of the vehicles or any other property towed, impounded, or stored by Operator, its employees or agents.

B. Notwithstanding any other term or condition herein, in responding to a call from the WPD, Operator shall have no claim whatsoever against City or any right to recover from City for the cost of any of the services it renders in the performance of this TSA. Operator shall look solely and exclusively to the owner of the vehicle towed, impounded, or stored for payment of the services provided by the Operator.

C. Operator shall assume the entire risk of nonpayment of any service charges incurred by a citizen pursuant to this TSA.

D. In the event a vehicle has been stored or impounded by WPD due to error or negligence, no charges or fees shall be paid and the vehicle shall be released to the owner or the owner’s agent. City shall not be liable for any such charges or fees. If the error is not discovered for a period of five (5) business days after the vehicle is stored and Operator has initiated lien sale process, as required by California Vehicle Code Section 22851.8, Operator shall be entitled to recover actual costs incurred to initiate the lien.

19 E. It is understood and agreed by the Parties that the acts and/or omissions of the owner(s), officers, operators, officials, employees, agents, and representatives of Operator in the performance of the services and obligations under this TSA shall constitute the acts and/or omissions of Operator and not the City.

24. SUCCESSORS AND ASSIGNS
A. Each of the terms and conditions of this TSA shall inure to the benefit of and shall bind, as the case may be, not only the Parties hereto, but each and every one of the heirs, executors, administrators, successors, assignees, and legal representatives of the Parties.

B. Operator shall not assign its rights or delegate or otherwise transfer its obligations under this TSA to any other person or entity without the prior written consent of City. Any such assignment without the prior consent of City shall be void and the attempted assignment shall constitute a material breach of this TSA.

C. If Operator is permitted to subcontract any part of this TSA, Operator shall be responsible to City for the acts and omissions of its subcontractor as it is for persons directly employed. Nothing contained in this TSA shall create any contractual relationship between any subcontractor and City. All persons engaged in the work will be considered employees of Operator.

City will deal directly with and will make all payments to Operator.

25. INDEMNITY
A. The WPD, City of Watsonville, its City Council, officers, employees, and agents shall not be responsible for any loss or damages arising from towing and storage of vehicles or the performance of any requirements imposed by this TSA. Operator shall protect, defend, indemnify, and hold harmless City, its Council Members, officers, employees and agents, against, without limitation, any and all claims, demands, debts, obligations, liabilities, judgments, actions, penalties, fines, costs, expenses, and attorneys’ fees of every kind and description arising out of or connected in any way with Operator’s performance under this TSA, including but not limited to:
(1) any claim or action relating to the preparation of vehicles for towing; (2) any claim or action relating to the towing of vehicles; (3) any claim or action relating to the storage, impound, and maintenance activities; (4) any claim or action relating to the sale or disposal of vehicles pursuant to this TSA; and (5) workers’ compensation.

B. This hold harmless provision shall apply to all liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by Operator.

26. INSURANCE
Operator, at its sole cost and expense, shall purchase and maintain throughout the terms of this TSA the following insurance policies. Coverage shall state that Vendor insurance shall apply separately to each insured against whom a claim is made, or a suit is brought, except concerning

20 the limits of the insurer’s liability. The Operator shall submit to City, along with the certificate of insurance, a waiver of subrogation endorsement in favor of the City, its officers, agents, employees, and volunteers.

A. Commercial General Liability
i. Operator shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than five million dollars ($5,000,000.00) per occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. Vendor’s general liability policies shall be primary and shall not seek contribution from the City’s coverage and be endorsed using Insurance Services Office form CG 20 10 (or equivalent) to provide that City and its officers, officials, employees, and agents shall be additional insureds under such policies. For construction projects, an endorsement providing completed operations coverage for the additional insured, ISO form CG 20 37 (or equivalent).

B. Worker’s Compensation
Operator shall carry and pay for workers’ compensation insurance as is required to fully protect Operator and its employees under California Workers’ Compensation law.

C. Garage Liability
i. Includes premises and operations. Coverage for bodily injury and property damage with a combined single limit of not less than one million dollars ($1,000,000). If the Garage Liability is a provision of the General Liability coverage and meets the minimum requirements stated above, then a separate Garage Liability policy is not required. The minimum required limits for Garage Liability must be provided in either the General Liability or a separate Garage Liability policy.

D. Garage Keepers Liability and On-Hook Coverage
i. This shall be the same minimum as on-hook coverage for vehicles in the care, custody, and control of the Tow Service in the storage yard. On-hook coverage shall be set at a minimum of:
a. Class A tow truck: $200,000
b. Class B tow truck: $200,000
c. Class C tow truck: $200,000

21 E. Automobile Liability
i. The Operator shall furnish to WPD a valid certificate of automobile liability insurance, at no expense to the City or the state, and shall maintain or cause to be maintained and in effect, at all times during the term of the agreement, a policy of no less than one million dollars ($1,000,000) per occurrence for bodily injury and property damage liability combined. The Contractor removing a vehicle from a hazardous materials incident to the nearest reasonable and safe stopping location will be considered transporting property, subject to normal minimum insurance requirements of Section 34631.5 of the California Vehicle Code.

F. Endorsements
i. The City, its officers, officials, employees, agents, and volunteers are to be named as additional insured concerning liability arising out of automobiles owned, leased, hired, or borrowed by or on behalf of the Operator.
a. For any claims related to the TSA, the Operator’s insurance coverage shall be the primary insurance concerning the City, its officers, officials, employees, agents, and volunteers shall be an excess of the Operator’s insurance and shall not contribute with it.
b. Written notice shall be given to the City of Watsonville not less than thirty (30) days before the expiration or cancellation of any insurance required by the TSA. Policy expiration dates and any notice of cancellation shall be forwarded to the WPD. Without insurance, a company shall be removed from rotation.

27. NO IMPLIED WAIVER OF BREACH
A. No delay or omission in the exercise of any right or remedy available hereunder shall impair such right or remedy or be construed as a waiver. Any waiver of any breach or condition hereunder must be in writing and shall not be construed as a waiver of any other breach concerning the same or any other provision of this TSA.

28. INDEPENDENT CONTRACTOR
A. The Parties hereto in the performance of this TSA shall be acting in an independent capacity and not as agents, employees, partners, or joint ventures with one another. Operator and its employees are not employees of City and are not entitled to any of the rights, benefits, or privileges of City’s employees including, but not limited to, medical, unemployment, or workers' compensation insurance.

B. Neither City or its officers, Council Members, agents, or employees shall have any control over the conduct of Operator employees except as set forth herein. Operator agrees not to represent that it or its agents, servants, or employees are in any manner agents, servants, or employees of City, it being understood Operator, its agents, servants, and employees are as to City

22 wholly independent contractors and that Operator’s obligations to City are solely those prescribed by this TSA. The Parties further acknowledge and agree that City shall have no responsibility for salary, health benefits, retirement benefits, taxes, or any other benefits that may be due to Operator’s employees.

29. EXCEPTION – ABANDONED VEHICLES
A. Vehicles, or parts thereof, which are disposed of through an Abandoned Vehicle Abatement Program by delivery to an authorized automobile dismantler, pursuant to Section 22660 of the California Vehicle Code are excluded from this TSA. No charge shall be assessed against the City or the owner of any vehicle that is towed, stored, or dismantled under the provisions of an Abandoned Vehicle Abatement Program.
i. Oversized abandoned vehicles. [Reserved.]

30. BREACH OF CONTRACT
It shall be grounds for suspension or termination of this TSA, if Operator, or any of its agents or employees or any person(s) connected or associated with the Operator has done any one of the following:

A. Has failed to remit timely payment to City of franchise fees and has been delinquent for a period in excess of ninety (90) days.

B. Has been convicted of a felony or any crime involving theft, embezzlement, stolen property, fraud or crimes of violence within the last ten (10) years or is so convicted during the term of this TSA.

C. Has published, uttered, or disseminated any false, deceptive, or misleading statements or advertisement in connection with the operation of the towing service.

D. Has conducted the towing service in a manner contrary to the peace, health, safety, and general welfare of the public.

E. Has violated or permitted other persons to violate, through an act of omission or commission by the Operator, any felony or misdemeanor crime involving sexual offenses or moral turpitude, or a felony involving sale or use of a controlled substance, or any act of dishonesty, fraud, within the last ten (10) years.

F. Had an inspection or investigation by the City which revealed a deficiency, violation, or conduct that endangers the peace, health, safety and general welfare of the public. G.

Employs tow truck operators under eighteen (18) years of age.

H. Fails to notify the WPD in writing of any names, addresses, driver's license numbers of any newly employed tow truck operators within ten (10) business days of their hire date, or fails

23 to notify the WPD within ten (10) business days of any tow truck operator who is no longer employed by Operator.

I. Has charged fees in excess of the rates approved by the City or in excess of any Federal, State, County or City laws or regulations for towing and/or storage of vehicles or any service incidental to towing.

J. Has allowed the services of a tow truck operator with a record of violations of the Vehicle Code which has resulted in the suspension or revocation of their driver's license or a second (2nd) driving under the Influence or reckless driving conviction within the three (3) years preceding the most recent violation, to remain in Operator’s employment as a tow truck driver providing service to Operator.

K. Fails to comply with any California Vehicle Code, Federal, State, or County regulations and laws relating to towing and/ or storing of vehicles, including the impounding and storing of vehicles from private property.

L. Having allowed an unauthorized person access to the storage yard or facilities.

M. Any other grounds as outlined in this TSA, or failing to comply with any provision of this TSA.

N. Has knowingly made false, misleading or fraudulent statements of a material fact in a report or record required to be filed with the WPD.

O. Has stopped and solicited on any street, highway or other public thoroughfare the rendering of assistance to a person or disabled vehicle without first being requested to do so, except to render emergency aid when there exists an imminent peril to life or property.

P. Has charged for services not performed, equipment not employed or used, service or equipment not needed, or has otherwise materially misstated the nature of any service performed or equipment used.

Q. Has been suspended from another police department tow list, within five (5) years of applying to provide tow services to the City, or during the term of the Operator’s agreement with City.

R. Towing a vehicle to a location other than approved by the WPD as an authorized storage facility without first receiving prior authorization to do so by the WPD.

S. Defrauding or conspiring to defraud any owner of any vehicle, any insurance company, or any other person financially interested in the towing, storage, or impound of any vehicle.

T. Moving, tampering with, or removing a vehicle involved in a traffic collision prior to the arrival of law enforcement officers at the scene.

24 U. WPD receives four (4) or more complaints against the Operator during any twelve (12) month period that the WPD, in its reasonable discretion, determines to be justified, regarding the service, or lack thereof, provided by the Operator.

V. Repeated or flagrant violations of the provisions of the California Vehicle Code.

W. Demonstrating a pattern or practice of failing to answer calls -for -service, respond promptly to calls, and/ or to maintain clean, orderly, and secured storage facilities.

X. Allowing the insurance coverage required herein to be withdrawn, lapse or otherwise to no longer being in force for any reason.

Y. Dissolution of business or bankruptcy.

Z. Assignment of the TSA, or any right or interest stated herein, without the prior written consent of Chief of Police of his/her designee.

31. RATES
A. Fees charged for calls originating from WPD shall be reasonable, valid, and not in excess of those rates charged for similar services provided in response to requests initiated by a public agency or private person. Reasonableness shall be determined as compared to other similar service rates.
i. The City Council shall by resolution establish the maximum chargeable rates for normal rotation requests.
ii. The City Council shall by resolution, establish the City Towing Service Fee.

B. Rate requirements represent the maximum a company may charge on a WPD call.

A company is not precluded from charge less when deemed appropriate by the company. This shall not be construed as requiring a charge if a company would not normally charge for such service.

C. Any company who charges rates above the submitted rates for a WPD call shall be subject to disciplinary action.

D. In any effort to remain competitive in the open market, the company may lower rates at any time by notifying WPD. When a company lowers the rate, the retail rate becomes the company’s new approved rate.

E. A valid bank credit card or cash payment shall be accepted for payment of storage and/or towing when a vehicle is stored pursuant to Section 22651 of the Vehicle Code.

F. No company or employee shall refer to any rate as a required or “WPD rate.”

25 G. The approved schedule of rates charged by the company shall be available in the tow truck, and shall be presented upon demand to the vehicle owner/agent for whom the tow service was provided or any WPD officer at the scene.

H. There shall be no additional charge for moving a stored vehicle form inside a tow company’s storage yard to the front of the business establishment.

I. Companies may only raise rates after approval by the Watsonville City Council.

J. The rate for towing shall be computed from portal to portal when a vehicle is towed to the operator’s storage yard. Portal to portal shall be defined as follows: Time shall start from either the point of dispatch (must be within the city limits) or upon departure from the place of business, whichever is closer to the location of the call, and shall end at the estimated time of return to the place of business or completion of the call.

K. Tow Rates. Time expended for towing a vehicle back to the company’s storage yard should be charged at a rate not to exceed the hourly rate. Time expended in excess of the hourly rate shall be calculated in no more than one (1) minute increments. There shall be no additional charges for mileage. Towing charges shall be based on the class of the vehicle being towed, regardless of the class of truck used.

L. Service Calls. Operator may charge up to a thirty (30) minute minimum per call for any service which is performed when the vehicle company or agent is present and the vehicle is not stored at the direction of an officer or remitted to the company’s storage yard. Rates for a service call (e.g., jumpstart, out-of-gas, lockouts, tire changes, towing and recovery, etc.) should be from portal to end of service. Time expended in excess of the thirty (30) minute minimum may be charged in no more than one (1) minute increments. Fuel charges for gasoline dispensed on outof-gas service calls shall be at the prevailing market rate.

M. Evidence Tows. [Reserved.]
N. Fee for Special Operations. Fees shall be reasonable and consistent with industry standards for similar operations.
i. Hourly rates shall be established for the following: auxiliary and contracted equipment (e.g., airbags, converter gear/dolly, additional trailers, forklift, front loaders, etc.) ii. If Operator performs a service which requires rental equipment and specialized labor, the Operator shall only be entitled to charge for the actual costs of that service plus a markup rate not to exceed ten percent (10%). O. Storage Fees. i. A vehicle stored twenty-four (24) hours or less shall be charged not more than one (1) day of storage pursuant to section 3068.1, subdivision (a) of the Civil Code. If the vehicle is released from storage after twenty-four (24) hours has lapsed, charges may be allowed

26 on a full, calendar-day basis for each day of storage, or part thereof pursuant to section 3068.1, subdivision (a) of the Civil Code.
ii. Storage of vehicles in combination should be charged a per vehicle rate except for dollies, con-gear, vehicle on a car carrier/trailer, etc. Dollies and con-gear, not in combination, may be charged a storage rate not to exceed Class A storage fees. iii. Inside storage fees shall only be charged when inside storage is requested by WPD; when requested by registered owner, legal owner, insurance company; or when the inside storage can be justified by the tow company and notice of the same is provided to WPD. iv.

Operator shall display in plain view at all cashiers stations, a sign disclosing all storage fees and charges, including, but not limited to the maximum storage rate pursuant to section 3070, subdivision (d)(2)(E).

P. Manner of Payment for Service Calls and Evidence Tows i. WPD shall pay Operator for the service calls and evidence tows identified above at the times and in the manner set forth. Invoices for service calls and evidence tows shall be submitted to WPD on the first of the month for the previous month’s TSA services. Payments to Operator shall be made within thirty (30) days of receipt of Operator’s invoice. Operator shall be responsible for the cost of supplying all documentation necessary to verify the monthly billings to satisfaction of the Chief of Police.
ii. All invoices shall contain the following information:
a. Job/Case Name;
b. City or WPD Purchase Order Number;
c. Operator’s Invoice Number;
d. Date of Invoice Issuance;
e. Work Order Number (if applicable);
f. WPD representative identified on the Purchase Order; g. Operator’s remit address for payment;
h. Description of services billed under Invoice;
i. Amount of Invoice – itemize all Reimbursable Expenses; and j. Total billed to date under TSA.
iii. Items on invoices shall be separated into services and expenses. Invoices

27 that do not follow the format outlined above shall be returned to the Operator for correction. WPD shall not be responsible for delays in payment to Operator resulting from Operator’s failure to comply with the TSA.

Q. After Business Hours Releases
i. Fees for after-business-hour releases (gate fee) shall only be charged for vehicles released between 5:00 p.m. and 8:00 a.m. on normal business days or for vehicles released when the business is not otherwise opened.
ii. The fee charged shall be no more than one-half the hourly rate or tow rate approved by the chief of police.

R. The Operator shall display in plain view at all cashier stations a sign described in section 3070 of the Civil Code, disclosing all fees in force.

S. The Operator or its employees(s) shall not charge the registered owner, legal owner, or innocent third party, who is the victim of any crime, any fees associated with the impounding of their vehicle when it has been impounded for an investigation under California Vehicle Code Section 22655.5. The Operator may charge the city all reasonable fees related to the towing and storage of the impounded vehicle. In all cases where the city is required to pay an impound fee, the city will seek restitution from the perpetrator through the courts and per California Vehicle Code Section 22655.5. Under no circumstances shall a perpetrator’s impound fees be paid by the City.

32. COLLUSION
A. A company and/or applicant shall not conspire, attempt to conspire, or commit any other act of collusion with any other company or applicant for the purpose of secretly, or otherwise, establishing an understanding regarding rates or conditions to the TSA that would bring about any unfair condition which could be prejudicial to WPD, the motoring public, or other companies.

B. A finding by WPD that any company and/or applicant has been involved in collusion shall be cause for denial of an application or shall nullify the TSA. Any company or applicant found to be involved in any act, or attempted act of collusion, shall be disqualified from participation in WPD rotation lists for the current term, plus three (3) years.

33. NOTICES
A. Any notices required or permitted under this TSA shall be in writing and shall be delivered personally or sent by U.S. Mail, first class, postage prepaid, return receipt requested, addressed as follows:

28 CITY: City of Watsonville
City Clerk’s Office
275 Main Street, 4th Floor
Watsonville, CA 95076
Copy to: Watsonville Police Department
Community Services Division
Attn: R. Mish Radich, Captain
215 Union Street
Watsonville, CA 95076
OPERATOR: [***INSERT OPERATOR NAME***]
Attn: [***INSERT POINT OF CONTACT***]
[***ADDRESS LINE 1***]
[***ADDRESS LINE 2***]

34. ATTORNEYS’ FEES
A. If a Party to his TSA brings an action, including an action for declaratory relief, to enforce or interpret the provision of this TSA, the prevailing Party shall be entitled to reasonable attorneys’ fees in addition to any other relief to which that Party may be entitled. The court may set such fees in the same action or in a separate action brought for that purpose.

35. VENUE
A. In the event either Party brings any action against the other under this TSA, the Parties agree that trial of such action shall be vested exclusively in the County of Santa Cruz.

36. SEVERABILITY
A. If a court of competent jurisdiction finds or rules that any provision of this TSA is invalid, void or unenforceable, the provision of this TSA not so adjudged shall remain in full force and effect. The invalidity in whole or in part of any provision of this TSA shall not void or affect the validity of any other provision of this TSA.

37. CONFLICT OF INTEREST
A. Operator may serve other clients, but none whose activities within the corporate limits of City or whose business, regardless of location, would place Operator in a “conflict of interest,” as that term is defined in the Political Reform Act, codified at California Government Code Section 81000 et seq.

B. Operator shall not employ any City official in the work performed pursuant to this TSA. No officer or employee of City shall have any financial interest in this TSA that would violate California Government Code Sections 1090 et seq. Operator hereby warrants that it is not now, nor has it been in the previous 12 months, an employee, agent, appointee, or official of the City. If

29 Operator was an employee, agent, appointee, or official of the City in the previous twelve months, Operator warrants that it did not participate in any manner in the forming of this TSA. Operator understands that, if this TSA is made in violation of Government Code § 1090 et seq., the entire TSA is void and Operator will not be entitled to any compensation for services performed pursuant to this TSA, including reimbursement of expenses, and Operator will be required to reimburse the City for any sums paid to Operator. Operator understands that, in addition to the foregoing, it may be subject to criminal prosecution for a violation of Government Code Section 1090 and, if applicable, will be disqualified from holding public office in the State of California.

38. CONTRACT ADMINISTRATION
A. This TSA shall be administered by the Chief of Police or his designee, who shall act as the City’s representative.

39. ENTIRE AGREEMENT
A. The persons executing this TSA hereby represent and warrant that the execution of this TSA and the performance of the terms and conditions of this TSA have been authorized by all requisite corporation, Federal, State, municipal, or other entity requirements and that the undersigned have the right, power, legal capacity and authority to execute and enter into this TSA.

40. COUNTERPARTS
A. This TSA may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement. [SIGNATURES ON FOLLOWING PAGE]

30 CITY OF WATSONVILLE:
___________________________________
Tamara Vides, Interim City Manager
ATTEST:

Date:_____________
___________________________________
Irwin I. Ortiz, City Clerk
APPROVED AS TO FORM:

Date:_____________
___________________________________
Samantha W. Zutler, City Attorney
OPERATOR:

Date:_____________
___________________________________ Date:_____________

6/20/2024 2:19:36 PM
C:\Program Files\eSCRIBE\TEMP\14193276207\14193276207,,,Report - License Agreement Land Trust SCC.docx Agenda Report
MEETING DATE: Tuesday, June 25, 2024
TO: City Council
FROM: PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG

ASSISTANT PUBLIC WORKS & UTILITIES DIRECTOR FONTES
SUBJECT: LICENSE AGREEMENT FOR TEMPORARY

CONSTRUCTION STAGING AREA AT LAND TRUST OF
SANTA CRUZ COUNTY PROPERTY LOCATED AT 275 LEE
ROAD
RECOMMENDED ACTION:

Adopt a resolution approving a license agreement with the Land Trust of Santa Cruz County for the use of a Temporary Staging area for City funded Lee Road Trail - Phase 1 project at 275 Lee Road, Watsonville, California, and authorizing and directing the City Manager to execute same.

BACKGROUND:

The City is currently in design and acquisition of a trail easement for the Lee Road Trail Project Phase 1. The project will require a temporary staging area for City hired contractor to use for employees and equipment parking, materials, and equipment storage during the length of construction. Project duration is approximately 8 months, weather permitting.

The Land Trust of Santa Cruz County owns a property adjacent to the proposed project and has agreed to rent the City a portion of said property at $1 per year for

1.1 acres of land, as shown on the attached map.

DISCUSSION:

The proposed license agreement would allow the City to access 1.1 acres of land from the Land Trust of Santa Cruz County for $1 per year for a duration of one year.

This time period should be sufficient for the City-hired consultants to perform reports and plans for the construction phase and allow the contractor a location to store their equipment and materials. Parking and land use is very limited in this area, so having an established temporary staging area next to the project will be a cost advantage on the price of the overall project.

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C:\Program Files\eSCRIBE\TEMP\14193276207\14193276207,,,Report - License Agreement Land Trust SCC.docx The term of the license agreement is for the actual duration of the trail construction period which is anticipated to commence December 2024 and end on approximately December 31, 2025.

Plans and Specifications are estimated to be completed by September 2024, with bid procurement to begin by the end of the year 2024.

STRATEGIC PLAN:

The project addresses the following Strategic Plan Goals:
2-Infrastructure & Environment
5-Public Safety
FINANCIAL IMPACT:

Insignificant, as there is a one-dollar charge per year for the agreement.

ALTERNATIVE ACTION:

No reasonable alternatives are known at this time.

ATTACHMENTS AND/OR REFERENCES (If any):

1. Location Map for Temporary Construction Easement

2. Expanded Location Map for Temporary Construction Easement

PROPOSED TEMPORARY CONSTRUCTION

STAGING AREA

PROPOSED SIDEWALK

AND BIKE LANE
PROPOSED BIKE AND PEDESTRIAN TRAIL- PHASE 1

STAGING
AREA
Attachment 1

PROPOSED TEMPORARY CONSTRUCTION

STAGING AREA

STAGING
AREA

PROPOSED SIDEWALK

AND BIKE LANE
PROPOSED BIKE AND PEDESTRIAN TRAIL- PHASE 1
Attachment 2

Reso No. (CM)
Meeting Date: 062524 SWZ ______ TV ______ PWU ______
1 RESOLUTION NO. __________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING A LICENSE AGREEMENT BETWEEN THE

CITY OF WATSONVILLE AND THE LAND TRUST OF SANTA CRUZ

COUNTY, A CALIFORNIA NON-PROFIT PUBLIC BENEFIT

CORPORATION, FOR A TEMPORARY CONSTRUCTION STAGING
AREA LOCATED AT 275 LEE ROAD, WATSONVILLE, CALIFORNIA,

AND AUTHORIZING AND DIRECTING THE CITY MANAGER TO

EXECUTE SAME
WHEREAS, the City is in design and acquisition of a trail easement for the Lee Road Trail Project, Phase 1 and will require a temporary staging area for City hired contractor to use for employee and equipment parking, materials and equipment storage during the length of construction; and
WHEREAS, the Land Trust of Santa Cruz County owns property adjacent to the proposed project and has agreed to rent the City a portion of said property.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. Adopting a Resolution approving the license agreement with the Land Trust of Santa Cruz County does not meet CEQA’s definition of a “project”, because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

2. That the License Agreement between the City of Watsonville and the Land Trust of Santa Cruz County, a California non-profit public benefit corporation, for the Land Trust owned property at 275 Lee Road, Watsonville, California, a copy of which License Agreement is attached hereto and incorporated herein by this reference, is hereby approved.

Reso No. (CM)
Meeting Date: 062524 2

3. The City Manager is hereby authorized and directed to execute such License Agreement for and on behalf of the City of Watsonville with minor revisions that may be approved by the City Manager and the City Attorney. ********************************

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Land Trust – License Agreement April 2024

LICENSE AGREEMENT
Watsonville Slough Farms
This license agreement (“Agreement”) is made and entered into effective _________, 2024 (“Effective Date”), by and between Land Trust of Santa Cruz County (“Land Trust”), a California non-profit public benefit corporation (“Land Trust”), and the City of Watsonville (“City”), an incorporated charter city in the State of California, with regard to the following.

A. Land Trust owns certain real property in Santa Cruz County, California, called the Watsonville Slough Farms, located at 275 Lee Road, Assessor Parcel Number(s) 052-081-37, 052-081-35, and 052-081-34 (“Property”), and which is shown on the map attached hereto and incorporated herein as Exhibit A (“Property Map”).

B. The City is the lead agency for the Lee Road Trail Project (“Trail Project”), a

1.43-mile paved pedestrian/bicycle trail identified in the City of Watsonville Trails and Bicycle Master Plan. This proposed trail segment extends south from Harkins Slough Road along Lee Road, across Struve Slough and south along Lee Road to West Riverside Drive. Phase 1 of this project is anticipated to be built in late 2024 and part of 2025, and will extend from Harkins Slough Road along Lee Road to the entrance of the Watsonville Slough Farms at 275 Lee Road.

C. Land Trust desires to grant, and the City desires to accept, a nonexclusive license to allow the City to utilize a portion of the Watsonville Slough Farms for the purpose of a temporary construction staging area to support implementation of the Lee Road Trail Project. This area is comprised of approximately 1.1 acre (approximately 48,000 square feet), and is shown as the “Temporary Construction Staging Area” on Exhibit B.

THEREFORE, for, in consideration of the foregoing, which are incorporated herein by reference, and for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Land Trust and the City agree as follow:

1. Grant of License; Term. Land Trust hereby grants, and the City accepts, a nonexclusive license to allow the City to utilize the Temporary Construction Staging Area for the purpose of a temporary construction staging area on the terms and conditions set forth in this Agreement. The term of this Agreement is for the actual duration of the trail construction period which is anticipated to commence on approximately December 2024 and end on approximately December 31, 2025.

2. As Is Condition of Property. Land Trust makes no warranties or representations to the City concerning the suitability of the Property or any portion thereof for the purpose of construction equipment staging. The City is fully aware of the needs of a laydown area for the duration of construction and has determined, based solely on its own inspection, that Temporary Construction Staging Area is suitable for this intended use. The City accepts the Temporary Construction Staging Area in its present condition “AS IS, WITH

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Land Trust – License Agreement April 2024
ALL FAULTS,” without representation or warranty of any kind, and subject to all applicable laws, statues, ordinances, rules and regulations governing the use, occupancy and management of the Temporary Construction Staging Area. Without limiting the forgoing, this Agreement is made subject to any and all covenants, conditions, restrictions, easements and other title matters affecting the Temporary Construction Staging Area, or any portion thereof, whether or not recorded. (a) The City agrees, on the last day of the Agreement term, to surrender the Temporary Construction Staging Area to Land Trust in substantially the same condition as when received, excepting only changes agreed to by Land Trust and changes resulting from natural casualties (except as provided in Paragraph 7, regarding insurance). The condition of soil and vegetation in the Temporary Construction Staging Area shall be restored to substantially the condition that existed prior to the City’s use.

3. Payment.

The City shall pay Land Trust $1 per year for the use of the Temporary Construction Staging Area.

4. Operations on the Premises. The City’s use of the Temporary Construction Staging Area shall be subject to the following conditions, in addition to any others set out in this Agreement:
(a) Activities. The City shall use the Temporary Construction Staging Area solely for the purpose of staging of equipment and construction related activities during the construction of Phase 1 of the Lee Road Trail Project. There shall be no activities or disturbances on Land Trust’s property outside of the Temporary Construction Staging Area, as shown on Exhibit B. All equipment operation, vehicle parking, equipment storage, etc. must occur only within the area shown on Exhibit B as the Temporary Construction Staging Area.
(b) Best Management Practices. The City shall carry on all of the activities specified under subparagraph (a) above in accordance with best management practices as described in the Project’s Mitigation Monitoring and Reporting Program (MMRP) as included in the Lee Road Trail Project Mitigated Negative Declaration (MND). The City shall be responsible for maintaining the current certification of the compliance with the Project MMRP.
(c) Waste. The City shall not cause or permit (i) any waste on the Temporary Construction Staging Area (ii) any public or private nuisance thereon; or (iii) any condition which violates any standard form policy of liability insurance covering the Temporary Construction Staging Area, provided the requirements of such policy have been delivered to the City in writing. The City shall maintain the Temporary Construction Staging Area free of all trash, abandoned vehicles and all other offensive materials. The City will provide adequate trash containers and portable toilets. Land Trust shall notify the City of unacceptable trash accumulation or any condition which, in Land Trust’s

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Land Trust – License Agreement April 2024
reasonable opinion, is unsafe or in violation of this Agreement and, if the condition is not rectified by the City within ten (10) days after being given written notice thereof, Land Trust shall have the right to rectify the condition and to bill the City for the reasonable cost of cleanup. Motor oil, tractor fluids or other vehicular materials, new or used, must be stored in a manner such that no spillage or exposure to the weather will occur. Used motor oil and other such toxic materials must be properly removed from the Temporary Construction Staging Area in a timely manner.

5. Hazardous and Toxic Materials. As used in this Agreement, the term “Hazardous Materials” shall mean any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including but not limited to substances defined as “hazardous substances”, “hazardous materials”, or “toxic substances” in the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.

Code. Sections 9601 et seq. (“CERCLA”); as amended by The Superfund Amendments and Reauthorization Act (“SARA”); or the Hazardous Materials Transportation Act, 42 U.S. Code. Sections 6901 et seq; and those substances defined as “hazardous wastes” in Section 25117 of the California Health and Safety Code, and in any regulations adopted and publications promulgated pursuant to the foregoing or any similar laws, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, byproducts or fractions thereof.

At all times during the Agreement term, the City shall strictly comply with any and all requirements of any federal, state, county or municipal statute, law, rule, administrative order, regulation or ordinance governing the use, operation, creation, management, transportation, storage, generation or disposal of Agrochemicals and Hazardous Material and/or relating to clean water, including specifically, but limited to, CERCLA, the Carpenter-Presley-Tanner-Hazardous Substance Account Act, and the Safe Drinking Water and Toxic Enforcement Act of 1986. The City shall indemnify, defend and hold harmless Land Trust, and its officers, directors, employees, agents, and tenants from and against any and all liabilities, claims, judgments, awards, settlements, damages and costs (including attorneys’ and consultants’ fees and costs); including, without limitation, those incurred for testing, remedial investigation, removal, interim and final remedial action, cleanup, abatement or other remedial work, natural resource damages, personal injury or property damages, fines and penalties arising from the presence of Hazardous Materials on, in or under the Temporary Construction Staging Area or in the ground or surface waters of the Temporary Construction Staging Area to the extent caused by the City’s operations under this Agreement. Provided, however, that the City shall not be responsible with respect to, or have any obligation to clean up, any Hazardous Materials which were brought onto or used on the Property by anyone other than the City and/or its employees, contractors, agents, and/or invitees. The provision of this Paragraph shall survive the expiration or termination of the Agreement.

6. Temporary Construction Staging Area Security. The City shall ensure that all gates are closed and locked when the City or any of the City’s employees, representative, agents, or invitees are not present at the Temporary Construction Staging Area. The City may alter gates, fences or ditches to facilitate access to the staging area, but such alterations

4892-4531-6274 v2 4
Land Trust – License Agreement April 2024
must be made in a manner that preserves the ability secure the Temporary Construction Staging Area by gates, fences and ditches. The City shall ensure that all gates are closed and locked from 6:00 PM to 6:00 AM. All gates shall be locked during all Saturday and Sunday hours. The Land Trust must have the ability to access and inspect the Temporary Construction Staging Area at all times upon reasonable notice to the City. The Land Trust shall not be held responsible for any theft of the City’s equipment or material, or that of their employees, contractors, agents staged within the Temporary Construction Staging Area. The City shall be responsible for repairing gates, fences and ditches damaged by vandalism within 72 hours to prevent trespass and notifying the Land Trust immediately of any such vandalism.

7. Liens. The City shall not suffer or permit to be enforced against the Property, or any part thereof, any mechanics', laborers', materialmen's, contractors', subcontractors', or any other liens arising from, or any claims for damages growing out of, any work or other activities of the City under this Agreement (collectively, "Liens"). The City hereby protects, defends, indemnifies and agrees to hold Land Trust and the Temporary Construction Staging Area free and harmless from all liability for any and all such Liens, together with all costs and expenses, including, but not limited to, attorneys' fees and court costs incurred by Land Trust in connection therewith.

8. Repair of Damage. The City agrees, at its sole expense, to repair or replace any damage to the Temporary Construction Staging Area which is in any material manner whatsoever damaged, destroyed or removed in connection with the exercise by the City or its agents, contractors or subcontractors of the rights herein granted.

9. Indemnification of Land Trust. The City shall indemnify and defend Land Trust and its officers, directors, employees, representatives, agents, contractors, and invitees against, and shall hold such indemnified parties harmless of and from, any and all claims, liabilities, losses, fines, penalties, costs, damages, and expenses of any kind or nature whatsoever (including, but not limited to, attorneys’ fees and expenses, as well as costs of suit, whether incurred at the trial, appellate, or administrative level) which any of such indemnified parties may sustain, incur, or suffer, or to which any of such indemnified parties may be subjected, to the extent resulting from or in connection with the use or operation of the Temporary Construction Staging Area or (where applicable to this Agreement) any other part of the Property by the City or any of the City’s employees, representatives, agents, contractor’s, or invitees, whether or not such use is permitted under this Agreement. The City’s indemnification obligations shall survive the termination or expiration of this Agreement.

10. Insurance. During the Term of this Agreement, the City shall, at the City's sole cost and expense, maintain commercial general liability, automobile liability and worker's compensation insurance against claims for personal injury, death or property to the extent arising from the City’s activities on the Temporary Construction Staging Area. All such insurance shall be obtained immediately upon the execution of this Agreement. Upon the request of Land Trust, a certificate of insurance shall be delivered by the City to Land Trust. The general and automobile liability insurance shall not be less than $1,000,000.00

4892-4531-6274 v2 5
Land Trust – License Agreement April 2024
combined single limit for bodily injury and property damage. Land Trust and the City (and its officials, officers, directors, employees, and agents) shall be named as additional insureds on the commercial general liability insurance and automobile liability insurance.

11. Waiver. The waiver by Land Trust of a breach of any term, covenant, or condition contained in this Agreement shall not be treated as a waiver of such term, covenant, or condition contained in this Agreement.

12. No Third-Party Beneficiary. The Parties are entering into this Agreement solely for the benefit of themselves and agree that nothing herein shall be construed to confer any right, privilege, or benefit on any person or entity other than the Parties hereto and their successors and assigns.

13. Miscellaneous Provisions.
(a) Agreement. The terms of this Agreement are intended by the parties hereto as a final expression of their agreement with respect to the subject matter hereof, and may not be contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Agreement constitutes the complete and exclusive statement of its terms, and that no extrinsic evidence of any kind which contradicts the terms of this Agreement may be introduced in any proceedings (judicial or otherwise) involving this Agreement, except for evidence of a subsequent written amendment to this Agreement.

This Agreement may not be modified, amended, or otherwise changed in any manner, except by a written amendment executed by all of the parties hereto, or their successors in interest. This Agreement may be executed in multiple counterparts, and each executed counterpart of this Agreement shall be deemed an original for all purposes, despite the fact that not all of the parties are signatories to the same counterpart. (b) Invalidity. If any provision of this Agreement or the application thereof to any person(s) or circumstance(s) shall to any extent be held to be invalid, illegal, or unenforceable in any respect by any court of competent jurisdiction, and provided that the essential agreement of the parties to this Agreement is not materially altered as a result of such holding: (1) neither the remainder of this Agreement nor the application of such provision to any person(s) or circumstance(s), other than those as to whom or which it is held to be invalid or unenforceable, shall be affected thereby; (2) this Agreement shall be construed as though such invalid, illegal or unenforceable provision had never been contained in this Agreement; and (3) every provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
(c) Interpretation. In this Agreement, personal pronouns shall be construed as though of the gender and number required by the context, the singular including the plural, the plural including the singular, and each gender including other genders, all as may be required by the context. Wherever in this Agreement the term “and/or” is used it shall mean: “one or the other, both, any one or more, or all” of the things, events, persons or parties in connection with which the term is used. Any and all recitals at the beginning of this Agreement are accurate and shall constitute an integral part of this Agreement, and

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Land Trust – License Agreement April 2024
this Agreement shall be construed in light of those recitals. Any and all exhibits, schedules, and addenda attached to and referred to in this Agreement are hereby incorporated into this Agreement as fully as if set out in their entirety herein. The headings of the various paragraphs of this Agreement are intended solely for reference purposes, and are not intended for any purpose whatsoever to modify, explain, or place any construction on any of the provisions of this Agreement. This Agreement shall be governed by, construed in accordance with, and interpreted under, the internal law of the State of California.
(d) Successors and Assigns. Subject to any restriction contained in this Agreement on the ability of a party to assign or delegate its rights or obligations under this Agreement, the terms and conditions of this Agreement shall apply to and bind, and shall inure to the benefit of, the heirs, executors, administrators, successors, and assigns of the parties hereto.
(e) Survival of Representations and Obligations. The representations, warranties, covenants, agreements, and obligations of the parties which are set out in this Agreement (including, but not limited to, any indemnification obligations) shall remain in full force and effect after the expiration or earlier termination of this Agreement, in each case until and unless there is a waiver or release of such representation, warranty, covenant, agreement, or obligation by the beneficiary thereof.
(f) Performance and Waiver. Time is of the essence in the performance of each of the obligations of the parties under this Agreement, but no failure of a party to this Agreement to insist upon the timely performance of any obligation by another party shall constitute a waiver of the right to require performance of such obligation, or act as a waiver of the right to require the performance of any other obligation of such party (or any other party).

IN WITNESS WHEREOF, Land Trust and the City have executed this Agreement, effective as of the date first above written.

Land Trust: City of Watsonville:

LAND TRUST OF SANTA CRUZ COUNTY ___________________
By: _________________________ By: ________________________ Title: Executive Director

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Land Trust – License Agreement April 2024
Exhibit A
Property Map

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Exhibit B
Temporary Construction Staging Area

6/20/2024 2:23:48 PM
C:\Program Files\eSCRIBE\TEMP\14234442474\14234442474,,,Report - Edible Food Recovery Services.docx Agenda Report
MEETING DATE: Tuesday, June 25, 2024
TO: City Council
FROM: PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG

SR ENVIRONMENTAL PROJECTS ANALYST STOLZENTHALER
SUBJECT: MEMORANDUM OF UNDERSTANDING WITH THE COUNTY OF

SANTA CRUZ FOR EDIBLE FOOD RECOVERY SUPPORT

SERVICES
RECOMMENDED ACTION:

Resolution authorizing the City Manager to execute the Memorandum of Understanding (MOU) with the County of Santa Cruz for Edible Food Recovery Support Services.

BACKGROUND:

An Edible Food Recovery Program is required by each jurisdiction in California to track edible food that would otherwise go to waste and redistribute it to feed people in need. In 2016, the California Legislature passed SB 1383, the Short-lived Climate Pollutants Act, to reduce disposal of organic materials. Recently, the City of Watsonville (City) was awarded $137,242.00 in CalRecycle grant funds for organic waste reduction. As part of this most recent grant, there is an expectation that some of the funds should be targeted toward edible food recovery activities.

DISCUSSION:

Each city and county is required, under SB 1383, to divert edible food to feed people in need, assess capacity levels, support food recovery organizations, conduct education on food recovery, and document compliance activities. The Solid Waste Division has collaborated with all county jurisdictions on Food Recovery since 2022, and operationally, it is more efficiently accomplished on a regional basis. This Technical Advisory Committee of local agencies determined a combined effort would be the best approach. Under this concept, the County of Santa Cruz (County) solicited a Requests for Proposals to providers to supply the expertise and resources to perform specific food recovery tasks required by SB 1383. The County would manage the master contract and then invoice each of the individual partner cities for the work provided, through the attached Memorandum of Understanding (MOU). The cities would share the costs of the contract based on the percentage of the population they represent, according to the State Department of Finance. The City share would be 19.67% of the contract for an estimated $51,366.00 of the allotted grant funding from July 2024 – December of 2025.

The resulting food recovery services will not only help our community meet our SB 1383

6/20/2024 2:23:48 PM
C:\Program Files\eSCRIBE\TEMP\14234442474\14234442474,,,Report - Edible Food Recovery Services.docx compliance requirements, but more importantly help expand edible food recovery opportunities in the region.

STRATEGIC PLAN:
2-Infrastructure & Environment
6-Community Engagement & Well-being
FINANCIAL IMPACT:

The MOU and subsequent partnership contract is fully funded through the CalRecycle grant. There is no impact to the General or Enterprise Funds.

ALTERNATIVE ACTION:

Without an MOU with the County of Santa Cruz who will contract with the Second Harvest Food Bank, the City of Watsonville may be negligent in accounting for the pounds of food recovered; and will need to internally staff all SB 1383 Food Recovery accounting, reporting, education, and outreach without the expertise of the Food Bank and other jurisdictions.

ATTACHMENTS AND/OR REFERENCES:
1) Draft Memorandum of Understanding for Edible Food Recovery Services

1 MEMORANDUM OF UNDERSTANDING

SANTA CRUZ COUNTYWIDE EDIBLE FOOD RECOVERY SERVICE AGREEMENT This Memorandum of Understanding (MOU) to support cooperative edible food recovery projects is effective July 1, 2024, made by and between the County of Santa Cruz (“County”) and the Cities of Capitola, Scotts Valley, Santa Cruz, and Watsonville for the purpose of entering into an agreement to fund a countywide Edible Food Recovery Service Agreement (“Service Agreement”) to comply with the requirements of State law under Senate Bill 1383 (SB 1383). The Cities of Capitola, Scotts Valley, Santa Cruz, and Watsonville, and County may be identified individually as “Partner” or collectively as “Partners.”

RECITALS
WHEREAS, SB 1383 requires the Partners to plan for, support, and accurately report countywide edible food recovery capacity; and
WHEREAS, SB 1383 requires the Partners to educate Food Recovery Organizations and Edible Food Generators about edible food recovery requirements and to annually collect and report information to CalRecycle; and
WHEREAS, the Partners have a mutual interest in the efficient countywide implementation of edible food recovery programs to meet SB 1383 ensure adequate food recovery capacity; and WHEREAS, the Partners have each received SB 1383 Local Assistance Grant funds from CalRecycle to support the implementation of SB 1383 within their local jurisdictions; and WHEREAS, CalRecycle SB 1383 Local Assistance Grant fund reporting requires a Service Agreement with the Service Agreement contractor (“Contractor”) and a Memorandum of Understanding between the Partners to certify valid expenses; and WHEREAS, the Partners have determined that there will be mutual benefits to cooperatively engaging in a Service Agreement to hire a Contractor and share costs to support cooperative SB 1383 programs; and
WHEREAS, the Partners have agreed to support the Edible Food Recovery Service Agreement by contributing a portion of their SB 1383 CalRecycle Local Assistance Grant to the County, as lead jurisdiction, according to their population based on CalRecycle’s jurisdictional procurement targets; and
WHEREAS, the Partners wish to make clear their respective roles and responsibilities relating to the Service Agreement.

AGREEMENT
NOW THEREFORE, the Partners incorporate the above Recitals and agree as follows:

Attachment 1

2 1. The County of Santa Cruz will act as the lead jurisdiction on behalf of the Partners and hold the Service Agreement with the Contractor selected by the County of Santa Cruz. The Contractor will be selected in consultation with and written approval from all Partners.

2. The Partners will contribute to a not-to-exceed cost of $250,000 for a two-year Service Agreement, to retain said Contractor based on the funding commitments shown in Table 1, which are reflective of each jurisdiction’s relative population as calculated based on CalRecycle’s SB 1383 jurisdictional procurement targets. The surplus of $11,115 includes grant funds committed to purchase and pay set up fees for the countywide Careit App subscription over the two-year SB 1383 Local Assistance Grant cycle (FY 2025-FY 2026).

Table 1: Cost Sharing by Population
Based on CalRecycle’s Jurisdictional Procurement Targets Jurisdiction Cost Share (over two years) Percentage Share Capitola $10,091 3.86%
Santa Cruz $56,156 21.51%
Scotts Valley $11,755 4.50%
Watsonville $51,366 19.67%
Unincorporated County $131,747 50.46%
Total $261,115 100.00%

3. The Partners agree this cost allocation set forth in Table 1 will only be used for the purposes of distributing the costs outlined in this Memorandum of Understanding, including the Service Agreement Scope of Work (“Scope”) outlined in Attachment A and purchase and set up fees for the countywide Careit App subscription over the FY 2024- FY 2026 SB 1383 . This allocation will not be used as a precedent, or to bind any of the Partners in any way, in cost sharing arrangements for any future cooperative waste management activities.

4. The Partners developed the Scope to increase countywide program consistency to benefit regulated businesses and food recovery organizations operating in various jurisdictions within Santa Cruz County and to reduce program costs for the individual jurisdictions by developing shared SB 1383 program components and implementation materials:

5. The County of Santa Cruz, Recycling and Solid Waste Services Section will be the primary entity responsible for the administrative management of the Service Agreement to oversee deliverables, approve invoices and provide billing information to partner jurisdictions.

6. The County of Santa Cruz will provide regular written reports to each Partner, at least quarterly, through billing and email updates to ensure compliance with the Scope. Any Partner may request specific information from County related to this MOU and the Service Agreement or a meeting with the County to discuss the Scope or any related deliverable under the SB 1383 Edible Food Recovery Service Agreement.

Attachment 1

3 7. Recordkeeping and Audit.

7.1 The County must keep accurate records relating to the Service Agreement in a manner consistent with applicable state and/or federal laws and regulations.

7.2 Any and all records pertaining to the Service Agreement shall be readily available for examination and audit by any Partner. All such records shall be maintained until audits and examinations are completed and resolved, or for a period of three (3) years after the termination of this MOU, whichever is sooner.

8. Insurance and Indemnification.

8.1 Each party (“Indemnitor”) to this MOU agrees to defend, indemnify, and hold harmless the other parties to this MOU, and the other parties’ respective officials, officers, employees, and volunteers (“Indemnitees”) from any claims, demands, damages, and liability of any kind or nature, including attorneys’ fees and costs, but only in proportion to and to the extent that any such liability imposed on the Indemnitees is proximately due to the negligent acts or omissions of the Indemnitor, its officials, officers, employees, volunteers, invitees, or others under Indemnitor’s control or authority relating to this MOU.

8.2 Each Partner represents and warrants that it is insured to honor its respective indemnification obligations provided herein and that the indemnifying Partner’s insurance coverage shall be the primary insurance as respects the other Partners.

9. Amendment. This MOU may not be amended or modified in any respect except by written instrument duly executed by each Partner.

10. No Agency. It is understood that each of the Partners operate independently from one another and cannot enter into agreements or contracts as agents of the other. It is expressly understood and agreed that none of the Parties are in any way or for any purpose an agent of each other related to this MOU or the Service Agreement.

11. No Assignment. No party to this MOU can assign any portion of this MOU without the other Partners' prior written consent, unless otherwise stated herein.

12. Entire Agreement. This MOU contains the entire agreement of the Partners and each Partner acknowledges there were no other oral agreements, representations, warranties or statements of fact made prior to or at the time of the signing of this MOU.

13. Severability. If any term or provision of this MOU is declared invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect.

Attachment 1

4 14. Waiver. Waiver by any Partner of any portion of this MOU shall not constitute a waiver of the same or any other portion hereof.

15. Governing Law. This MOU shall be governed by and interpreted in accordance with California law.

16. Notices. If either party shall desire or is required to give notice to the other such notice shall be given in writing, via email:

To COUNTY:
[name/title]
[address]
[phone]
[email]
To CAPITOLA:
[name/title]
[address]
[phone]
[email]
To SANTA CRUZ:
[name/title]
[address]
[phone]
[email]
To SCOTTS VALLEY:
[name/title]
[address]
[phone]
[email]
To WATSONVILLE:
[name/title]
[address]
[phone]
[email]
Changes to the above information shall be given to the other party in writing ten (10) business days before the change is effective.

17. Counterparts. This MOU may be executed in counterparts, and when each party has signed and delivered at least one such counterpart, each one shall be deemed an original and, when taken together with other signed counterparts, shall constitute one agreement, which shall be binding Attachment 1

on and effective regarding all parties. Facsimile and scanned signatures have the same force and effect as original signatures.

IN WITNESS WHEREOF, the parties execute this MOU as of the dates below:

COUNTY OF SANTA CRUZ Approved as to form:

By: __________________________________________ __________________________________________ County Counsel
Its: __________________________________________
Date: __________________________________________
CITY OF CAPITOLA Approved as to form:

By: __________________________________________ __________________________________________ City Attorney
Its: __________________________________________
Date: __________________________________________
CITY OF SANTA CRUZ Approved as to form:

By: __________________________________________ __________________________________________ City Attorney
Its: __________________________________________
Date: __________________________________________
CITY OF SCOTTS VALLEY Approved as to form:

By: __________________________________________ __________________________________________ Attachment 1

City Attorney
Its: __________________________________________
Date: __________________________________________
CITY OF WATSONVILLE Approved as to form:

By: __________________________________________ __________________________________________ Its: __________________________________________
Date: __________________________________________
Attachment 1

Attachment A
Scope of Work
A. Food Recovery Capacity Planning
• Survey known Food Recovery Organizations (FROs) operating within Santa Cruz County
• Develop survey in collaboration with local jurisdictions to include at minimum:
• Current collection capacity (by weight/meals).
• Current distribution capacity (by weight/meals).
 Desire to expand food recovery and distribution capacity (yes/no).  Equipment/personnel needed to maintain/expand services.  Work with Santa Cruz County local jurisdictions to complete other components of SB 1383 Food Recovery Capacity Planning Report.  Provide survey data and brief summary report to Santa Cruz County by July 24, 2024.

B. Food Recovery Information Collection:
• Name, Location, and Contact Information for all known food recovery. organizations and services operating within Santa Cruz County.  Annual amount of food collected from Food Generators by donor location/jurisdiction
 Annual food recovery capacity (if greater than annual amount of food collected).
 Annual amount of food delivered to food recipients by local jurisdiction. • Maintain Accurate Edible Food Recovery Agreement Records with Tier 1 and Tier 2 Food Generators to document SB 1383 local contract compliance. • Name, Location, and Contact Information for Tier 1 and Tier 2 Food Generators.  Onboarding and coordination of Tier 1 and Tier 2 Food Generators • Work with local jurisdictions to identify and onboard new Food Generators.
• Meet with SB 1383 food donors to increase food recovery opportunities.

C. Annual CalRecycle Food Recovery Data Report to each of five (5) local jurisdictions within the county
• Provide brief edible food recovery report to each jurisdiction for each calendar year by June 15 for submission by local jurisdictions as part of CalRecycle’s Electronic Annual Report (EAR) including:
 Pounds of estimated or weighed recovered food for the preceding calendar year.
 Help jurisdiction to clarify list of and quantify total of all Tier 1 & 2 Food Generators.
 Support the identification and quantity of Food Recovery Organizations and Services located within each jurisdiction.
 Report number of food recovery education notices print, electronic, direct contact, and others distributed by CONTRACTOR to FROs and Tier 1 & 2 Food Generators for the calendar year.
 Support local jurisdictions to clarify quantity and location of food recovery violations within the year by Tier 1 & 2 Food Generators, FROs, and Food Recovery Services.

Attachment 1

 Report numbers of complaints and follow up at Food Recovery Organizations and Services, Tier 1 & 2 Food Generators.  Deliver brief edible food recovery report to lead contact at each of the five (5) local jurisdictions.

D. Support Food Recovery Organization Collection and Record Keeping:
• Provide record keeping training to Food Recovery Organizations.  Provide scales to record pounds of donated food.
 Provide temperature regulating equipment to hold food at temperature during transit.

E. Prepared Food Handling Methods:
• Work with Food Recovery Organizations to build capacity for Tier 2 food recovery:
 Establish edible food quality acceptance standards and empower edible Food Recovery Organizations to accept or reject prepared edible food based on these standards.
 Collaborate with County Environmental Health or other food safety lead agency/ies to develop accepted best practices in safe food handling. • Prepare/distribute bilingual (Spanish/English) food safety training materials (available on website and printed)
 Prepare and present in-person bilingual (Spanish/English) food safety training for FROs and/or Tier 1 & 2 Food Generators (twice per year as needed)
F. Prepare bilingual (Spanish/English) SB 1383 educational outreach materials. • Food Recovery Organizations and services outreach
 SB 1383 food recovery reporting when contracts are held directly with Food Generators.
• School education and outreach
 Food donation Tier 2 requirements
• Contract and record keeping responsibilities.
• Food Generating Business education and outreach.
 SB1383 donation requirements
• Donate maximum amount of edible food
• No intentional edible food spoilage
o Good Samaritan Act protections
G. Implement Countywide Use of Edible Food Recovery Software • Assist with implementation of “Careit App” to simplify SB 1383 record keeping and enhance communications between edible Food Generators, Food Recovery Organizations, and local jurisdictions.
o Introduce app to Food Generators and Food Recovery Organizations during outreach, training, education, and reporting tasks.

Attachment 1

Reso No. (CM)
Meeting Date: 062524 SWZ ______ TV ______ PWU ______
1 RESOLUTION NO. __________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WATSONVILLE

APPROVING MEMORANDUM OF UNDERSTANDING BETWEEN THE

COUNTY OF SANTA CRUZ AND THE CITIES OF CAPITOLA, SCOTTS

VALLEY, SANTA CRUZ, AND WATSONVILLE FOR EDIBLE FOOD
RECOVERY SERVICES REQUIRED BY SB 1383; AND AUTHORIZING

INTERIM CITY MANAGER TO EXECUTE SAME, IN A FORM APPROVED BY THE CITY ATTORNEY (FUNDED FROM CALRECYCLE SB 1383 GRANT FUND)
WHEREAS, an Edible Food Recovery Program is required of each jurisdiction in California to track edible food that would otherwise go to waste and redistribute it to feed people in need; and
WHEREAS, the County of Santa Cruz solicited Request for Proposals and selected the Second Harvest Food Bank of Santa Cruz County as the eligible provider for Edible Food Recovery Services for all collaborating jurisdictions of Santa Cruz County; and
WHEREAS, the County of Santa Cruz is the state appointed lead agency on SB 1383 Edible Food Recovery Services required of each Santa Cruz County jurisdiction; and WHEREAS, the cities will share the costs of the contract based on their percentage of population according to the state Department of Finance; and WHEREAS, the City of Watsonville’s share will be $51,366 which will be funded from a CalRecycle SB1383 grant.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. Adopting a Resolution approving a Memorandum of Understanding with the County of Santa Cruz does not meet CEQA's definition of a “project,” because the action

Reso No. (CM)
Meeting Date: 062524 2
does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

2. That the Council hereby approves the Memorandum of Understanding between the County of Santa Cruz and the cities of Capitola, Scotts Valley, Santa Cruz and Watsonville for the Edible Food Recovery Support Services.

3. That the Interim City Manager is hereby authorized and directed to execute said Memorandum of Understanding for and on behalf of the City of Watsonville, in a form approved by the City Attorney.

4. The City Clerk is hereby authorized and directed to attach to this resolution, a copy of the Memorandum of Understanding between the County of Santa Cruz and the Cities of Capitola, Scotts Valley, Santa Cruz and Watsonville for the Edible Food Recovery Support Services.
********************************

6/20/2024 2:24:41 PM
C:\Program Files\eSCRIBE\TEMP\14243879939\14243879939,,,Report - Lease Specialized Helicopters .docx Agenda Report
MEETING DATE: Tuesday, June 25, 2024
TO: City Council
FROM: AIRPORT DIRECTOR WILLIAMS

ADMINISTRATIVE ANALYST AGUADO
SUBJECT: APPROVAL OF FOUR-YEAR LEASE OF AIRPORT PROPERTY AT 140 AND 150 AVIATION WAY TO SPECIALIZED
HELICOPTERS, INC.

RECOMMENDED ACTION:

It is recommended that the City Council approve a lease of an airport property to Specialized Helicopters, Inc., a California corporation.

BACKGROUND:

Specialized Helicopters, Inc. is a California corporation formed in 2006 by Christopher Gularte to operate a Specialized Aviation Service Organization (SASO). A SASO is a single-service provider or special fixed-base operator performing less than full aviationrelated services.

DISCUSSION:

The Airport has negotiated with Specialized Helicopters, Inc. and reached agreement on lease terms for an aggregate amount of building space of twenty-two thousand three hundred forty-nine (22,349) square feet, an aggregate amount of ramp space of sixty-six thousand seven hundred square feet of ramp space, six (6) aircraft tie-down spaces, and 16 parking spaces, located at 140 and 150 Aviation Way. The initial monthly lease rates are $0.75 per square foot for the building space, $0.10 per square foot for undesignated ramp space, $0.0125 per square foot for designated ramp space, resulting in a total monthly rent of $18,163.75 with standard CPI adjustments over the initial four-year term, as noted in the attached lease document.

STRATEGIC PLAN:
4-Economic Development
FINANCIAL IMPACT:

The lease rate will generate approximately $217,965.00 in annual revenue adjusted annually by CPI.

6/20/2024 2:24:41 PM
C:\Program Files\eSCRIBE\TEMP\14243879939\14243879939,,,Report - Lease Specialized Helicopters .docx ALTERNATIVE ACTION:

Alternatives include not approving the initial lease resulting in a loss of approximately $217,965.00 in annual lease revenue.

ATTACHMENTS AND/OR REFERENCES (If any):

None.

1 Reso No. ______ (CM)
Meeting Date: 0622524 SWZ ______ TV ______ Airport ______ RESOLUTION NO. _________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING A FOUR-YEAR LEASE AGREEMENT

BETWEEN THE CITY OF WATSONVILLE AND SPECIALIZED
HELICOPTERS, INC. FOR THE USE OF CITY OWNED PROPERTY
LOCATED AT 140 AND 150 AVIATION WAY, WATSONVILLE,
CALIFORNIA, COMMENCING ON JULY 1, 2024, AND ENDING ON JUNE 30, 2028; AND AUTHORIZING AND DIRECTING THE CITY MANAGER

TO EXECUTE SAME

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. Adopting a Resolution approving a Lease with Specialized Helicopters, Inc., a corporation, does not meet CEQA’s definition of a “project”, because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

2. That the four-year Lease, dated as of July 1, 2024, between the City of Watsonville and Specialized Helicopters, Inc, for the use of City-owned property located at 140 and 150 Aviation Way, Watsonville, commencing on July 1, 2024, and ending on June 30, 2028, a copy of which Lease is attached hereto and incorporated herein by this reference, is hereby approved.

3. That the City Manager be and is hereby authorized and directed to execute such Lease, with any non-substantive changes approved by the City Manager and City Attorney, for and on behalf of the City of Watsonville. ******************************

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LEASE BETWEEN CITY OF WATSONVILLE AND SPECIALIZED HELICOPTERS, INC.

THIS LEASE, “Lease”, is made and entered into to be effective the first day of June, 2024 by and between the CITY OF WATSONVILLE, a municipal corporation, hereafter called “City”, and SPECIALIZED HELICOPTERS, INC., a California corporation, hereafter called “Tenant”.

THE PARTIES AGREE AS FOLLOWS:

1. Premises.
(a) City does hereby rent and Tenant does hereby hire and take from City a portion of that certain real property and improvements, commonly known and referred to as 140 Aviation Way, Watsonville, California (“140 Aviation Way Space”), consisting of an approximately 6,727 square feet portion of building space and approximately 2,950 square feet of ramp space, two (2) aircraft tie-down spaces, and five (5) vehicle parking spaces; and 150 Aviation Way, Watsonville, California (“150 Aviation Way Space”), consisting of an approximately 15,622 square feet of building space, 3,750 square feet of ramp space, 60,000 square feet of designated ramp space, four (4) aircraft tie-down spaces (marked nos. 8-11), and eleven (11) vehicle parking spaces. 140 Aviation Way Space and 150 Aviation Way Space are referred to herein, collectively, as the “Premises,” and are depicted with greater specificity on Exhibit “A,” attached hereto and incorporated herein by this reference.
(b) At any time during the Lease Term in the event adjacent space becomes available and at the sole discretion of the City, Tenant may request to lease such space as expansion space under this Lease at a rent per square foot not to exceed 120% of then current rent under this Lease.

2. Term and Rent
The term of this Lease shall be four (4) years, commencing July 1, 2024, and expiring on June 30, 2028, hereafter “Lease Term”, at an agreed monthly rent of EIGHTEEN THOUSAND ONE HUNDRED SIXTY-THREE AND 75/100 DOLLARS ($18,163.75), consisting of approximately $0.75 per square foot per month for the building space, approximately $0.10 per square foot per month for undesignated ramp space, and approximately $0.0125 per square foot of designated ramp space. There is no additional rent charged for the sixteen (16) vehicle parking spaces. Tenant and City agree to this monthly rent amount without regard to whether per square foot rent is more or less than the prescribed amounts above (i.e. a rounding error).

The rent shall be adjusted annually, every July 1sthbeginning during the second year of the lease and each July 1st thereafter using the rate of April to April change in the Consumer Price Index (CPI) for All Urban Consumers San Francisco-Oakland-San Jose, California. In no event will the annual rental increase be more than seven percent (7%) due to increases in the CPI.

If on any rental adjustment date there shall not exist a CPI in the same format as recited herein, the parties shall substitute the Consumer Price Index for all Urban Consumers provided DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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such index has been so revised or changed in such a way as to affect the direct comparability of such revised or changed index published by the Bureau of Labor Statistics or similar or successor governmental agency as may then be in existence and most nearly equivalent thereto (i.e.: the Wholesale Price Index). If the parties are unable to agree on a successor index in the event the aforesaid index is no longer reporting, then the parties shall refer the choice of the successor index to arbitration in accordance with rules of the American Arbitration Association. Rent is due and shall be paid in advance on the 1st day of each and every month during the term of this Lease, commencing June 1, 2024. Rent not received by the tenth (10th) of the month shall be assessed a ten percent (10%) late payment penalty.

Pursuant to Airport Policy, approved Tenant shall be eligible for a credit against rent in in subsequent leases in an amount of up to fifty percent (50%) of the total documented cost of Tenant constructed tenant improvements not to exceed two (2) months’ rent.

3. Use.

The Premises shall be used to engage in (a) operating a Specialized Aviation Service Organization (SASO) pursuant to Section 3 of the City’s published Airport Minimum Commercial Standards, and (b) any and all operations, events or other group activities, subject to the City’s published Airport regulations, the City of Watsonville Municipal Code, and the City’s published Airport Minimum Commercial Standards.

4. Prohibited Uses.

The leased Premises shall not be used for any other use not expressly allowed in Section 3 of this Lease.

5. Improvements to Premises.

If any improvements are proposed by the Tenant, Tenant shall submit a written description of the proposal to the Airport Director together with two sketches drawn to scale. The Airport Director will review the proposal and provide written comments with a recommendation and forward the same to the City Manager for review.

6. Conditions of Construction.

Before construction is commenced on the Premises, and before any building materials have been delivered to the Premises by Tenant or under Tenant’s authority, Tenant shall comply with all the following conditions or procure Landlord’s written waiver of the condition or conditions specified in the waiver: plans and specifications, and four (4) copies of site plan. City shall not unreasonably disapprove preliminary plans and specifications. (a) Notify City of Tenant’s intention to commence the work of improvement at least ten (10) days before commencement of any such work or delivery of any materials. City shall have the right to post and maintain on the Premises any notices of non-responsibility provided for under applicable law.

DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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(b) Furnish City with a true copy of Tenant’s contract with the general contractor and with evidence of the general contractor’s financial condition for City’s approval.

The contact shall give City the right but not the obligation to assume Tenant’s obligations and rights under that contract if Tenant should default. (c) Tenant shall comply with all applicable codes, ordinances, or regulations, and requirements for permits and approvals, including, but not limited to or restricted to a grading permit, building permit, zoning and planning requirements, and approvals from various governmental agencies and bodies having jurisdiction. (d) Tenant shall require from the contractor: (i) certificates of insurance evidencing coverage for “Builder’s risk”, (ii) evidence of Worker’s Compensation Insurance covering all persons employed in connection with the work and with respect to whom death or bodily injury claims could be asserted against Landlord or the Premises, and (iii) evidence that contractor has paid or caused to be paid all premiums for the coverage described in this sub- paragraph and premiums sufficient to assure maintenance of all insurance during the anticipated course of the work.

7. New Construction Completion Date.

Once work has begun on one area, Tenant shall with reasonable diligence prosecute all construction of improvements for completion and ready for use; provided however, that the time for completion shall be extended for as long as Tenant shall be prevented from completing the construction by delays beyond Tenant’s control; but failure, regardless of cause to commence construction within two (2) weeks following execution of this Lease, at City’s election exercised by five (5) days written notice, shall terminate this Lease.

Notwithstanding the preceding paragraph, Tenant shall prosecute the construction of any initial improvements commenced within thirty (30) days of the full execution of this Lease for completion on or before July 31, 2024.

8. Protection of City against Cost or Claim.

Tenant shall pay or cause to be paid the total cost and expense of all works of improvements, as that phrase is defined in the mechanic’s lien law in effect at the place of construction when the work begins. No such payment shall be construed as rent. Tenant shall not suffer or permit to be enforced against the Premises or any part of it any mechanic’s, materiel man’s, contractor’s, or sub-contractor’s lien arising from any work of improvement, however it may arise. However, Tenant may in good faith and at Tenant’s own expense contest the validity of any such asserted lien, claim, or demand, provided Tenant has furnished the bond required in California Civil Code Section 8424. Tenant shall defend and indemnify City against all liability and loss of any type arising out of work performed on the Premises by Tenant, together with reasonable attorney’s fees and all costs and expenses incurred by City in negotiating, settling, defending, or otherwise protecting against such claims.

9. Notice of Completion.

DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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On completion of the work of improvement, Tenant shall file or cause to be filed a notice of completion. Tenant hereby appoints City as Tenant’s attorney in fact to file the notice of completion on Tenant’s failure.

10. Ownership of Improvements During Term.

All buildings and improvements constructed on the Premises by Tenant as permitted or required by this Lease shall, during this Lease Term, be and remain the property of Tenant; provided, however, that Tenant shall have no right to waste, destroy, demolish or remove the improvements except as expressly provided in this Lease; and provided, further, that Tenant’s rights and powers with respect to the improvements are subject to the terms and limitations of this Lease. City and Tenant covenant for themselves, and all persons claiming under or through them, that the improvements are real property. All buildings and improvements existing on the Premises, as of the date of this Lease are City’s property, free of all claims to or against them by Tenant or any third person.

11. Ownership of Improvements at Termination.

Except as specified in Section 13 of this Lease, all buildings and improvements placed or constructed on said Premises as part of said project, as well as any and all other alterations, additions, improvements, and fixtures, except furniture and trade fixtures, made or placed in or on said Premises by Tenant or any other person, shall be considered part of the real property of said Premises and on expiration or sooner termination of this Lease, or the exercised option, shall remain on said Premises and become the property of City free and clear of any liens or encumbrances whatsoever and without the payment of any consideration therefore.

12. Removal of Fixtures.

At the normal expiration of the Lease Term, provided Tenant is not in default, Tenant shall have the right to remove any and all trade fixtures, provided all resultant injuries to the Premises and remaining improvements, except for ordinary wear and tear, are completely remedied and Tenant complies with City’s reasonable requirements respecting the resultant appearance. Any such items not so removed within thirty (30) days of termination shall become the property of City free and clear of any liens or encumbrances whatsoever and without payment of consideration therefore.

13. No Subordination.

City shall not subordinate the fee title to the Premises to any security transaction to enable Tenant to obtain financing for the new improvements. The Premises are now and shall remain free and clear of any liens, encumbrances or other Tenant obligations to third person.

14. Utilities.

Tenant is responsible for, and shall pay for, all gas, heat, light, power, telephone service, and all other services supplied to the Premises, including installation and connection of such DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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services from the main source thereof, including City’s meters, and hold harmless the City therefore.

15. Possessory Interest Tax.

Pursuant to Section 107.6 of the State Revenue and Taxation Code the City hereby gives notice that the property interest to Tenant under this Lease may be subject to property taxation as a possessory interest and the Tenant acknowledges that it shall be subject to payment of property tax if a possessory interest tax is levied on the property interest.

16. Alterations and Additions.

Except as otherwise provided by Section 6 of this Lease, Tenant shall not make any alterations or improvements to or erect any additional structures on the Premises without prior written consent of City. Any alterations or additions approved by City shall be constructed at the sole expense of Tenant.

17. Compliance with rules, regulations and laws.

In the use and occupancy of the Premises and in the conduct of all business, activities and transactions thereon, Tenant will comply with all applicable laws, ordinances, rules, regulations and orders of the City or any governmental subdivision, body or authority, including all federal, state and municipal laws and ordinances and all rules and regulations of the Federal Aviation Agency and the City of Watsonville rules and regulations concerning the operations of the Watsonville Municipal Airport and environs.

18. Storage of Materials, Equipment.

No materials, supplies, products, equipment or other personal property shall be stored or permitted to remain on any portion of the Leased Premises outside of City approved buildings or structures without City’s prior written consent. Tenant shall store personal property items, supplies, materials and combustibles inside the buildings in a safe, neat and sanitary manner.

Tenant shall provide or cause to be provided adequate enclosures, screened areas and/or suitable covered metal receptacles within the Leased Premises for the short-term accumulation and storage of solid waste, such as rubbish, trash, garbage, sludge, discarded machinery or parts and any other solid industrial wastes. Such enclosures and/or screened areas shall be designed in such a way as to prevent, odors, fumes, attraction of pests, and dispersal of wastes due to wind or water runoff, and shall be serviced regularly by qualified waste removal and disposal services.

19. Environmental Considerations.
(a) Tenant shall not commit, or suffer to be committed, any waste upon the Leased Premises, or any nuisance or other act or thing, which may disturb the quiet enjoyment of the use of Watsonville Airport or surrounding property. Tenant shall DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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ensure that no untreated liquid waste from any type of operation will enter the airport storm drainage system or sanitary system.
(b) Tenant shall at all times comply with all applicable laws, rules and regulations of federal, state or local governmental agencies, including, but not limited to, the City of Watsonville, Santa Cruz County, and responsible Regional Air and Water Quality Control Boards. Tenant shall not permit any activity which directly or indirectly produces objectionable or unlawful amounts or levels of air pollution (gases, particulate matter, odors, fumes, smoke, or dust), water pollution, noise, glare, heat emissions, electronic or radio interference with navigational and communication facilities for the operation of the Airport and for its use by aircraft, trash or refuse accumulation, vibration, prop-wash, or jet blast, or which is hazardous or dangerous by reason or risk of explosion, fire or harmful emission. Any waste oil storage tanks shall be in approved containers and in accordance with environmental and fire protection regulations. (c) Hazardous Substances. The term “Hazardous Materials” shall mean any toxic substance, hazardous substance, hazardous material, or hazardous waste, pollutant or contaminant which is or during the term of this Lease becomes regulated by any local governmental authority, the State of California, or the United States government, including, but not limited to any, material or substance which is defined as a “hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste” under local, State, or federal law and as determined by the Fire Department. Except in strict compliance with all government approvals, applicable laws and regulations pertaining to Hazardous Materials, and in accordance with the provisions of this Lease, Tenant shall not cause or permit the presence, use, handling, generation, emission, release, discharge, storage, or disposal of any Hazardous Materials on, under, in or about the Premises, excepting the presence of any Hazardous Materials on, under, in or about the Premises as of the date of this Lease or the migration to or seepage of Hazardous Materials from surrounding or adjacent property; and shall not cause or permit the transportation of any such materials.

20. Hazardous Materials to or from the Premises.
(a) Tenant shall at all times notify City of any Hazardous Materials present, used, generated, handled, emitted, released, discharged, stored or disposed of on or from the Premises. Notwithstanding the foregoing, notice shall not be required for Hazardous Materials present on the Premises in reasonable quantities which are commonly used in machining facilities including, but not limited to, cleaning materials, motor oils, and hydraulic fluids provided such Hazardous Materials are used and disposed of in accordance with law, or for materials which are first designated as Hazardous Materials after expiration of the term of this Lease.

Tenant shall also institute operating procedures designed to handle Hazardous Materials consistent with prudent industry practice, including evidence of a licensed agent removal service. City shall have the right to inspect the Premises on 24-hours prior notice for compliance with the provisions of this Section.

DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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(b) Indemnification by City. City shall indemnify, protect, defend, and hold harmless Tenant and Tenant’s successors and assigns, officers, directors, employees, agents, subtenants and assignees, from and against all liability, and foreseeable consequential damages, penalties, expenses and costs of any required or necessary remediation, repair, removal, clean up or detoxification, of the Premises and surrounding properties, and from and against the preparation of any clean up, remediation, closure or other required plans, whether such action is required or necessary during or following the term of this Lease, to the full extent that the same is attributable to the use, handling, generation, emission, release, storage, discharge or disposal of hazardous material by City, its agents, employees, and contractors.

21. Indemnification by Tenant.

Tenant shall indemnify, protect, defend, and hold harmless City and City’s successors and assigns, officers, directors, employees, agents, subtenants and assignees, from and against all liability, and foreseeable consequential damages, penalties, expenses and costs of any required or necessary remediation, repair, removal, clean up or detoxification, of the Premises and surrounding properties, and from and against the preparation of any clean up, remediation, closure or other required plans, whether such action is required or necessary during or following the term of this Lease, to the full extent that the same is attributable to the use, handling, generation, emission, release, storage, discharge or disposal of hazardous material by Tenant, its agents, employees, and contractors.
(a) Indemnification Survives Lease. The indemnification provisions of the foregoing shall survive the termination of this Lease. No Warranty of Current Condition.

City makes no representation or warranty, express or implied, as to the physical condition of the Premises, including, but not limited to the condition of the exterior or interior of the structure, ground, soil, surface water or groundwater. the geology, the presence of known and unknown faults, the presence of any Hazardous Materials or other kinds of contamination or pollutants of any kind in the air, soil, groundwater or surface water, or the suitability of the Premises for the construction and use of the improvements thereon.

22. Repairs.

City shall maintain the exterior of the Premises, including outside walls and roof, heating, electrical systems (excluding internal lights and fixtures), except in the event that repairs or replacements are necessary thereto because of negligence or misconduct of the Tenant or if Tenant fails to notify City in writing within three (3) days of the need to repair.

Tenant shall maintain Premises, including, but not limited to, interior plumbing (i.e., sanitary sewer obstructions), interior walls, interior doors, supporting hardware fixtures, alarms, internal lights and fixtures, etc., in as good order, condition and repair as they shall be upon the commencement of the term of this Lease. Any addition to the electrical system installed by Tenant shall remain the responsibility of the Tenant. Tenant shall keep drainage ditches and gutters free of debris.

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23. Freedom from Liens.

Tenant shall not create or permit to be created or to remain, and covenants to remove and discharge promptly, at its cost and expense, all liens, claims, stop notices, encumbrances and charges upon the Premises, or Tenant’s leasehold interest therein which arise out of the use or occupancy of the Premises by Tenant or anyone using or occupying the Premises with the consent or sufferance of Tenant, or by reason of labor or materials furnished or claimed to have been furnished to Tenant for any construction, alteration, addition or repair of any part of the Premises. Tenant shall give City fifteen (15) days’ notice prior to commencing any work on the Premises, so that City shall have a reasonable time within which to post notices of nonresponsibility.

24. Holding Over.

If Tenant shall hold possession of the Premises after the term of this Lease, Tenant shall become a Tenant from month to month at the rental and upon the terms herein specified and shall continue to be such tenant until the tenancy shall be terminated by City on thirty (30) days’ notice or until Tenant shall have given at least thirty (30) days’ notice of Tenant’s intention to terminate the tenancy. The provisions of this Lease, so far as applicable, shall govern such tenancy, except that the monthly rent for such tenancy shall be the same as the last full month’s rental rate.

25. Abandonment.

Tenant shall not vacate or abandon the Premises at any time during the term thereof; if Tenant shall abandon, vacate or surrender the Premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Premises shall be deemed to be abandoned and at the option of City shall become City’s property free from all claims of Tenant. In the event Tenant abandons the Premises City shall have the option to terminate this Lease by giving Tenant notice of belief of abandonment pursuant to California Civil Code Section 195 1.3 or City has the remedy described in California Civil Code Section 1951.4, i.e., City may continue the Lease after breach and abandonment and recover rent as it becomes due, if Tenant has the right to sublet or assign, subject to reasonable limitations as provided in paragraph 25.

26. Assignment or Subletting.

Tenant shall not assign or encumber any interest in this Lease or in the Leased Premises, or sublease all or any part of the Premises, or allow any other person or entity to occupy or use all or any part of the Premises, without City’s written consent, and consent to one assignment or sublease shall not be construed as consent to any subsequent assignment or subleasing. If Tenant is a corporation or partnership, any dissolution, merger, consolidation or other reorganization of Tenant or the sale or transfer of controlling percentage of the capital stock of Tenant or the sale of twenty five percent (25%) of the value of the assets of Tenant shall be deemed a voluntary assignment. The phrase “controlling percentage” means the ownership of and the right to vote stock possessing at least twenty five percent (25%) of the total combined voting power of all classes of Tenant’s capital stock issued outstanding and entitled to vote for the election of DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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directors. City shall not unreasonably withhold consent, but City may nevertheless condition consent upon such factors as the identity, reputation, financial worth and stability and operating ability of any proposed assignee or subtenant. Unless prior written consent of City shall have been obtained, any transfer, or attempted assignment or transfer, of this Lease or any interest therein, or any subletting, either by voluntary or involuntary act of Tenant or by operation of law or otherwise, shall at the option of the City terminate this Lease, and any such purported assignment, transfer or subletting without such consent shall be null and void.

27. Assignment.
(1) Tenant shall not have the right to assign this Lease, except by Leasehold mortgage, without the written consent of City, which shall not be unreasonably withheld. If Tenant desires to assign the Lease, Tenant shall comply with the following procedures:
(a) Tenant shall give City at least sixty (60) days prior written notice of its desire to assign the Lease.
(b) Tenant shall simultaneously provide City with the assignee’s name, business organization, financial statement, and other documentation as may be requested by City.
(c) Tenant shall provide City with a true copy of the proposed assignment and the proposed assignee shall, in recordable form, expressly assume all the covenants and conditions of this Lease. (d) Tenant shall provide City with copies of any financial agreements, schedule of payments, mortgage or encumbrance on the Leasehold estate.
(e) Tenant shall pay City at the time the request to assign is submitted, a deposit of Five Thousand Dollars ($5,000.00) to offset City’s expenses, including attorney’s fee, in evaluating and documenting the assignment. City shall charge said deposit at the then current hourly rate for staff time charged to the Airport. Any balance of said deposit shall be refunded to Tenant, and any excess amount charged, excluding said deposit, shall be paid by Tenant. (2) City and Tenant hereby deem it reasonable for the City to refuse to consent to a proposed assignment in the following circumstances:
(a) City may object to any proposed assignment if, in the City’s sole opinion, the proposed assignee is not a qualified assignee in terms of financial strength, business experience or reputation or the ability to operate the fixed base operation and provide the required services in a manner consistent with the purposes for which this Lease was granted.

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(b) City may object on any other reasonable grounds.

The effective date of the assignment shall not occur until sixty (60) days after the Tenant’s notice of the proposed assignment unless, within that time, City gives notice of a valid objection or refusal of consent as set forth in subsection A. (3) hereof. If City gives notice of a valid objection and withholds consent, the Lease will not be assigned.

28. Subletting.

It is understood and agreed that, from time to time, Tenant may request City’s permission to sublet portions of the Premises and City shall not unreasonably withhold consent, provided:
(1) Each sublease made shall be subject and subordinate to the right of the City and the provisions of each sublease shall conform to the provisions of this Lease as far as practicable.
(2) The sublease does not effect an assignment of the Lease as prohibited elsewhere.
(3) Tenant includes the following information with its request to sublease, the name, address, a true copy of the proposed sublease, and appropriate documentation as evidence the subtenant is qualified to conduct business on the Airport and such subtenant will provide the type of development and services required under the provisions of this Lease. (4) Subtenant provides insurance coverage(s) as appropriate, in accordance with Lease provision(s), INSURANCE, the same as if the subtenant were a lessee.

If Tenant is in the default of monetary obligations to City pursuant to this Lease, Tenant immediately and irrevocably assigns to City, as security for Tenant’s obligations under this Lease, all rent from any subletting of all or a part of the Leased Premises as permitted by this Lease, and City, as assignee and as attorney- in-fact for Tenant, or a receiver for Tenant appointed on City’s application, may collect such rent and apply it toward Tenant’s obligations under this Lease; except that, until the occurrence of an act of default by Tenant, Tenant shall have the right to collect such rent. It is understood and agreed by the parties hereto that the above assignment provisions do not apply to heirs by will.

29. LANDLORD’S RECAPTURE RIGHT.

RIGHT OF RECAPTURE
Despite any other provision of this Lease, Tenant shall notify Landlord in writing (Availability Notice) if Tenant wishes to transfer the Premises or any portion thereof (Subject Space). If Tenant does not give Landlord the Availability Notice before delivering a Transfer Notice, the Transfer Notice shall also be the Availability Notice.

Landlord has the option, by written notice to Tenant (Recapture Notice) within thirty (30) days after receiving any Availability Notice, to recapture the Subject Space as DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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described in the next section. A timely Recapture Notice terminates this Lease as to the Subject Space and Tenant’s obligations regarding the remaining term of this Lease (or, at Landlord’s election, for a shorter period specified in the Availability Notice as the term of the Transfer) and as of the date specified in the Availability Notice. The Recapture Notice shall be void, however, if Tenant notifies Landlord, within thirty (30) days after receipt of the Recapture Notice, that Tenant withdraws the Availability Notice or Transfer Notice. If Landlord declines or fails timely to elect to recapture the Subject Space, Landlord shall have no further right under this section to the Subject Space unless it becomes available again after Transfer by Tenant.

CONSEQUENCES OF RECAPTURE
To determine the new Base Rent under this Lease if Landlord recaptures the Subject Space, the original Base Rent under the Lease shall be multiplied by a fraction, the numerator of which is the Rentable Square Feet of the Premises retained by Tenant after Landlord’s recapture and the denominator of which is the total Rentable Square Feet of the Premises before Landlord’s recapture. The Additional Rent, to the extent that it is calculated on the basis of the Rentable Square Feet within the Premises, shall be reduced to reflect Tenant’s proportionate share based on the Rentable Square Feet of the Premises retained by Tenant after Landlord’s recapture. This Lease as so amended shall continue thereafter in full force and effect for the remaining Premises only. Either party may require written confirmation of the amendments to this Lease necessitated by Landlord’s recapture of the Subject Space. If Landlord recaptures the Subject Space, Landlord shall, at Landlord’s sole expense, construct any partitions required to segregate the Subject Space from the space retained by Tenant. Tenant shall, however, pay for painting, covering, or otherwise decorating the surfaces of the partitions facing the remaining Premises retained by Tenant.

If Landlord recaptures the Subject Space, Landlord shall pay Tenant ten percent (10%) of any Transfer Premium received by Landlord.

30. Signs, Posters, Buildings and Towers.

No advertising signs, posters or similar devices shall be erected, displayed or maintained in, on, about or above the Premises or the structures thereon without a sign permit and the written approval of the Airport Manager.

No structures erected on the Premises shall exceed the height limit fixed by any City zoning ordinance or regulations of the Airport or Federal Aviation Authority. Tenant in its operations shall not unreasonably interfere with the property, interests, operations or activities of the City or of other tenants of the City.

31. Taxes.

Tenant will pay all fees, taxes, assessments and licenses levied, imposed or required by any governmental subdivision, body or authority on or in respect to any improvements or property placed on the Premises by Tenant or any person with its permission DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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The use, occupancy or possessory rights of Tenant in the Premises (a) Any business, activity or transaction conducted thereon by Tenant; (b) City license and permits; and
(c) Commercial Operator Permit fee.

32. Waiver of Damages and Indemnification.

City shall not be liable to Tenant for any injury or damage that may result to any person or property by or from any cause whatsoever, except as results from acts of the sole negligence on the part of City, its agents, servants, employees or invitees. Without limiting the generality of the foregoing waiver, it is expressly extended to injury or damage caused by water leakage of any character from the roof(s), wall(s), basement or any part of the property, or caused by gas, oil, electricity or any other cause in or about the Premises or the building(s). Tenant agrees to hold City harmless from, and to defend City against, any and all claims or liability for any death of for injury to any person or damage to any property, whatsoever, occurring in, on or about the Premises.

33. Payment of Rent and Services.

Notwithstanding any other provision of this Lease, all rents shall be paid to City of Watsonville, c/o Finance Department, by delivering or mailing to the address provided in Section

38. 34. Security Deposit.

On execution of this Lease, Tenant shall deposit the sum of EIGHTEEN THOUSAND ONE HUNDRED SIXTY-THREE AND 75/100 DOLLARS ($18,163.75) representing one (1) month’s rent in cash as security for the faithful performance of the terms, covenants and conditions of this Lease.

If Tenant is in default, City can use the security deposit or any portion of it, to cure the default or to compensate City for all damages or loss sustained by City resulting from Tenant’s default if the notice requirements, if applicable, have been observed.

Tenant shall immediately, on demand, pay to City a sum equal to the portion of the security deposit expended or applied by City as provided in this paragraph so as to maintain the security deposit in the sum initially deposited. Upon final accounting by City, any balance of said deposit shall be refunded to Tenant.

35. Hold Harmless.
(a) Tenant shall save, protect, indemnify, and hold harmless City, its elective and appointive boards, commissions, officers, agents, and employees from any and all claims, cost or liability of any kind allegedly suffered, incurred or threatened, including personal injury, death, property damage, inverse condemnation, or any combination of these, foreseeable or DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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unforeseeable, arising directly or indirectly from or connected with any acts performed pursuant to this Lease, or any omission to perform, including, but not limited to, claims, costs or liability resulting from: (I) The conduct, negligent or otherwise, of Tenant, its subtenant(s), assignee(s), or any officer(s), agent(s) or employee(s) of one or more of them; (2) The joint conduct of the City and Tenant, regardless of whether the City is concurrently, active or passively negligent or not negligent at all; or (3) The sole concurrent conduct of any other person or entity.

The above promise and agreement in this section is not conditioned or dependent on whether Tenant or City has prepared, supplied or approved any plan(s) or specification(s) in connection with this Lease, or has insurance or other indemnification covering any of these matters, or that the alleged damage resulted partly from any negligent or willful misconduct of City.
(b) Non-Liability of City for Damages. This Lease is made upon the express condition that City is to be free from all liability and claim for damages by reason of any injury to any person or persons including, Tenant, or property of any kind whatsoever and to whomsoever belonging, including Tenant, from any cause or causes whatsoever while in, upon, or in any way connected with the Premises during the term of this Lease or any extension hereof or any occupancy hereunder, Tenant hereby covenanting and agreeing to indemnify and save harmless City from all liability, loss, cost, attorney’s fees, and obligations on account of or arising out of any such injuries or losses however occurring.

36. Breach.

After service of ten (10) days written notice thereof by City on Tenant any one of the following shall constitute a breach of this Lease by Tenant (a) The appointment a general assignment by Tenant for the benefit of creditors, or of a Receiver to take possession of all or substantially all of the assets of Tenant, or (b) Period of twenty (20) days, or
(c) A default in the performance of any other covenant or condition of this Lease on the part of Tenant to be performed for a period of twenty (20) days

37. Insurance.
(a) During the rental term, Tenant, at Tenant’s sole expense, shall secure and maintain in force such policies of insurance as will protect it from claims for damages or injury resulting from bodily injury, including death, and for the loss or damage to property of others which may arise from operations of this Lease. Such insurance shall contain statements that:
(b) these policies shall also apply to City, as an Additional Named Insured; (i) the insurance afforded by these policies applies severally as to each insured, except that the inclusion of more than one insured shall not operate to increase the limit of the company’s liability, and the inclusion hereunder of any person or organization as an insured shall not affect any right which such person or organization would have as a claimant if not so included; (ii) the insurance shall be primary insurance over any other insurance carried by City, which other insurance shall be DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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considered excess only; (iii) the above policies specifically include coverage indemnifying City as set forth in this Lease; (iv) the policies may not be canceled, nor the coverage reduced until thirty (30) days after a written notice of such cancellation or reduction in coverage is delivered to City at the address contained herein; (v) the insurance companies named herein waive any all rights of subrogation against City. Such liability insurance shall be written with limits of at least Two Million Dollars ($2,000,000.00), combined single limits, and shall be written by companies acceptable to City. The limit of liability insurance coverage shall be adjusted commensurate with inflation and other liability factors upon adoption of resolution of the City Council of City.

Certificates of Insurance evidencing the above obligations shall be delivered to City on prior commencement of operations covered by this agreement.
(c) City, at Tenant’s cost, shall cooperate fully with Tenant to maximize any recovery following an insured casualty. All policies of fire and extended coverage or other casualty insurance required by subparagraphs (e) and (g) below shall provide that proceeds there under shall be paid to City and Tenant as their interests may appear. (d) All policies required to be maintained by Tenant pursuant to the terms of this Lease shall be issued by companies authorized to do business in the State of California with a financial rating of at least “A” in the most recent edition of Best Insurance Reports. Tenant shall pay premiums therefore and shall deliver annually to City Certificates of Insurance that such policies are in effect. If Tenant fails or refuses to procure or maintain the insurance coverage required hereunder, or fails or refuses to furnish City with proof that coverage has been procured and is in full force and paid for, City shall have the right, at City’s election and without notice to Tenant, but without any obligation to do so, to procure and maintain such coverage. Tenant shall reimburse City on demand for any premiums City so pays in connection with such procurement. (e) Fire Insurance: During the Lease Term, Tenant, at Tenant’s sole expense, shall insure for fire and extended coverage risks all buildings, personal property, improvements, and alterations in, on, or about the Leased Premises. Such insurance shall be in an amount not less than eighty percent (80%) of insurable, full replacement cost of such buildings and improvements, and shall include vandalism and malicious mischief endorsements. Said fire insurance policies shall contain loss payable endorsements in favor of the parties as their respective interests may appear hereunder. The CITY OF WATSONVILLE shall be named as additional insured in such policy or policies.
(f) Fire or Casualty:
(1) Destruction of Tenant Owned Building. In the event of extensive damage (greater than fifty percent (50%)) to or destruction of buildings or other improvements on the Leased Premises owned by Tenant as provided in Section 11 of this Lease (“Tenant Improvements”), Tenant shall determine whether to repair or replace the Tenant Improvements. If it is determined to repair or replace the Tenant Improvements, the proceeds of any insurance policy paid on account of such damage or destruction shall be used to defer the cost of repairing or replacing the Tenant Improvements.

Tenant shall complete all repairs within a reasonable time. If it is determined not to repair or replace the Tenant Improvements, Tenant may DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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terminate this Lease upon written notice to City within thirty (30) days of such damage or destruction. If Tenant terminates this Lease pursuant hereto, after deducting any proceeds payable to Tenant’s lender pursuant to the following paragraph, the remaining proceeds of any insurance policy paid on account of such damage or destruction shall be distributed to City and Tenant pursuant to the following formula: City’s share shall be the product of the amount of the remaining proceeds multiplied by a fraction, the numerator which is the number of months since the commencement date of this Lease until the date of the casualty causing such damage or destruction, and the denominator of which is four hundred and twenty (420). Tenant’s share shall be the excess of the remaining proceeds after subtracting the City’s share. In the event of termination of the Lease pursuant to this Section 33 (e) (l), Tenant shall remove the Tenant Improvements and, restore the City owned building to its prior condition at Tenant’s sole cost and expense prior to the date of termination of the Lease.

All fire and extended coverage insurance policies insuring the Tenant Improvements may have a loss payable clause in favor of any lender of Tenant, including, but not limited to, any mortgagee of Tenant, as such lender’s interest may appear.
(2) Destruction of City Owned Premises. If during the term of this Lease the City owned Premises, as provided in Section 11 of this Lease, shall be damaged or destroyed to the extent of fifty percent (50%) of its valuation or at a repair cost estimated by the City Building Official to exceed the sum of Twenty Five Thousand Dollars ($25,000.00) by fire, the elements, or any other cause, then this Lease shall, at City’s option, cease and become null and void from the date of such damage, or destruction, and Tenant shall immediately surrender the entire Premises to City and shall pay rent only to the time of such surrender.

If the City owned Premises shall be damaged by fire, or other cause, so as to be capable of being repaired within a reasonable time, City shall have the option to repair the same and during the time that the repairs are being made, City shall remit to Tenant a just and fair portion of the rent according to the nature of the damage sustained and according to the extent that Tenant is deprived of the use of the City owned Premises.

Should the estimated time to repair damage exceed one hundred twenty (120) days, the Tenant may, at his option, terminate, this Lease. In such event both parties shall be released from further obligations under the terms of this Lease.
(g) Workers’ Compensation: Tenant, at Tenant’s sole expense, must obtain and maintain workers’ compensation insurance covering all its employees, and said insurance must be kept in force during the entire term of this Lease.

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(h) Notice: Each party hereto shall give to the other prompt and timely notice of any claim made or suit instituted coming to its knowledge which in any way directly, contingently or otherwise, affects or might affect either, and both shall have the right to participate in the defense of the same to the extent of its own interest.

38. Litigation Expenses.

If either party shall bring an action against the other by reason of the breach of any covenant, warranty or condition hereof, or otherwise arising out of this Lease, whether for declaratory or other relief, the prevailing party in such suit shall be entitled to its costs of suit and reasonable attorney fees, which shall be payable whether or not such action is prosecuted to judgment. “Prevailing Party” within the meaning of this paragraph shall include without limitation a party who brings an action against the other after the other’s breach or default, if such action is dismissed upon the other’s breach or default, if such action is dismissed upon the other’s payment of the sums allegedly due or performance of the covenant’s allegedly breached, or if the plaintiff obtains substantially the relief sought by it in the action.

39. Surrender of Premises.

Tenant agrees to surrender the Premises and any addition thereto at the termination of the tenancy herein created in the same condition as the Premises were in at the beginning of the tenancy or at the time of completion of the improvements as the case may be, reasonable use and wear thereof and damage by act of God or the elements excepted. The voluntary or other surrender of this Lease by Tenant or a mutual cancellation thereof shall not work a merger, and shall, at the option of City, terminate all or any existing subleases or sub tenancies, or may, at the option of City, operate an assignment to City of any or all such sublease or sub tenancies.

40. Waiver.

Any waiver, expressed or implied, by either party of any breach by the other party of any agreement, term or condition of this Lease shall not be, or be construed to be, a waiver of any subsequent breach of a like or other agreement, term of condition hereof; and the acceptance of rent hereunder shall not be, or be construed to be, a waiver of any breach of any agreement, term or condition of this Lease, except as to the payment of rent so accepted. The rights and remedies of either party under this Lease shall be cumulative and in addition to any and all other rights and remedies which either party has or may have.

41. Quiet Enjoyment.

City covenants and warrants that upon Tenant’s paying the rent and observing and performing all of the terms, covenants, and conditions on Tenant’s part to be observed and performed hereunder, Tenant shall and may peaceably and quietly enjoy the Premises hereby demised, subject nevertheless to the terms and conditions of this Lease.

42. Notices.

All notices, consents, waivers or other communications which this Lease requires or permits either party to give to the other shall be in writing and shall be served personally or DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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delivered by registered or certified mail, return receipt requested, made upon or addressed to the respective parties as follows:

To Landlord: City Clerk
City of Watsonville
275 Main Street, Suite 400
Watsonville, CA 95076
To Tenant: Specialized Helicopters, Inc.
150 Aviation Way
Watsonville, CA 95076
ATTN: Managing Member
or such other address as may be contained in a notice from either party to the other given pursuant to this section. Notice of registered or certified mail shall be deemed to be given fortyeight (48) hours from the time of postmarking if mailed within the United States (excluding Alaska).

43. Recordation.

Neither party, without the consent of the other, shall cause or permit the original nor any copy of this Lease to be recorded, filed or published in any public place.

44. Tenant to Assume All Unknown Expenses.

Notwithstanding the existence of a provision therefore in this Lease, Tenant shall assume, pay and be obligated for any and all costs and expenses toward the operation, protection, maintenance of the Premises, known or unknown, expressed or unexpressed, it being the intention of the parties for this to be a triple net lease to City.

45. Right of City to Enter for Inspection.

City shall have the right to enter upon the Premises at all reasonable times during the term of this Lease for the purpose of making any inspection it may deem expedient to the proper enforcement of this Lease. On a quarterly basis Airport staff will conduct Premises inspection to ensure preventative maintenance issues are identified early. Airport staff will report to Tenant issues requiring attention and if appropriate provide estimated costs for services to address identified maintenance needs.

46. Nondiscrimination.

Tenant hereby covenants that Tenant in its use of the Premises and any and all structures, buildings and improvements located here on shall conduct the fixed base operation or any other activity hereafter authorized by the City on the Premises on a non-exclusive and nondiscriminatory basis in all respects with regard to any person, firm or group of persons. Tenant DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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shall not act in any manner prohibited by Part 15 of the Federal Aviation Regulations and further agrees to be nondiscriminatory also with respect to price or cost of services or goods and in every other fashion.

47. Enforcement of Nondiscrimination Clause.

City shall have the right to take such action against the Tenant as the United States Government may direct or request to enforce the terms of the preceding paragraph on behalf of the United States Government or on behalf of any of its citizens or the City itself.

48. Other Operations.

It is understood that the use authorized at the Watsonville Municipal Airport by this Lease is not given to Tenant exclusively but may be given to any other Tenant at the Airport at the sole discretion of the City.

49. Condemnation.

If the whole or any substantial part of the Premises shall be taken by any paramount public authority under the power of eminent domain then the term of this Lease shall cease as to the part so taken from the date the possession of that part shall be taken for any public purpose, and from that day Tenant shall have the right either to cancel this Lease or to continue in the possession of the remainder of the Premises under the term herein provided, except that the square foot rental shall be reduced in proportion to the amount of the Premises taken. Damages awarded for such taking shall be apportioned between the City and Tenant in a ratio relating to the number of years expired and remaining in the Lease Term between City and Tenant respectively; provided, however, that City shall not be entitled to any portion of the award made for loss of business installation or improvements belonging to Tenant.

50. Nondiscrimination- (FAA, MBE, DB Requirements).

The Tenant, for itself, its heirs, personal representatives, successors in interest, and assigns, as a part of the consideration for this Lease, does hereby covenant and agree as a covenant running with the land that in the event facilities are constructed, maintained, or otherwise operated on the Premises for a purpose for which a Department of Transportation (DOT) program or activity is extended or for another purpose involving the provision of similar services or benefits, the Tenant shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in FederallyAssisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as such Regulations may be amended. The Tenant for itself, its personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby further covenant and agree as a covenant running with the land that: (a) no person on the grounds of race, color or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of facilities; (b) that in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subject to discrimination; (c) that the DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

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Tenant shall use the with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 2 1, Nondiscrimination in Federally-Assisted Programs of the Department of TransportationEffectuation of Title VI of the Civil Rights Act of 1964, and as such Regulations may be amended.

Tenant shall furnish its accommodations and/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustly discriminatory prices for each unit or service; PROVIDED, THAT the Tenant may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers.

Tenant shall insert the provisions of this section in any lease agreement or contract by which Tenant grants a right of privilege to any person, firm or corporation to render accommodations and/or services to the public on the Premises.

51. Remedy for Discrimination.

In the event of breach of any of the nondiscrimination covenants identified in Paragraph 48, City shall have the right to terminate this Lease and to reenter and repossess the Premises and the facilities thereon, and hold the same as if this Lease had never been made or issued. The provision does not become effective until the procedures of 49 CFR Part 21 are followed and completed including expiration of appeal rights.

Non-compliance with paragraph 51 shall constitute a material breach thereof and in the event of such non-compliance City shall have the right to terminate this Lease and the estate hereby created without liability therefore or at the election of the City or the United States either or both Governments shall have the right to judicially enforce paragraph 48.

52. Affirmative Action.

Tenant assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to insure that no personal shall be on the grounds of race, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR, Subpart E. Tenant assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by such subpart. Tenant assures that it will require that its covered by such subpart. Tenant assures that it will require that its covered suborganizations provide assurances to the Tenant that they similarly will undertake affirmative action programs and that they will require assurances from their suborganizations, as provided by 14 CFR Part 152, subpart 2, to the same effect.

53. Subordination to Future FAA Agreements.

This Lease shall subordinate to the provisions and requirements of any existing or future agreement between the City and the United States, relative to the development, operation or maintenance of the Airport.

54. Notice to Federal Aviation Administration.

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Tenant shall comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event of future construction of a building planned for the Premises, or in the event of any planned modification or alteration of any present or future building or structure situated on the Premises.

55. Non-Exclusive Right.

It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308 of the Federal Aviation Act.

56. Terms.

All the provisions of this Lease shall be deemed and construed to be “covenants” as though the words imported such covenants were used in each separate paragraph hereof, except when expressed as conditions.

57. Governing Law.

This Lease shall be construed and enforced in accordance with the laws of the State of California.

58. Binding Effect.

This Lease and the covenants and agreements herein contained shall bind and inure to the benefit of the parties hereof, their heirs, successors, executors, administrators, and when permitted assigns.

59. Time is of the Essence.

Time is of the essence regarding this Lease.

60. Consent.

Whenever consent or approval of either party is required, that part shall not unreasonably withhold such consent or approval.

61. Corporate Status.

If either party is a corporation, that party shall deliver to the other party on execution of this Lease, a certified copy of a resolution of its governing body authorizing the execution of this Lease and naming the officers that are authorized to execute this Lease on behalf of the corporation.

62. Brokers.

Each party represents that it has not had dealings with any real estate broker, finder, or other party, with respect to this Lease in any manner. Each party shall hold harmless the other DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

In Process

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 other party has or purportedly has dealt.

63. Exhibits.

All exhibits referred to are attached to this Lease and incorporated by reference.

64. Entire Agreement.

This Lease contains the entire agreement of the parties, and by signing this Lease they agree that there is no other written or oral agreement, promise, or representation between them respecting the Premises. This Lease shall bind and inure to the benefit and advantage of the assigns of City, and of the heirs, executors, administrators, and when permitted hereunder the assigns of Tenant.

DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

In Process

IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and year first above written.
“City”

CITY OF WATSONVILLE,
a charter city and municipal corporation
By:

Tamara Vides
Interim City Manager
“Tenant”
Specialized Helicopters, Inc,
By:

Chris Gularte
Director of Operations
ATTEST:

By:

Irwin I. Ortiz, City Clerk
APPROVED AS TO FORM:

Samantha Zutler, City Attorney
DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A 6/13/2024 | 3:47 PM PDT

In Process

EXHIBIT “A”
DocuSign Envelope ID: 5B2FF3FA-5826-4321-9FCC-17001169988A

150 AVIATION WAY
140 AVIATION WAY
SPECIALIZED HELICOPTERS EXHIBIT “A”
Premises
Ramp
Space
1 2
4 3
5 Parking

Exhibit B

I I I I
I I \ - I I
.. ,F ;.· I
I "'1: ... I
I I I
I I

1 2 3 4 5 - 7 8 9 10 11
8 -11: Specialized Helicopters
Exhibit C

3353 Peachtree Road NE, Suite 1000
Atlanta, GA 30326
Certificate Number: 8.2
Issued By and Date: JUNE 17, 2024 (SC)
By
Starr 10058 (6/06) (Authorized Representative)
Certificate Holder: CITY OF WATSONVILLE
275 MAIN ST., 4TH FLOOR
WATSONVILLE, CA 95076
Named Insured: SPECIALIZED HELICOPTERS, INC. DBA SPECIALIZED AVIATION 150 AVIATION WAY, SUITE 101
WATSONVILLE, CA 95076
Policy Period: From: MAY 19, 2024 To: MAY 19, 2025
Policy Number: 1000281031-05
Issuing Company: STARR INDEMNITY & LIABILITY COMPANY
This is to certify that the policy(ies) listed herein have been issued providing coverage for the listed insured as further described. This certificate of insurance is not an insurance policy and does not amend, extend, or alter the coverage afforded by the policy(ies) listed herein.

Notwithstanding any requirement, term or condition of any contract, or other document with respect to which this certificate of insurance may be concerned or may pertain, the Insurance afforded by the policy(ies) listed on this certificate is subject to all the terms, exclusions, and conditions of such policy(ies).

Aviation Commercial General Liability Limits of Insurance Each Occurrence Limit $ 2,000,000
Damage to Premises Rented to You Limit $ 100,000 Any one premises Medical Expense Limit $ 5,000 Any one person
Personal & Advertising Injury Aggregate Limit $ 1,000,000 General Aggregate Limit $ 2,000,000
Products/Completed Operations Aggregate Limit $ 1,000,000 Hangarkeepers Limit
Each Aircraft Limit $ 1,000,000
Each Loss Limit $ 1,000,000
Hangarkeeper's Deductible $ 10,000 Each Aircraft

THE CERTIFICATE HOLDER IS INCLUDED AS ADDITIONAL INSURED, BUT SOLELY AS RESPECTS THE OPERATIONS OF THE NAMED INSURED.

INCLUDING THE LOCATION AT 140 AVIATION WAY, WATSONVILLE, CA 95076 THIS CERTIFICATE CANCELS AND SUPERSEDES THE CERTIFICATE NUMBER 8.1

Starr 10803 (8/20)

ADDITIONAL INSURED ENDORSEMENT
This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE FORM

SCHEDULE
Name of Additional Insured Person(s) or Organization(s):

CITY OF WATSONVILLE
275 MAIN ST., 4TH FLOOR
WATSONVILLE, CA 95076
Information required to complete this Schedule, if not shown above, will be shown in the Declarations.

SECTION II - WHO IS AN INSURED is amended to include as an additional Insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused, in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf:

A. In the performance of your ongoing operations; or
B. In connection with your premises owned by or rented to you.

As respects the above additional insured:

1. this insurance does not apply to any claim or liability arising out of the use of any aircraft product manufactured, sold, handled, or distributed by the above additional insured.

2. this insurance does not apply to the design, manufacture, repair, sale, or servicing of aircraft by the above additional insured.

3. this insurance does not apply to structural alterations, new construction and demolition operations performed by or for that person or organization.

All other provisions of this policy remain the same.

This endorsement becomes effective JUNE 17, 2024 to be attached to and hereby made a part of:
1000281031-05
SPECIALIZED HELICOPTERS, INC. DBA SPECIALIZED AVIATION
By STARR INDEMNITY & LIABILITY COMPANY
Endorsement No. 26
Date of Issue JUNE 17, 2024 (JBA) By
(Authorized Representative)
Policy No.

Issued to

Starr 10017 (2/06)

DELETION ENDORSEMENT
In consideration of AN ADDITIONAL premium of $ INCLUDED , this policy is amended as follows:

The following endorsement No (s). 4 is/are deleted in its entirety.

All other provisions of this policy remain the same.

This endorsement becomes effective JUNE 17, 2024 to be attached to and hereby made a part of:
1000281031-05
SPECIALIZED HELICOPTERS, INC. DBA SPECIALIZED AVIATION
By STARR INDEMNITY & LIABILITY COMPANY
Endorsement No. 25
Date of Issue JUNE 17, 2024 (SC) By
(Authorized Representative)
Policy No.

Issued to

6/20/2024 2:27:29 PM
C:\Program Files\eSCRIBE\TEMP\14272596542\14272596542,,,Report - Lease Community Arts and Empowerment .docx Agenda Report
MEETING DATE: Tuesday, June 25, 2024
TO: City Council
FROM: PARKS & COMMUNITY SERVICES DIRECTOR CALUBAQUIB
SR. ADMINISTRATIVE ANALYST ZAVALA

PROJECT MANAGER PERALTA
SUBJECT: RESOLUTION APPROVING A LEASE BETWEEN THE CITY OF

WATSONVILLE AND COMMUNITY ARTS & EMPOWERMENT

FOR USE OF MUZZIO PARK COMMUNITY CENTER
RECOMMENDED ACTION:

It is recommended that the City Council adopt a resolution authorizing the City Manager to execute a Lease, and any amendments of a non-substantive nature subject to legal approval, with Community Arts & Empowerment for use of the Muzzio Park Community Center as a youth art center.

BACKGROUND:

A five-year lease between the City of Watsonville and Community Arts & Empowerment for the use of city-owned property located at 26 West Front Street (Muzzio Park) was approved through Resolution No. 91-19 on June 25, 2019. The lease commenced on July 1, 2019, and ends on June 30, 2024. The rent is one dollar per year, with a lump sum of $5.00 paid before the commencement date.

The premises are for the sole and exclusive use of Community Arts & Empowerment.

Their free Mosaic Arts Center is an open art space for teens and community members to design and fabricate work for Watsonville Brillante. Community Arts & Empowerment is an organization with ten paid interns and volunteers.

The Muzzio Park Community Center is being utilized for the Watsonville Brillante Art Project lead by Kathleen Crocetti. Watsonville Brillante is a mosaic project that will cover the entire exterior of the Civic Plaza Parking Garage in Downtown Watsonville by the end of 2024. The images have been approved by the City of Watsonville and will be mounted on horizontal panels of the parking garage.

DISCUSSION:

Community Arts & Empowerment will continue working on finalizing the Watsonville Brillante Project which is anticipated to be completed by November 2024. However, the

6/20/2024 2:27:29 PM
C:\Program Files\eSCRIBE\TEMP\14272596542\14272596542,,,Report - Lease Community Arts and Empowerment .docx current lease with Community Arts & Empowerment is set to expire on June 30, 2024, and a lease renewal is recommended. In addition to the Watsonville Brillante Project, there are two additional city funded public art projects that are pending completion:

City Plaza Revitalization Art Project
On October 24, 2023, the City Council adopted Resolution No. 203-23 (CM) awarding a contract to Kathleen Crocetti Art, LLC for her “Pageantry and Performance” designs consisting of four (4) large sculpture installations (between 8’ and 9’ tall) for the Watsonville City Plaza.

The design concept is to have one figurative sculpture for each of the four major groups of people who migrated to the area including Asian Americans and Pacific Islanders (AAPI), Europeans, Indigenous, and Mexican, Central, and South Americans. The AAPI group, decided on a three sided Asian-inspired Pavilion. The European group embraced the idea of architecture and decided on a brick wall with an arch and flowers from their respective countries. The Mexican, Central, and South American group decided on a bench with flowers on the front and 3 figures on the back. The Indigenous group meeting resulted in a hummingbird structure with four tree trunk stumps to be used as seating. All four sculptures offer some form of seating and will also be completed using mosaic pieces. This project is anticipated to be completed by December 2025.

Wetlands Watch, Nature Center project,
The City of Watsonville ad Watsonville Wetlands Watch in partnership with Community Arts & Empowerment released a call for artist to design images that will be translated into mosaics for the main entrance and pathway of the new Nature Center opening in Ramsay Park in 2026.

The mural and walkway will convey a theme of natural migrations and environmental stewardship of the Pajaro Valley. This project is a grant funded from the California State Coastal Conservancy’s Coastal Stories Program.

Based on the existing city initiated public art projects, the recommendations for the lease renewal terms are as follows:

1. Term: Two years beginning July 1, 2024, with one, 2-year renewal option.

2. Rent: $1 per year during the initial term. The rent is to be re-negotiated at the time of renewal if option is exercised.

3. Lessee will be responsible for all utilities and routine building maintenance.

STRATEGIC PLAN:

The recommended action is consistent with the City’s Strategic Plan goals of:
 1-Economic Development (Downtown Revitalization) by creating place making art in the heart of downtown
 5-Public Safety (Youth Prevention Programs) by providing youth with a safe, positive environment through the development of a free arts center  6-Community Engagement & Well-Being (Parks and Community Services, Youth Activities & Programs) by engaging the community in the creation of large art Installation

6/20/2024 2:27:29 PM
C:\Program Files\eSCRIBE\TEMP\14272596542\14272596542,,,Report - Lease Community Arts and Empowerment .docx FINANCIAL IMPACT:

There is no financial impact to the City by approving this lease agreement. The programming that will take place in the Youth Art Center at Muzzio Park will be a great addition to City programs. Muzzio Community Center is vacant most of the time and there is no significant programming or use of this building.

ALTERNATIVE ACTION:

The City Council may choose not to approve the execution of this Lease.

ATTACHMENTS AND/OR REFERENCES (If any):

None.

Reso No. (CM)
Meeting Date: 062425
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING TWO YEAR LEASE BETWEEN THE CITY

OF WATSONVILLE AND COMMUNITY ARTS & EMPOWERMENT, A

CORPORATION, FOR THE USE OF CITY OWNED PROPERTY LOCATED AT 26 WEST FRONT STREET, WATSONVILLE (MUZZIO PARK
COMMUNITY CENTER), COMMENCING ON JULY 1, 2024, AND ENDING JUNE 30, 2026, AND AUTHORIZING AND DIRECTING THE CITY

MANAGER TO EXECUTE SAME
WHEREAS, on June 25, 2019, the Council adopted Resolution No. 91-19 (CM), approving a five-year Lease between the City and Community Arts & Empowerment for the use of the Muzzio Park Community Center; and
WHEREAS, the current Lease with Community Arts & Empowerment is set to expire on June 30, 2024.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. That the two-year Lease between the City of Watsonville and Community Arts & Empowerment, a corporation, for the use of City owned property located at 26 West Front Street, Watsonville (Muzzio Park Community Center), commencing on July 1, 2024, and ending June 30, 2026, a copy of which Lease is attached hereto and incorporated herein by this reference, is hereby approved.

2. That the City Manager on behalf of the City of Watsonville, be and is hereby authorized and directed to execute said Lease for the original term, and if properly exercised, the one (1) two-year option term, and any amendments thereto of a non-substantive nature that may be approved by the Interim City Manager and the City Attorney.
**************************************

Lease Agreement/Community Arts & Empowerment Page 1 of 27 Rev.: 06-12-2024

COMMERCIAL PROPERTY LEASE AGREEMENT

BY AND BETWEEN

CITY OF WATSONVILLE, CALIFORNIA
AND

COMMUNITY ARTS & EMPOWERMENT
This lease agreement (“Lease”) is dated ____________________________________ and is by and between the City of Watsonville, California, a chartered California municipal corporation (“City”) and Community Arts & Empowerment, a corporation (“Lessee”). City and Lessee may be referred to individually as a “Party” or collectively as the “Parties” or the “Parties to this Lease.” The City Manager serves as Contract Administrator for this Lease on behalf of the City Council.

RECITALS:

A. City owns the property at 26 West Front Street, Watsonville, California, consisting of approximately 2,800 square feet, known as Muzzio Park Community Center.

B. City wishes to lease the Property to Lessee.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, stipulated and agreed, Lessee and City mutually agree as follows:

AGREEMENTS:

LEASE PROVISIONS

1. PREMISES AND PROJECT.

1.1 General. City hereby leases to Lessee, and Lessee hires from City, certain real property located in the City of Watsonville, County of Santa Cruz, State of California, commonly known as Muzzio Park Community Center consisting of approximately 2,800 square feet (the “Premises”), located within an approximately 1.1 acre parcel known as Muzzio Park(the “Project”), all as more particularly described or identified in Exhibit A attached hereto and incorporated herein by reference. The Project excludes, and Lessee is the sole owner of, the items identified on the Inventory of Fixtures set forth in Exhibit B attached hereto and incorporated herein by reference.

1.2 Pro Rata Share. Lessee’s pro rata share (“Pro Rata Share”) is percent (100%) which represents the percentage that the rentable area of the Premises bears to the total rentable area of the Project.

2. TERM; COMMENCEMENT DATE.

2.1 Lease Term. The term of this Lease shall be for two years (the “Initial Term”), commencing at 12:01 am on July 1, 2024 (“Commencement Date”) and ending on June 30, 2026. Lessee shall, at the expiration of the term of this lease, or upon its earlier termination, DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

Lease Agreement/Community Arts & Empowerment Page 2 of 27 Rev.: 06-12-2024
surrender the Premises in as good condition as it is now at the date of this lease, reasonable wear and tear excepted. City shall have the right, upon the termination of the term or upon a breach, to enter the Premises and take possession of it.

2.2 Option to Extend Lease Term. Lessee is granted the option to extend the term of this Lease (the “Renewal Option”) upon and subject to all of the provisions contained herein, except for Base Rent and the Renewal Option, for one (1) two (2) year term (the “Extended Term”) following expiration of the Initial Term. The Renewal Option may be exercised only by giving notice of exercise of the Renewal Option (“Option Notice”) to City at least six (6) months before the expiration of the Initial Term. If Lessee is in default beyond the period of notice and opportunity to cure provided in Section 16.1 of this Lease on the date of giving the Option Notice, the Option Notice will be totally ineffective. If Tenant is in default beyond the period of notice and opportunity to cure provided in Section 16.1 of this Lease on the date the Extended Term is to commence, the Extended Term will not commence and this Lease will expire at the end of the Initial Term as it may have previously been extended.

3. RENT.

3.1 Base Rent. Lessee shall pay base rent (“Base Rent”) in the amount of $1 per year.

All rent, including Base Rent, shall be paid in lawful money of the United States of America without deduction or offset. Base Rent for initial term shall be payable on the Commencement Date, at a place (or places) as may be designated in writing from time to time by City.

3.1.1 Late Charge. Lessee acknowledges late payment by Lessee to City of rent will cause City to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing, accounting and late charges that may be imposed on City. Therefore, if City does not receive any installment of rent due from Lessee within ten (10) days after the date such rent is due, Lessee shall pay to City an additional sum of ten percent (10%) 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 Lessee. Acceptance of any late charge shall not constitute a waiver of Lessee’s default with respect to the overdue amount, nor prevent City from exercising any of the other rights and remedies available to City.

3.1.2 Rent. The term “Rent” as used in this Lease shall mean Base Rent and any other amounts owing from Lessee to the City pursuant to this Lease.

3.2 Extended Term Base Rent. Base Rent of the Premises payable during the Extended Term as of the Extended Term commencement date shall be equal to the Market Rate (as hereinafter defined) adjusted annually, beginning the second year of the Extended Term, using as the basis for calculating the adjustment, the rate of April to April change in the Consumer Price Index (CPI) for All Urban Consumers San Francisco-Oakland-Hayward Metropolitan Area, not to exceed three percent (3%) per year. City shall, in response to and within thirty (30) days of City's receipt of Lessee's notice of its intent to exercise the Option, give DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

Lease Agreement/Community Arts & Empowerment Page 3 of 27 Rev.: 06-12-2024
Lessee written notice of the applicable Market Rate, as reasonably determined in good faith by City.

3.2.1 The term “Market Rate” shall mean, the then prevailing annual rental rate per square foot of rentable area for space in comparable buildings in the City of Watsonville which has been built out for occupancy, comparable in area and location and quality to the space for which such rental rate is being determined (to the extent that quoted rental rates in the building, as applicable, vary with regard to location), being leased for a duration comparable to the Extended Term for terms commencing on or about the Extended Term commencement date for non-sublease, non-encumbered, non-equity space. The determination of the Market Rate shall take into consideration rental concessions and abatements, the “as is” condition of the Premises, operating expenses and tax expenses, other adjustments to base rental and other comparable factors. Notwithstanding anything to the contrary contained herein, in no event shall the Market Rent as determined hereunder be less than the Base Rent owing immediately prior to the commencement of the Extended Term.

3.2.2 Not later than sixty (60) days after City's notice to Lessee of the Market Rate, Lessee shall give notice to City of Lessee's election to: (i) accept City's determination of Market Rate; or (ii) to have the Market Rate determined by the “arbitration” procedure set forth in subsection 3.2.3 below. If Lessee fails to notify City within said sixty (60) day period of Lessee's election, Lessee shall be deemed to have accepted City's determination of the then Market Rate and to have waived its rights to an “arbitration” thereof. Lessee's notice under either subsection (i) or (ii) above shall be deemed Lessee's exercise of the Option.

3.2.3 If Lessee has timely elected to have an “arbitration” of the amount(s) and component(s) of the then Market Rate, then the following shall be utilized to make and implement such election: Upon the valid exercise of Lessee's election to have an “arbitration” of the then Market Rate, then not later than ten (10) days after Lessee's notice to have such an “arbitration” of the then Market Rate, City and Lessee shall each designate, by written notice give to the other party setting forth the designated person's address, a qualified appraiser who shall have had at least ten years’ experience relevant to the commercial retail space in the Watsonville market area (the “Arbitrators”). It is expected that the Arbitrators will familiarize themselves with this Lease, the exhibits and riders hereto and such other documents as are deemed relevant by the Arbitrators or either or both of them. Each of the Arbitrators shall submit to City and Lessee, within sixty (60) days after his or her appointment, his or her written determination of the then Market Rate with respect to the Premises. If the lower of said two determinations is not less than ninety-five percent (95%) of the other determination, then the average of the two determinations shall be deemed to be the then Market Rate and conclusive and binding as between the parties. If such not be the case, then the Arbitrators shall mutually select a third qualified and impartial Appraiser who shall also have had at least ten years' experience relevant to the commercial retail space in the Watsonville market area (the “Third Arbitrator”). The Third Arbitrator shall, within sixty (60) days of his appointment, deliver his written determination to City and Lessee of which of the Arbitrator's Market Rate determinations is most accurate, and that determination shall be the deemed Market Rate which shall be conclusive and binding as between the parties. Each party shall be responsible for all fees and costs incurred in the determination of Market Rate by their own Arbitrator, and the parties shall share equally the fees and costs incurred in the determination of Market Rate by the Third Arbitrator. If Lessee becomes obligated to pay Rent with respect to the Extended Term prior to DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

Lease Agreement/Community Arts & Empowerment Page 4 of 27 Rev.: 06-12-2024
when the applicable Market Rate has been determined in accordance with the foregoing, Lessee shall commence paying Rent utilizing City's determination of the then Market Rate. Following determination of the applicable Market Rate in accordance with the foregoing, City and Lessee shall, by a cash payment within thirty (30) days of the date of such determination, adjust between themselves the difference, if any, between the Rent paid by Lessee pursuant to the foregoing sentence and the Rent actually owed by Lessee pursuant to the terms of this Lease for that time period.

4. SECURITY DEPOSIT.

Lessee has tendered to City an amount of Zero Dollars ($0) as a security deposit. City may use these funds as are reasonably necessary to remedy any Lessee breach(s) or default(s) under this Lease, including without limitation in the payment of rent, to repair damages caused by Lessee, or expenses incurred to clean the Premises upon termination of tenancy. If any portion of the security deposit is used towards rent or damages at City’s sole discretion, Lessee agrees to reinstate said total security deposit upon receipt of five (5) days written notice. Any remaining balance of the security deposit shall be returned by City to Lessee at such time after termination of this Lease that all of Lessee’s obligations under this Lease have been fulfilled, reduced by such amounts as may be required by City to remedy defaults on the part of Lessee in the payment of Rent or other obligations of Lessee under this Lease, to repair damage to the Premises, or Project caused by Lessee and to clean the Premises. City may use and co-mingle the security deposit with other funds of City. Lessee hereby waives the provisions of the California Civil Code section 1950.7, and all other provisions of any laws, now or hereinafter in force, which restricts the amount or types of claim that a landlord may make upon a security deposit or imposes upon a landlord (or its successors) any obligation with respect to the handling or return of security deposits.

5. DUTIES OF LESSEE.

5.1 Lessee shall not use the image of the Premises or Project, the name of City or any other identifying sign or symbol associated with the Premises or Project or City to undertake any action or representation than those specifically assigned to Lessee as a duty under this Lease.

5.2 Lessee shall protect and maintain the Premises. Lessee shall assume the responsibility for the guarding and safekeeping of all personal property located at the Premises.

5.3 Lessee shall not make any interior renovation or remodeling or make any major changes to the Premises or remove any objects, which are not the property of Lessee without the prior written consent of the City Manager or her designee.

6. USE OF PREMISES/COMMON AREAS.

6.1 Permitted Uses. Lessee shall use the Premises for the sole and exclusive purposes of the Community Arts & Empowerment and for no other purpose. Without limiting the foregoing, Lessee agrees not to use or permit use of the Premises for any unlawful purpose, and not to commit or permit any waste or nuisance in or about the Premises. Lessee will not use Premises in a manner that increases the risk of fire, cost of fire insurance or improvements thereon. No unreasonable sign or placard shall be painted, inscribed or placed in or on or about DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

Lease Agreement/Community Arts & Empowerment Page 5 of 27 Rev.: 06-12-2024
the Premises or Project; and no tree or shrub thereon (if any) shall be destroyed or removed or other waste committed of said Premises or Project. No bicycles, motorcycles, automobiles or other mechanical means of transportation shall be placed anywhere on the Premises or Project except for areas (if any) identified by the City from time to time. No repair, storage, overhaul or modification of any motor vehicle shall take place on or about the Premises or Project. Lessee, at his/her expense, shall keep the Premises in as good condition as it was at the beginning of the term hereof, reasonable wear and tear excepted.

6.2 Prohibited Uses. Lessee shall not use Premises for any purpose not expressly permitted hereunder. Lessee shall not (i) 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, and (ii) do or permit to be done anything in any manner which unreasonably disturbs the users of the Project or the occupants of neighboring property. Specifically, and without limiting the above, Lessee agrees not to cause any unreasonable odors, noise, vibration, power emissions or other item to emanate from the Premises. No materials or articles of any nature shall be stored outside upon any portion of the Premises.

6.3 Condition, Use of Premises. At no cost to Lessee, City either has, or shall, supply, furnish, install, finish and deliver in warm vanilla shell, the Premises, in full compliance with all applicable laws (including, without limitation, the ADA), regulations and building codes applicable to new construction, disregarding variances and grandfathered/grandmothered rights, all at City’s sole cost and expense, and which shall comprise and is defined as the “Base Building”.

6.4 Overloading. Lessee shall not do anything on the Premises that will cause damage to the Premises, or the Project. Lessee shall not suffer or allow the Premises to be used in any manner that will harm or impair the structural strength of the Building nor to suffer or allow to be installed or operated on the Premises, or the Building, any machinery or apparatus whose weight or vibration would harm or impair the structural strength of the Premises or the Building. Lessee shall not place a load upon the floor or roof of the Premises without the City’s prior written consent, which consent may be conditioned on moving by skilled licensed handlers, or which exceeds the load per square foot which such floor or roof was designed to carry.

Business machines and mechanical equipment used by Lessee which cause vibration or noise that may be transmitted to the Building structure or to any leased space to such a degree as to be reasonably objectionable to the City or to any other tenants in the Building shall be placed and maintained by Lessee at its expense, in settings of cork, rubber, or spring-type vibration eliminators sufficient to eliminate such vibration or noise.

6.5 Common Areas.

6.5.1 The term “Common Areas” shall mean and refer to all areas within the exterior boundaries of the Project which are now or hereafter made available for general use, convenience, and benefit of the City and other persons entitled to occupy space in the Project, including, without limiting the generality of the foregoing, roofs, exterior walls, structural parts of the Premises and structural floor, pipes and conduits, outside lighting fixtures (if any), automobile parking areas (if any), driveways, sidewalks, landscaped and planted areas, and HVAC and plumbing systems and similar common areas, facilities, and systems. Lessee and its employees and invitees are, except as otherwise specifically provided in this Lease, authorized, DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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empowered, and privileged to use the Common Areas in common with other persons during the Term of this Lease. City agrees to maintain and operate, or cause to be maintained and operated (except as hereinafter provided with reference to cost of maintenance), the Common Areas at all times for the benefit and use of the customers and patrons of Lessee, and of other lessees, owners, and occupants of the Project.

6.5.2 City shall keep or cause the Common Areas to be kept in a neat, clean, and orderly condition, and shall repair any damage to the facilities thereof, but all Common Area Expenses shall be charged and prorated in the manner hereinafter set forth. “Common Area Expenses” shall include, but not be limited to, all sums expended in connection with the Common Areas for all general maintenance and repairs, resurfacing, painting, restriping, cleaning, sweeping and janitorial services; maintenance and repair of sidewalks, curbs, and Project signs; sprinkler systems, planting and landscaping (if any); lighting and other utilities; directional signs; maintenance and repair of any fire protection systems, lighting systems, storm drainage systems and other utility systems outside of the Premises; all maintenance and repair costs and expenses, except as to cost of replacement of the roof, exterior walls, structural parts of the Premises and structural floor, and pipes and conduits outside the leased Premises in the Project that furnish the leased Premises with various utilities (except to the extent that the same are the obligations of the appropriate utility company or are otherwise Lessee’s obligation pursuant to Section 7.1 or other provision of this Lease), incurred by the City pursuant to Section

7.2; personnel to implement such services; real and personal property taxes and assessments on the improvements and land comprising the Project; any governmental imposition or surcharge imposed upon the City or assessed against any portion of the Common Areas; all costs and expense pertaining to any security alarm system for the lessees in the Project (if any); depreciation on maintenance and operating machinery and equipment (if owned) and rental paid for such machinery and equipment (if rented); and adequate public liability and property damage insurance on the Common Areas. In addition, the Common Area Expenses shall include a management fee of ten percent (10%) of the total of all other Common Area Expenses, adjusted from time to time as provided herein. The City may cause any or all of those services to be provided by an independent contractor or contractors.

6.5.3 From and after the Commencement Date, and throughout the term hereof, Lessee shall pay to the City, on the first day of each calendar month, the amount of $0.00 per square foot of the Premises, which as of the Commencement Date, equates to $0 per month, as the an amount agreed upon by the parties to be Lessee’s share of the Common Area Expenses.

6.5.4 Failure of Lessee to pay any of the charges as in this Section 6.6 required to be paid shall constitute a default under the terms hereof in like manner as failure to pay Base Rent when due.

6.5.5 The City shall at all times have the right and privilege of determining the nature and extent of the Common Areas, and of making such changes therein and thereto from time to time which in its sole discretion it deems to be desirable and in the best interest of all persons using the Common Areas, including without limitation the location and relocation of driveways, entrances, exits, automobile parking spaces (if any), installation of prohibited areas, landscaped areas, utilities, and all other facilities thereof.

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6.5.6 Nothing contained herein shall be deemed to create any liability upon the City for any damage to motor vehicles of customers or employees or for loss of property from within such motor vehicles.

6.5.7 The City shall have the right to establish, and from time to time change, alter, and amend, and to enforce against Lessee and the other users of the Common Areas such reasonable rules and regulations (including the exclusion of employees’ parking therefrom) as the City in its sole discretion may deem necessary or advisable for the proper and efficient operation and maintenance of the Common Areas. The rules and regulations herein provided may include, without limitation, the hours during which the Common Areas shall be open for use.

6.5.8 City shall retain the sole and absolute discretion in the modification of the Common Areas, which may include the rearrangement, increase or decrease of the areas, and the manner in which the areas are utilized. City shall also have the right at any time and from time to time during the term hereof to exclude and restrain any person from use or occupancy thereof, excepting, however, bona fide customers, patrons, and service suppliers of Lessee, and other tenants of the City who make use of the Common Areas fully in accordance with the rules and regulations established by the City from time to time with respect thereto. The rights of Lessee hereunder in and to the Common Areas shall at all times be subject to the rights of the City, the other tenants of the Project to use the same in common with Lessee, and it shall be the duty of Lessee to keep all of the Common Areas free and clear of any obstructions created or permitted by Lessee or resulting from Lessee’s operation and permit the use of the Common Areas only for normal parking, ingress and egress by said customers, patrons, and service suppliers to and from the Project.

6.5.9 If in the sole discretion of the City unauthorized persons are using any of the Common Areas by reason of the presence of Lessee in the Premises, Lessee, upon demand of the City, shall enforce such rights against all such unauthorized persons by appropriate proceedings. Nothing herein shall affect the rights of the City at any time to remove any such unauthorized persons from said areas or to restrain the use of any of said areas by unauthorized persons.

7. MAINTENANCE AND REPAIRS.

7.1 Lessee’s Obligations. Lessee agrees at all times during the term hereof, at its own expense, to repair, replace and maintain in good and tenantable condition the Premises and every part thereof (except that portion of the Premises to be maintained by the City as hereinafter provided) and including, without limitation, the utility meters, pipes and conduits, all fixtures, air conditioning equipment and heating equipment, if any, exclusively serving the Premises and other equipment therein, including any equipment installed by Lessee which is part of said system, the storefront or storefronts, all signs, locks and closing devices, and all window sash, casement or frames, door and door frames, floor coverings, including carpeting, terrazzo or other special flooring, and all such items of repair, maintenance, allocation and improvement or reconstruction as may at any time or from time to time be required by a governmental agency having jurisdiction thereof. Tenant will not place or suffer to be placed or maintained on any exterior door, roof, wall or window of the Leased Premises any sign, awning or canopy, or advertising matter or other thing of any kind, and will not place or maintain or permit, or suffer to be DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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placed or maintained, any decoration, lettering or advertising matter on the glass of any window or door of the Leased Premises without first obtaining Landlord's written approval. In no event shall any: (a) neon, flashing or moving sign(s), or (b) sign( s) which shall interfere with the visibility of any sign, awning, canopy, advertising matter, or decoration of any kind of any other business or occupant of the Beach Street Garage of which the Leased Premises are a part, be permitted hereunder. Tenant further agrees to maintain any such sign, awning, canopy, decoration, lettering, advertising matter or other thing as may be approved in good condition and repair at all times.

Lessee shall contract with a qualified service company for the monthly maintenance of the air conditioning equipment or heating, ventilating and air conditioning equipment, as the case may be, exclusively serving the Premises, with a copy of the service contract to be furnished to the City upon execution of this Lease and a copy of any subsequent contracts to be furnished from time to time during the term of this Lease provided that, at the City’s sole election, the City may so contract directly with a qualified service company, and Lessee shall promptly reimburse the City for the full cost of same. Maintenance of all glass, both exterior and interior, is the sole responsibility of Lessee, and any glass broken shall be promptly replaced by Lessee with glass of the same kind, size and quality. Upon surrender of the Premises, Lessee shall deliver the Premises to the City in good order, condition and state of repair, but shall not be responsible for damages resulting from ordinary wear and tear.

7.2 City Obligations. Subject to the foregoing provisions and to the reimbursement by Lessee described in Section 6.6, the City shall keep and maintain in good and tenantable condition and repair the roof, exterior walls, structural parts of the Premises and structural floor, and pipes and conduits outside the Premises that furnish the Premises with various utilities (except to the extent that the same are the obligations of the appropriate utility company or are otherwise Lessee’s obligation pursuant to Section 7.1 or other provision of this Lease); provided, however, that the City shall not be required to make repairs necessitated by reason of the negligence of Lessee or anyone claiming under Lessee, by reason of failure of Lessee to perform or observe any conditions or agreements of this Lease, or by reason of alterations, additions, or improvements made by Lessee or anyone claiming under Lessee. As used in this Section, “exterior walls” shall not include storefronts, plate glass, window cases or window frames, doors or door frames, security grilles or similar enclosures. It is understood and agreed that the City shall be under no obligation to make any repairs, alterations, renewals, replacements or improvements to and upon the Premises or the mechanical equipment exclusively serving the Premises at any time except as this Lease expressly provides. Anything to the contrary contained in this Lease notwithstanding, the City shall not in any way be liable to Lessee for failure to make repairs as herein specifically required of it unless Lessee has previously notified the City, in writing, of the need for such repairs and the City has failed to commence and complete said repairs within a reasonable period of time following receipt of Lessee’s written notification.

7.3 Lessee’s Failure to Maintain. If Lessee refuses or neglects to make repairs or maintain the Premises, or any part thereof, in a manner reasonably satisfactory to the City, the City shall have the right, upon giving Lessee reasonable written notice of its election to do so, to make such repairs or perform such maintenance on behalf of and for the account of Lessee. In such event the cost of such work shall be paid by Lessee as additional rent promptly upon receipt of an invoice therefor. In addition, the City shall include a management fee on the work that was completed by the City on behalf of the Lessee, in the amount of fifteen percent (15%) that may be adjusted from time to time as provided herein.

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7.4 Waiver of Legal Rights. Lessee waives the benefits of any law existing now or at any time during the term of this Lease and any extension thereof or thereafter giving Lessee rights or remedies as a result of the physical condition of the Premises, or Project and, without limitation, Sections 1932, 1933, 1941, 1941.2, 1942 and 1942.1 of the Civil Code of California and all right to make repairs at the expense of the City or to terminate this Lease as provided in those Civil Code sections or otherwise, except as expressly provided herein.

8. HAZARDOUS MATERIALS.

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

8.2 Termination of Lease. City shall have the right to terminate the Lease in City’s sole and absolute discretion in the event that (i) any anticipated use of the Premises by Lessee 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 Materials laws; (ii) Lessee 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 Lessee’s action or use of the Premises; or (iii) Lessee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal or storage of a Hazardous Material on the Premises.

8.3 Assignment and Subletting. If (i) any anticipated use of the Premises by any proposed assignee or sublessee involves the generation or storage, use, treatment or disposal or release of Hazardous Material in a manner or for any purpose, (ii) the proposed assignee or sublessees has been required by any prior landlord, lender or governmental authority to take remedial action in connection with Hazardous Material contaminating a property, if the contamination resulted from such party’s action or use of the property in question, or (iii) the proposed assignee or sublessee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal or storage of a Hazardous Material, then it shall not be unreasonable for City to withhold its consent to an assignment or subletting to such proposed assignee or sublessee.

8.4 Hazardous Materials Defined. The term “Hazardous Material(s)” shall mean any toxic or hazardous substance, material or waste or any pollutant or contaminant or infectious or radioactive material, 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 all of those substances included within the definitions of “hazardous substances,” “hazardous waste,” “hazardous chemical substance or mixture,” “imminently hazardous chemical substance or mixture,” “ toxic substances,” “hazardous air pollutant,” “toxic pollutant” 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. Sec. 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 et seq., (k) Cal. Hazardous Waste Control Act, Cal. Health & Safety Code Section 25100 et seq., (l) DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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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 Act, Cal.

Health & Safety Code Sec. 28740 et seq., (q) Air Resources Law, Cal. Health & Safety Code Sec. 39000 et seq., (r) Hazardous Materials Release Response Plans and Inventory, Cal. Health & Safety Code Secs. 25500-25541, (s) TCPA, Cal. Health and Safety Code Secs. 25208 et seq., and (t) regulations promulgated pursuant to said laws or any replacement thereof, or as similar terms are defined in the federal, state and local laws, statutes, regulations, orders or rules.

Hazardous Materials shall also mean any and all other substances, materials and wastes which are, or in the future 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, materials or wastes, pollutants or contaminants, as defined, listed or regulated by any federal, state or local law, regulation or order or by common law decision, including, 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.

8.5 City’s Right to Perform Tests. At any time prior to the expiration of the Lease Term, City shall have the right to enter upon the Premises in order to conduct tests of water and soil and to deliver to Lessee the results of such tests to demonstrate that levels of any Hazardous Materials in excess of permissible levels has occurred as a result of Lessee’s use of the Premises.

Lessee shall be solely responsible for and shall indemnify, protect, defend and hold City harmless from and against all claims, costs and liabilities including actual attorneys’ fees and costs arising out of or in connection with any removal, remediation, cleanup, restoration and materials required hereunder to return the Premises and any other property of whatever nature to their condition existing prior to the appearance of the Hazardous Materials. The testing shall be at Lessee’s expense if City has a reasonable basis for suspecting and confirms the presence of Hazardous Materials in the soil or surface or groundwater in on, under, or about the Premises or the Project, which has been caused by or resulted from the activities of Lessee, its agents, employees, contractors or invitees.

8.6 Hazardous Materials Indemnity. Lessee shall indemnify, defend (by counsel reasonably acceptable to City), protect and hold the City harmless from and against any and all claims, liabilities, penalties, forfeitures, losses and/or expenses, including, without limitation, diminution in value of the Premises or Project, damages for the loss or restriction on use of the rentable or usable space or of any amenity of the Premises or Project, damages arising from any adverse impact or marketing of the Premises or Project 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 damage to any property whatsoever (including, without limitation, groundwater, sewer systems and atmosphere), arising from, or caused or resulting, either prior to or during the Lease Term, in whole or in part, directly or indirectly, by the presence or discharge in, on, under or about the Premises or Project by Lessee, Lessee’s agents, employees, licensees or invitees or at Lessee’s direction, of Hazardous Material, or by Lessee’s failure to comply with any Hazardous Materials Law, whether knowingly or by strict liability. Lessee’s indemnification obligations shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary Hazardous Materials management plan, investigation, repairs, cleanup or DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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detoxification or decontamination of the Premises or Project, 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 Lease Term. For purposes of the indemnity provided herein, any acts or omissions of Lessee or its employees, agents, customers, sublessees, assignees, contractors or subcontractors of Lessee (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributable to Lessee.

9. UTILITIES.

Lessee shall pay prior to delinquency, and shall indemnify and hold the City harmless from, all costs incurred in installation, hook-up, delivery, and repair of all utilities and services whatsoever supplied to or consumed by Lessee on the Premises including, but not limited, to gas, water, sewer, electricity, telecommunications service, janitorial, garbage pickup and disposal, onPremises landscaping installation and maintenance (if any) and other public utilities. City shall not be responsible for providing any utilities or services to Lessee whatsoever, and shall not be liable to Lessee for any interruption or failure of any utility services to the Premises from any cause whatsoever, nor shall such interruption or failure constitute a constructive eviction or give rise to a right of rent offset or abatement or affect the obligations of Lessee under this Lease in any other way whatsoever.

10. ALTERATIONS.

10.1 Alterations. Lessee shall not make any alterations to the Premises without the prior written consent of the City which consent shall not be unreasonably withheld. City shall be deemed to have reasonably withheld or withdrawn consent unless each and every proposed alteration (i) shall not, individually or in the aggregate, lessen the fair market value of the Premises or materially affect the usefulness of the Premises, either for Lessee’s business or the business of potential successor tenants, (ii) be accompanied by all final plans and specifications with any deviation therefrom constituting a separate alteration subject to this Section 10, (iii) be constructed by a California licensed contractor and under the direction of a California licensed architect satisfactory to the City, and (iv) once consented to by the City, shall be completed expeditiously in a good and workmanlike manner, with first class quality materials, and in compliance with all applicable legal and insurance requirements, (v) shall be constructed in strict compliance with the additional conditions set forth in Section 10.4 hereof, and (vi) shall become a “Lessee Improvement” and part of the Premises and subject to this Lease, provided, at the City’s option, Lessee shall remove any such alteration and restore the Premises to their condition prior to the making of same, normal wear and tear excepted, upon the expiration or earlier termination of the term hereof. The City shall exercise its option by 30 days’ notice given no later than 30 days after such expiration or termination and, if Lessee has not so removed and restored within 30 days after the City gives said notice, Lessee shall pay the City upon demand the reasonable rental value of the Premises during the period beginning with the date immediately following said 30 days after the City gives its notice and ending with the date upon which the removal and restoration is completed and the City may, but shall not be obligated to, remove such alteration and restore the Premises and Lessee also shall pay the City its cost of same upon demand.

10.2 Required Alterations. Subject to Section 10.1 above, Lessee shall, at its sole cost, make any alteration, addition, or change to the Premises of any sort, substantial or insubstantial, DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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ordinary or extraordinary, foreseeable or unforeseeable, whether structural or otherwise, as may be required by law due to the existence of, or Lessee’s use or occupancy of, the Premises or as a result of Lessee’s application for any permit or governmental approval, provided that the City may elect to make same, in which case Lessee shall reimburse the City promptly upon demand for all costs of the City’s making same.

10.3 Security for Completion. Before commencing any proposed alteration, Lessee, if requested by the City, shall furnish to the City security reasonably satisfactory to the City guaranteeing to the City the completion of the proposed alteration within a reasonable time, free and clear of all liens and, if available, all encumbrances, chattel mortgages, conditional bills of sale, security agreements and other claims and charges (other than those, if any, permitted hereunder) and in accordance with any plans and specifications theretofore approved by the City and, if required under any City encumbrance, by the City’s lender.

10.4 Additional Conditions. Lessee further covenants and agrees that no alterations will be made except in compliance with, and Lessee hereby covenants that it will comply with, each of the following provisions:

10.4.1 Before any alterations are begun, Lessee shall procure, at its own sole cost and expense, all necessary permits from all governmental authorities and shall, on demand, deliver photocopies thereof to the City;

10.4.2 All alterations shall be made in compliance and conformity with all applicable laws;

10.4.3 In making any alterations, Lessee shall not violate the terms or conditions of any insurance policy obtained or required pursuant to the provisions of this Lease affecting or relating to the Premises or any part thereof;

10.4.4 Promptly after the completion of any alterations, Lessee shall procure, at Lessee’s own sole cost and expense, all permits of governmental authorities for the completed alterations as may be required by any applicable laws, if any, and, on demand, shall promptly deliver photocopies thereof to the City; and

10.4.5 Lessee shall pay all costs, expenses and liabilities arising out of, in connection with, or by reason of, any alterations, and shall keep the Premises and Project free and clear of all liens, claims and encumbrances in any way arising out of, in connection with, or by reason of, any alterations.

10.5 No City Contribution. The City shall not be required to make any contribution to the cost of any alterations or any part thereof, and Lessee covenants that the City shall not be required to pay any cost, expense or liability arising out of or in connection with or by reason of any alterations and shall indemnify and hold the City harmless from and against, and shall reimburse the City upon demand for, all such costs, expenses and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements).

10.6 Notice. If Lessee makes any alterations to the Premises as provided in this Section 10, the alterations shall not be commenced until ten (10) days after the City has received written DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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notice from Lessee stating the date the installation of the alterations is to commence so that the City can post and record an appropriate notice of nonresponsibility at the Premises.

10.7 Manner; Cost. Any alterations by Lessee shall be made in a manner that will not interfere with the quiet enjoyment of the other tenants in the Project. Lessee shall pay prior to delinquency all cost for construction done by it or caused by it to be done on the Premises as permitted by this Lease. Lessee shall also reimburse the City upon demand for all costs the City incurs in reviewing any proposed alteration, including without limitation, architect, engineer and legal fees. Upon completion of any such work, Lessee shall have recorded in the office of the County Recorder of Santa Clara County a Notice of Completion as required or permitted by law.

10.8 Mechanic’s Liens. Lessee shall keep the Premises, and the Project free and clear of all mechanic’s liens resulting from construction done by or for Lessee.

10.9 Trade Fixtures. Lessee shall have the right at any time, and from time to time during the term of this Lease, at Lessee’s sole cost and expense, to install in or on the Premises such items, herein called “trade fixtures,” for use in Lessee’s trade or business as Lessee may, in its reasonable discretion, deem advisable, except that all such Lessee’s trade fixtures, furniture, furnishings, signs, and other personal property not permanently affixed to the Premises must be new when installed in, or attached to, the Premises. (All items identified on the Inventory of Fixtures, Exhibit B, shall be subject to all provisions of this Lease governing fixtures.) Any and all such trade fixtures shall remain the property of Lessee, and may be removed by Lessee at any time or times prior to the expiration or sooner termination of this Lease so long as Lessee is not in default hereunder, so long as Lessee shall immediately replace the same with similar personal property of comparable or better quality, except that Lessee shall not be obligated to replace such personal property at the expiration or earlier termination of this Lease, and Lessee shall immediately repair all damage caused by such removal and restore the Premises to substantially the condition they were in prior to the installation of such fixtures so that no trace remains of their presence at the Premises. At all times during the term of this Lease, Lessee shall maintain such trade fixtures in a good, first class condition.

10.10 Removal. Any trade fixtures described in this Section 10 that are not removed from the Premises by Lessee on the date of expiration or sooner termination, regardless of cause, of this Lease shall be deemed abandoned by Lessee and shall automatically become the property of the City and Lessee shall hold City harmless as to all claimants with respect to same.

10.11 Insurance. In the event that Lessee shall make any permitted improvements to the Premises under the provisions of this Section 10, Lessee agrees to carry such insurance as the City may reasonably request covering any such improvements, it being expressly understood and agreed that none of such improvements shall be insured by the City under the insurance it may carry upon the Project, nor shall the City be required to reconstruct any such improvements under any circumstances whatsoever, notwithstanding the provisions of Section 13.

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11. TAXES.

11.1 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes, license fees and public charges assessed or levied against Lessee or or Lessee’s Improvements, trade fixtures, furnishings, equipment and other personal property.

11.2 Assessments and Special Taxes. As a municipal corporation, City’s fee interest in the Project is exempt from the 1% general property tax levy and therefore property taxes will not be levied and will not be passed through to lessee or other tenants of the Project during City’s ownership of the Project. However, if and to the extent the Project or portion thereof is subject to special taxes or assessments, Lessee shall pay Lessee’s share of all such assessment and special taxes, if any, (other than possessory interest taxes on Lessee’s leasehold interest which shall be paid 100% by Lessee) which become due and payable to City on or before the later of ten (10) days prior to the delinquency thereof or three (3) days after the date on which Lessee receives a copy of the special tax or assessment bill and notice of City’s determination hereunder. Lessee’s liability to pay special taxes and assessments shall be prorated on the basis of a three hundred sixty-five (365) day year to account for any fraction or portion of a tax year included in the Lease term at the commencement or expiration of the Lease.

11.3 Revenue and Taxation Code Notice; Possessory Interest Taxes. Lessee specifically acknowledges it is familiar with §107.6 of the California Revenue and Taxation Code, realizes that a possessory interest subject to property taxes may be created, agrees to pay any such tax in full and without proration, and hereby waives any rights Lessee may have under said California Revenue and Taxation Code §107.6. City shall have no obligation to pay any possessory interest tax. No such possessory interest tax or any other tax payable by Lessee shall in any way reduce or substitute for the rent, charges or fees required to be paid as a condition of this Lease or as otherwise required by City.

12. HOLD HARMLESS/INDEMNIFICATION.

12.1 Indemnification. To the extent permitted by law, Lessee agrees to protect, defend, hold harmless and indemnify City, its City Council, commissions, officers, agents, volunteers, and employees from and against any claim, injury, liability, loss, cost, and/or expense or damage, however same may be caused, including all costs and reasonable attorney’s fees in providing a defense to any claim arising therefrom for which City shall become legally liable arising from Lessee’s negligent, reckless, or wrongful acts, errors, or omissions with respect to or in any way connected with this Lease. Lessee shall give City immediate notice of any claim or liability hereby indemnified against.

12.2 Waiver of Claims. Lessee waives any claims against City for injury to Lessee’s business or any loss of income therefrom, for damage to Lessee’s property, or for injury or death of any person in or about the Premises or the Project, from any cause whatsoever, except to the extent caused by City’s active negligence or willful misconduct.

13. DAMAGE, DESTRUCTION AND TERMINATION.

13.1 Uninsured Risks. If, during the Term of this Lease, the Premises is totally or partially destroyed from a risk not covered by the insurance described in Section 19.2, the City, DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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at its option, may elect to terminate this Lease by giving notice to Lessee or may elect to restore the same. However, as to destruction which was caused by an act or omission of Lessee, its employees, agents, invitees or permittees, Lessee shall reimburse the City the full cost of the restoration of the Premises, and all leasehold improvements therein under any circumstances. If the City elects to restore the Premises, Lessee shall be entitled to a proportionate reduction of rent while such repairs are being made. Such reduction shall be in an amount which bears the same proportion to the Base Rent as the floor area of that portion of Premises which has been damaged or is otherwise unusable by Lessee, bears to the total floor area of the Premises, except that if the damage or destruction is to more than 50% of the square footage of the Premises and Lessee ceases to occupy the Premises, such proportionate reduction shall be 100%.

13.2 Insured Risks.

13.2.1 If, during the Term of this Lease, the Premises is totally or partially destroyed from a risk covered by insurance described in Section 19.2, the City shall forthwith repair the same to substantially the same condition they were in immediately prior to the destruction and to the extent of proceeds received under such insurance, provided such repairs can be made within ninety (90) days under then existing law. Such destruction shall in no way annul or void this Lease, except that Lessee shall be entitled to a proportionate reduction of rent while such repairs are being made, including but not limited to the foregoing ninety days, such proportionate reduction to be equal to, and granted upon the City’s receipt of, the proceeds received by the City from any rental interruption insurance maintained by Lessee. Such reduction shall be in an amount which bears the same proportion to the minimum monthly rent as the floor area of that portion of the Premises which has been damaged or is otherwise unusable by Lessee bears to the total floor area of the Premises. If such repairs cannot be made in 90 days, the City may, at its option, make same within a reasonable time, this Lease continuing in full force and effect and the rent being proportionately reduced as aforesaid. In the event that the City does not so elect to make such repairs which cannot be made in 90 days, or such repairs cannot be made under such then existing law, this Lease shall terminate.

13.2.2 Notwithstanding any other provision of this Lease, if, at any time during the term of this Lease, the Premises is totally or partially destroyed and (i) the total cost to repair the Premises exceeds One Hundred Thousand Dollars($100,000), or (ii) twenty percent (20%) of the Project is damaged or destroyed (and whether or not any portion of the Premises is also damaged or destroyed), the City may elect to terminate this Lease by written notice to Lessee.

Determination of the extent of damage or destruction and the time for effectuating repair shall be made by the City based upon written appraisals and insurance adjustment reports, and shall be final and binding on the Parties.

13.3 Extent of Obligation. Notwithstanding the foregoing, the City shall not be required to repair, reconstruct, or restore damage or destruction by fire or other cause to any portion of the Premises constructed by or for Lessee, and Lessee shall at its sole cost and expense fully restore or replace its stock in trade, trade fixtures, furniture, furnishings, equipment, and other personal property. Lessee shall commence all such replacement and restoration work promptly following the occurrence of any such damage or destruction, and shall diligently prosecute such work to completion. Lessee hereby waives any statutory rights of termination which may arise by reason of any partial or total destruction of the Premises or any part thereof.

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released thereby from any further obligations hereunder except for obligations which, prior to the date of such termination, had already accrued, and except as provided in the following sentence.

In the event of such a termination, all proceeds from Lessee’s insurance which pertain to alterations or improvements to the Premises which would otherwise become the property of the City upon expiration or termination of this Lease shall be disbursed and paid to the City.

13.4 Force Majeure/Excusable Delay. Except as provided in this Lease, any act of City or Lessee required by this Lease to be done within a specified time shall be subject to Excusable Delay. Lessee’s obligation to pay Rent, however, is not excused by this Section. “Excusable Delay” means prevention, delay or stoppage due to strikes, lockouts, labor disputes, Acts of God, inability to obtain labor, materials or reasonable substitutes, governmental restrictions, governmental regulation, governmental controls, judicial orders, enemy, or hostile governmental actions, civil commotion, fire or other casualty, and other causes beyond the reasonable control of Lessee or City (excepting, however, City’s or Lessee’s financial inability), which shall excuse the performance by City or Lessee for a period equal to the prevention, delay or stoppage, except the obligations imposed with regard to rent to be paid by Lessee pursuant to this Lease. In the event any work performed by Lessee or Lessee’s contractors results in a strike, lockout, and/or labor dispute, the strike, lockout, and/or labor dispute shall not excuse the performance by Lessee of the provisions of this Lease.

13.5 Waiver. City and Lessee waive the provisions of any statutes which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease.

14. SIGNS.

Lessee shall not construct, maintain or place any signs, advertising or other exterior decoration (collectively, “Signs”) upon the exterior of the Premises or Project, or modify any existing Signs, without prior written consent of City. Any Sign that Lessee has the right to place, construct or maintain shall comply with all laws at all times during the term of this Lease, and Lessee shall obtain any approval required by such law. City makes no representation with respect to Lessee’s ability to obtain such approval.

15. ASSIGNMENT AND SUBLETTING.

15.1 City’s Consent Required. Lessee shall not assign this Lease, nor any interest therein, and shall not sublet or encumber the Premises or any part thereof, nor any right or privilege appurtenant thereto, nor allow or permit any other person(s) to occupy or use the Premises, or any portion thereof, without the prior written consent of City, such consent not to be unreasonably delayed, withheld, or denied. This Lease shall be binding upon any permitted assignee or successor of Lessee. Consent by City to one assignment, subletting, occupation or use by another person shall not be deemed to be consent to any subsequent assignment, subletting, occupation or use by another person. No assignment, subletting, or encumbrance by Lessee shall release it from or in any way alter any of Lessee’s obligations under this Lease. Any assignment, subletting, encumbrances, occupation or use contrary to the provisions of this Lease shall be void and shall constitute breach of this Lease. City may assign any of its rights hereunder without notice to Lessee.

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15.2 No Release of Lessee. No subletting or assignment as approved by City shall release Lessee of Lessee’s obligation or alter the primary liability of Lessee to pay the rent and to perform all other obligations by Lessee hereunder. The acceptance of rent by City from any other person shall not be deemed to be a waiver by City of any provision hereof. In the event of default by any approved assignee or other successor of Lessee in the performance of any of the terms hereof, City may proceed directly against Lessee without the necessity of exhausting remedies against such assignee or successor.

16. DEFAULTS; REMEDIES.

16.1 Defaults. The occurrence of any one or more of the following events shall constitute a material default or breach of this Lease by Lessee:

16.1.1 Abandonment of the Premises by Lessee as defined by California Civil Code § 1951.3;

16.1.2 Failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of ten (10) business days after written notice thereof from City to Lessee. In the event City serves Lessee 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 Lessee to observe or perform any of the covenants, conditions or provisions of this Lease in any material respect to be observed or performed by Lessee where such failure shall continue for a period of thirty (30) days after written notice thereof from City to Lessee; provided, however, that if the nature of Lessee’s default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion;

16.1.4 Making by Lessee of any general arrangement or assignment for the benefit of creditors; Lessee’s becoming a “debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); the appointment of a bankruptcy trustee or receiver to take possession of all or substantially all of Lessee’s assets located at or on the Premises or of Lessee’s interest in this Lease where possession is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of all or substantially all of Lessee’s assets located at or on the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within thirty (30) days.

16.2 Remedies. In the event of any material default or breach by Lessee, 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 Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises and all alterations to City. In such event, City shall be entitled to DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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recover from Lessee all damages incurred by City by reason of Lessee’s default including, but not limited to, the cost of recovering possession of the Premises and alterations, expenses of reletting, including necessary renovation and alteration of the Premises and alterations, reasonable attorneys’ fees, the worth at the time of the award of the unpaid rent that had been earned at the time of termination of this Lease and the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided.

16.2.2 Maintain Lessee’s right to possession, in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises. In such event, City shall be entitled to enforce all of City’s rights and remedies under this Lease, including the right to recover rent as it becomes 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.

16.3 No Relief from Forfeiture after Default. Lessee waives all rights of redemption or relief from forfeiture under California Code of Civil Procedure §§ 1174 and 1179, and any other present or future law, in the event Lessee is evicted or City otherwise lawfully takes possession of the Premises by reason of any default or breach of this Lease by Lessee.

17. INTEREST 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. CITY’S ACCESS.

18.1 Access for Inspection. City and City’s agents shall have the right to enter the Premises at reasonable times, upon not less than twenty-four (24) hours prior notice to Lessee or less in case of an emergency), for the purpose of inspecting same, showing same to prospective purchasers, lenders, lessees or others, and making such alterations, repairs, improvements or additions to the Premises as City may deem necessary. 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 Lease” signs, all without rebate of rent or liability to Lessee.

18.1.1 City will conduct Premises inspections on a quarterly basis to identify maintenance issues that require attention. City will provide to Lessee a report specifying such maintenance issues as are identified that are Lessee’s responsibility under this Lease, and if appropriate, City will provide the estimated cost for services to perform the maintenance.

18.2 No Warranty. Except as otherwise stated in this Lease, Lessee hereby acknowledges that neither the City nor any employees or agents of the City has made any oral or written warranties or representations to Lessee relative to the condition or use by Lessee of said Premises and Lessee acknowledges that Lessee assumes all responsibility regarding the Occupational Safety and Health Act, the legal use and adaptability of the Premises and compliance with all applicable laws and regulations in effect during the term of this Lease.

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18.3 Security Measures. City shall have the right to require a reasonable security system, device, operation or plan be installed and implemented to protect the Premises or any alterations. Should City, in its sole discretion, require Lessee to install such a security system, Lessee agrees to bear the sole cost and expense of any security system, device, operation or plan and the installation and implementation thereof. Lessee shall obtain City’s prior approval before installing or implementing any security system, device, operation or plan.

19. INSURANCE.

19.1 Lessee Insurance. Lessee’s responsibility for the Premises begins immediately upon the Commencement Date and Lessee, at its sole cost and expense, and at no cost to City, shall provide and maintain in full force and effect during the entire term of this Lease insurance coverage in an amount(s) 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 Lessee’s employees, if any, and all vehicles operated on the Premises. The policies shall include the required endorsements, certificates of insurance and coverage verifications as described in Exhibit C. Lessee also agrees to secure renter’s liability insurance.

19.2 Fire Insurance on Project. City shall maintain insurance (or self-insurance through City’s joint pool coverage plan) covering the Project.

20. CONTRACT FOR ADMINISTRATIVE SERVICE.

To the extent that this Lease is a contract for administrative services, the City Council entered into such agreement upon recommendation of the City Manager pursuant to Section 1108 of the City’s Charter. The policy decision with respect to the services was made by the City Council and not by the City Manager.

21. DISPUTE RESOLUTION.

21.1 Unless otherwise mutually agreed to or as provided in Section 21.5, any controversies between Lessee and City regarding the construction or application of this Lease, and claims arising out of this Lease or its breach shall be submitted to mediation within thirty (30) days of the written request of one Party after the service of that request on the other Party.

21.2 The Parties may agree on one mediator. If they cannot agree on one mediator, the Party demanding mediation shall request the Superior Court of Santa Clara County to appoint a mediator. The mediation meeting shall not exceed one day (eight (8) hours). The Parties may agree to extend the time allowed for mediation under this Lease.

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

21.4 Except as provided in Section 21.5, mediation under this section is a condition precedent to filing an action in any court. In the event of litigation arising out of any dispute related to this Lease, the Parties shall each pay their respective attorney’s fees, expert witness costs and cost of suit, regardless of the outcome of the litigation.

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21.5 Nothing in this Section shall require the City to mediate any eviction, unlawful detainer, or other exercise of remedies following the expiration of the Term of this Lease as provided in Section 2 or any termination of this Lease under Section 16.

22. PAYMENTS/PARTIAL PAYMENTS.

Payments shall be effective upon receipt. City may apply any payment received from Lessee at any time against any obligation due and owing by Lessee under this Lease, regardless of any statement appearing on or referred to in any remittance from Lessee or any prior application of such payments. Acceptance by City of a partial payment of rent or other charges shall not be considered or construed to waive any right of City or affect any notice of legal proceedings, unless both Parties shall agree otherwise in writing. The receipt by City of a partial payment of any amount due to City endorsed as payment in full will be deemed to be a partial payment only, and any endorsements or statements on the check or any letter accompanying the check shall not be deemed an accord and/or satisfaction, and, notwithstanding said endorsements, City may accept and deposit said check without prejudice to its right to recover the balance. Lessee’s obligation (without prior notice or demands) to pay rent and all other amounts due hereunder shall be absolute and unconditional, and not subject to any abatement, set off, defense, recoupment or reduction.

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

No official or employee of City shall be personally liable for any default or liability under this agreement.

24. NON-DISCRIMINATION.

Lessee covenants it shall not discriminate based upon race, color, creed, religion, sex, marital status, age, handicap, national origin or ancestry in any activity pursuant to this agreement.

25. CONFLICT OF INTEREST.

Lessee shall at all times avoid conflict of interest or appearance of conflict of interest in performance of this agreement.

26. MEMORANDUM OF LEASE.

Lessee shall not record this Lease or a memorandum thereof, or any other reference to this Lease, without the prior written consent of the City. Lessee, upon the request of the City, shall execute and acknowledge a Memorandum of Lease for recording in the official records of Santa Clara County. Upon termination or expiration of this Lease, Lessee shall execute and record a quitclaim deed as to its leasehold interest.

27. ESTOPPEL CERTIFICATE.

Lessee shall, from time to time, upon at least ten (10) days prior written notice from City, execute, acknowledge and deliver to City a statement in writing (i) certifying this Lease is unmodified and in full force and effect, or, if modified, stating the nature of the modification and certifying that the Lease, as modified, is in full force and effect, and the date to which the rental DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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and other charges, if any, have been paid; and, (ii) acknowledging that there are not to Lessee’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 Project.

28. LIENS.

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

29. VACATING.

Upon termination of the tenancy, Lessee shall completely vacate the Premises, and Project, including the removal of any and all of its personal property and fixtures (whether or not identified on the Inventory of Fixtures (Exhibit B). Before departure, Lessee shall return keys and the Premises (including Lessee Improvements) to City the same condition in which it was received. Lessee shall allow City to inspect the Premises to verify the condition of the Premises and its contents.

30. ABANDONMENT.

Lessee’s absence from the Premises for three (3) consecutive days, without prior notice, during which time rent or other charges are delinquent, shall be deemed abandonment of the Premises and a material default by Lessee entitling City to the remedies in Section 16 above, including the right to terminate this Lease. In the event of such termination, City shall be authorized to enter and take possession and to remove and dispose of the property of Lessee and its employees, agents, contractors and invitees without any liability whatsoever to City.

31. PROPRIETARY AND GOVERNMENTAL ROLES; ACTIONS BY CITY.

Except where clearly and expressly provided otherwise in this Lease, the capacity of the City in this Lease shall be as owner and lessor of property only (“Proprietary Capacity”), and any obligations or restrictions imposed by this Lease on the City shall be limited to that capacity and shall not relate to, constitute a waiver of, supersede or otherwise limit or affect its governmental capacities, including enacting laws, inspecting structures, reviewing and issuing permits, and all of the other legislative and administrative or enforcement functions pursuant to federal, state or local law (“Governmental Capacity”). When acting in its Proprietary Capacity, discretionary actions may be undertaken by the City Manager or other designees as designated by the City Manager to the extent otherwise provided for in this Lease. In addition, nothing in this Lease shall supersede or waive any discretionary or regulatory approvals required to be obtained from the City under applicable law, nor guarantee that the City, in its Governmental Capacity, will grant any particular request for a license, permit or other regulatory approval. Lessee understands that the City may grant or deny such request in its sole discretion, and may impose such terms and conditions as it deems consistent with that discretion and applicable laws.

32. HOLDOVER.

Lessee has no right to retain possession of the Premises or any portion thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over after the expiration of the term without executing a new lease, then such holding over shall be construed as a tenancy DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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from month-to-month, subject to all conditions, provisions and obligations of this Lease insofar as they are applicable to a month-to-month tenancy, except that the Base Rent portion of the rent shall be increased to 150% of the amount of the Base Rent payable immediately prior to the expiration or termination of the Lease, as the case may be. Nothing contained herein shall be construed as consent of City to any holding over by Lessee.

33. NOTICES.

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

City of Watsonville
Attention: City Clerk
275 Main St. Suite 400
Watsonville, CA 95076
And to Lessee addressed as follows:

Community Arts & Empowerment
Attention: Kathleen Crocetti
240 Maple Ave.

Watsonville, CA 95076
Notices may be served upon Lessee in person or by first class mail or by certified mail to Lessee whether or not said mailing is accepted by Lessee. If notice is sent via facsimile, a signed, hard copy of the material shall also be mailed. The workday the facsimile was sent shall control the date notice was deemed given if there is a facsimile machine generated document on the date of transmission. A facsimile transmitted after 1:00 P.M. on a Friday shall be deemed to have been transmitted on the following Monday. These addresses shall be used for service of process.

34. TIME.

Time shall be of the essence in this Lease.

35. MISREPRESENTATIONS.

Any statements submitted to City in the Application to Rent by Lessee (if applicable) are considered inducements to execute this Lease. Misrepresentations shall entitle City to terminate this Lease at any time.

36. AMENDMENTS.

It is mutually agreed that no oral Leases have been entered into and that no alteration or variation of the terms of this Lease shall be valid unless made in writing and signed by the Parties to this Lease.

37. INDEPENDENT LEGAL ADVICE.

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Each Party represents and warrants to the other the following: they have carefully read this Lease, and in signing this Lease, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Lease, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Lease; and, they have freely signed this Lease without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Lease, and without duress or coercion, whether economic or otherwise.

38. SERVICE CHARGE.

A service charge of twenty dollars ($20.00) will be made for each check that must be resubmitted for payment.

39. SIGNING AUTHORITY.

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

40. CHANGE OF LOCKS.

Lessee may install new locks on all exterior doors. Lessee shall advise City of such action and shall provide City with keys to said locks. Lessee shall also deliver to City the old locks with keys. Upon termination, Lessee shall leave new locks that shall become the property of City.

41. CAPTIONS/RECITALS.

The captions of the various sections, paragraphs and subparagraphs of this Lease are for convenience only and shall not be considered or referred to in resolving questions of interpretation. All of the recitals of this Lease, and the defined terms set forth therein, are incorporated into and made a part of this Lease by this reference.

42. REPAIRS.

Except as expressly provided in this Lease, City shall have no obligation to repair or maintain the Premises or any alterations thereto or facilities placed therein. Lessee expressly waives the benefit of any statute now or hereinafter in effect which would otherwise afford Lessee the right to make repairs at City’s expense or to terminate this Lease because of City’s failure to keep Premises in good order, condition and repair. Lessee shall not call on City to make any improvements or repairs to said property of any kind whatsoever.

43. SURRENDER OF LEASE NOT MERGER.

The voluntary or other surrender of this lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of City, terminate all or any existing subleases or subtenancies, or may, at the option of City, operate as an assignment to it of any and all such subleases or subtenancies.

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44. INTEGRATED DOCUMENT; AMENDMENTS.

This Lease, including any exhibits attached hereto, embodies the entire agreement between City and Lessee and its terms and conditions. No other understanding, agreements, conversations or otherwise, with any officer, agent or employee of City prior to execution of this Lease shall affect or modify any of the terms or obligations contained in any documents comprising this Lease. Any such verbal agreement shall be considered as unofficial information and in no way binding upon City. This Lease may be modified only by a written amendment duly executed by the Parties to this Lease, pursuant to Section 37 entitled “Amendments.” All agreements with City are subject to approval of the City Council before City shall be bound thereby.

45. WAIVER.

Waiver by City of one or more conditions of performance or any breach or condition under this Lease shall not be construed as a waiver(s) of any other condition of performance or subsequent breaches or conditions. The subsequent acceptance by a Party of 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 Lease. 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 privileges hereunder and 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.

46. INTERPRETATIONS.

In construing or interpreting this Lease, the word “or” shall not be construed as exclusive and the word “including” shall not be limiting. The Parties agree that this Lease shall be fairly interpreted in accordance with its terms without any strict construction in favor of or against any other Party.

47. SEVERABILITY CLAUSE.

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

48. GOVERNING LAW.

This Lease shall be governed and construed in accordance with the statutes and laws of the State of California.

49. VENUE.

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

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50. COMPLIANCE WITH LAWS.

Lessee shall not use the Premises or permit anything to be done in or about the Premises which will in any way conflict with any law, statute, zoning restriction, ordinance or governmental law or rule, regulation, or requirement, including any Hazardous Materials laws or regulations, of any duly constituted public authorities now in force or which may hereafter be enacted or promulgated, or which will subject City to any liability for injury to any person or property by reason of any business operation being conducted in or about the Premises. To the extent required due to Lessee’s specific use of the Premises, alterations of the Premises made by Lessee, or as a result of Lessee’s application for permits or authorizations, Lessee shall, at its sole cost and expense, promptly comply with all applicable laws, statutes and ordinances, governmental rules, regulations, orders, permits, licenses, approvals, authorizations, federal and state disability laws, and other requirements including the Americans with Disabilities Act (“ADA”) of 1990 (42 U.S.C. 12101 et seq.), together with any amendment thereto or regulations promulgated under any of the foregoing, and any state or local ordinances or codes enacted pursuant thereto, and with all requirements of any board or fire insurance underwriters or other similar bodies, now or hereafter constituted, relating to or affecting the condition, use, or occupancy of the Premises by Lessee, any improvements or alterations made by, on behalf of, or for Lessee, or any other Lessee acts or omissions. The final judgment of any court of competent jurisdiction or the admission of Lessee in any action against Lessee, whether City be a party thereto or not, that Lessee has violated any laws shall be conclusive of that fact as between City and Lessee. Lessee, within ten (10) days after receipt, shall provide City with copies of any notices it receives regarding a material violation or alleged material violation of any Laws.

Lessee shall also cause its agents, contractors, subcontractors, employees, customers, and subtenants to comply with all applicable laws.

51. COUNTERPARTS; ELECTRONIC SIGNATURES.

This Lease may be executed in counterparts, each of which shall be deemed to be an original, but both of which shall constitute one and the same instrument; and, the Parties agree that signatures on this Lease, including those transmitted electronically by email or facsimile, shall be sufficient to bind the Parties.

52. ACCESSIBILITY; DISABILITY LAWS.

52.1 The Premises have not undergone an inspection by a Certified Access Specialist.

52.2 “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” DocuSign Envelope ID: 60B86000-B167-4A42-9A57-5C6A26448749

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52.3 Since compliance with the ADA and other federal and state disability laws (collectively, “Disability Laws”) is dependent upon Lessee’s specific use of the Premises, City makes no warranty or representation as to whether or not the Premises comply with Disability Laws. In the event that Lessee’s use of the Premises requires modifications or additions to the Premises in order to be in compliance with Disability Laws, Lessee agrees to make any such necessary modifications and/or additions at Lessee’s sole cost and expense.

53. OFAC COMPLIANCE.

Lessee represents and warrants to City that Lessee is not a party with whom City is prohibited from doing business pursuant to the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury, including those parties named on OFAC’s Specially Designated Nationals and Blocked Persons List. Lessee is currently in compliance with, and shall at all times during the term of this Lease remain in compliance with, the regulations of OFAC and any other governmental requirement relating thereto. In the event of any violation of this section, City shall be entitled to immediately terminate this Lease and take such other actions as are permitted or required to be taken under law or in equity. LESSEE

SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CITY FROM AND AGAINST

ANY AND ALL CLAIMS, DAMAGES, LOSSES, RISKS, LIABILITIES AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COSTS) INCURRED BY CITY ARISING FROM OR RELATED TO ANY BREACH OF THE FOREGOING CERTIFICATIONS. These indemnity obligations shall survive the expiration or earlier termination of this Lease.

54. NO BROKERAGE.

City is represented in this transaction by Self (“City’s Agent”). Brokerage fees, commissions or other payments owed to City’s Agent, if any, in connection with this Lease transaction shall be paid by City per the terms of a separate agreement between City and City’s Agent. Lessee represents and warrants to City that Lessee is represented in this transaction by Self (“Lessee’s Agent”). Fees, if any, payable to Lessee’s Agent, if applicable, shall be paid pursuant to separate agreement(s) between City’s Agent and Lessee’s Agent or between Lessee and Lessee’s Agent.

Lessee shall indemnify and defend City from and against any claims made by Lessee’s Agent or any other person or entity purporting to represent Lessee in this transaction for any finder’s fee, brokerage fee, commission or other payment claiming through Lessee or its affiliates with respect to the execution of this Lease or the consummation of the transaction contemplated hereby.
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