CC Resolution No. 21-099 approving a first amendment to the Current Lease Agreement for lease of real property (water system) with San Jose Water CompanyF1RST AMENDMENT
TO AMENDED AND RESTATED AGREEMENT
FOR LEASE OF REAL PROPERTY (WATER SYSTEM)
This First Amendment (" Amendment") to the Amended and Restated Agreement for
Lease of Real Property (Water System), dated December 17, 2019 ("Lease"), is entered
into on the date of full execution of this Amendment ("Effective Date"), by and
between the City of Cupertino, a California municipality (''City') and San Jose Water
Company, a California corporation ("Lessee") (individually, a "Party" and collectively,
the "Parties") with reference to the following recitals:
RECITALS
A. Any capitalized terms not otherwise defined in this Amendment have the same
meaning as specified in the Lease.
B. Pursuant to Lease Section 2 (Term of Lease), the Lease Term shall expire on
September 30, 2022.
C. The Gty intends to initiate a new request for proposals ("RFP") process pursuant
to Public Utilities Code section 10061, to solicit proposals for leasing the Water
System following expiration of the Lease.
D. Because the timing and outcome of the RFP process cannot be predicted, the City
wishes to have the option of extending the Term of the current Lease long
enough to allow the City to transition to whichever course of action the Gty
adopts at the conclusion of the RFP process, depending on the City s
determination of the best interest for the Water System.
E. The best interest for the Water System, as determined by the City Council for the
City following the RFP process, may include transitiorung to a new lease
agreement, transitioning to City operation of the Water System; or seeking to sell
the Water System.
F. Therefore, the Parties have agreed to amend the Lease in order to extend the
Term of the Lease, upon request by the City, for an additional six months, two
years, or three years, depending on the City's best interest determination and
associated transition needs, with a commensurate extension of Lessee's
obligations regarding the Capital Improvements Funds.
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G. Based on the foregoing and for good and valuable mutual consideration, the
receipt and adequacy of which is acknowledged by both Parties, the Parties agree
to amend the Lease as set forth below.
TERMS
1. Term Extension. Upon written request by City, submitted to Lessee no later than
April 30, 2022 in accordance with Lease Section 21 (Notices), Lease Section 2 (Term of
Lease) shall be amended as specified in the City's written request for one of the three
options set forth below, with all remaining provisions in Lease Section 2, including the
option for earlier termination, to remain in full force and effect.
A. Six -Month Extension. If the City requests a six-month Term extension, the
Term shall be extended from twenty-five (25) years to twenty-five (25) years and
six (6) months ("Six-Month Extension").
B. Two -Year Extension. If the City requests a two-year Term extension, the Term
shall be extended from twenty-five (25) to twenty-seven (27) years (uTwo-Year
Extension").
C. Three-Year Extension. If the City requests a three-year Term extension, the
Term shall be extended from twenty-five (25) to twenty-eight (28) years (11Three•
Year Extension").
2. Capital Improvements Funds. Lessee's obligations with respect to Capital
Improvement Funds as set forth in Lease Section 7 (Operation of Water System) shall be
amended as follows, depending on whether City requests a Six-Month Extension, Two-
Year Extension, or a Three-Year Extension:
A. Amendments to Subsection 7.A(2). Lease subsection 7.A(2) (Lessee's Capital
Improvements) shall remain in full force and effect, except as follows:
(1) Six-Month Extension. If the Oty requests a Six-Month Extension, the
second paragraph in Lease subsection 7.A(2) (Lessee's Capital
Improvements) shall be modified to require Lessee to expend an
additional three hundred fifty thousand dollars ($350,000), for a total
expenditure of five million three hundred fifty thousand dollars
($5,350,000) for Capital Improvements Funds, and to do so by March 31,
2023 instead of by September 30, 2022.
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(2) Two -Year Extension . If the City requests a Two-Year Extension, the
second paragraph in Lease subsection 7.A(2) (Lessee's Capital
Improvements) shall be modified to require Lessee to expend an
additional one million six hundred thousand dollars ($1,600,000), for a
total expenditure of six million six hundred thousand dollars ($6,600,000)
for Capital Improvements Funds, and to do so by September 30, 2024
instead of by September 30, 2022.
(3) Three-Year Extension. If the City requests a Three-Year Extension, the
second paragraph Lease subsection 7.A(2) (Lessee's Capital
Improvements) shall be modified to require Lessee to expend an
additional two million five hundred thousand dollars ($2,500,000), for a
total expenditure of seven million five hundred thousand dollars
($7,500,000) for Capital Improvements Funds, and to do so by September
30, 2025 instead of by September 30, 2022.
B. Amendments to Subsection 7.A(l0). Lease subsection 7.A(lO) (Capital
Improvements Funds) shall remain in full force and effect, except as follows:
(1) Six-Month Extension. If the City requests a Six-Month Extension, Lessee
must, within 45 days following the date of City's request, submit a scope
of work for expenditure of three hundred fifty thousand dollars ($350,000)
in addition to the five million dollars ($5,000,000) specified therein for
Capital Improvement Projects for Oty authorization; and the second to
last sentence shall be amended to provide that Lessee shall not be
obligated to expend any amount in excess of the amended total of five
million three hundred fifty thousand dollars ($5,350,000) of the Capital
Improvements Funds on Capital Improvement Projects. If the City
terminates the Lease before the expiration of the Six-Month Extension,
Lessee shall only be responsible for a prorated amount of the additional
expenditure, calculated as one-sixth (1/6) of three hundred fifty thousand
dollars ($350,000) for each month,. including partial months, that the Six-
Month Extension is in effect. If Lessee has invested more than the three
hundred fifty thousand dollars ($350,000) at expiration of the Lease or
more than the prorated portion in the case of early Lease termination due
to an emergency event requiring additional expenditure of Capital
Improvement Funds authorized in writing in advance by the City, the
City shall remit to Lessee an amount equal to the difference between such
amount and the actual amount that Lessee invested pursuant to the City's
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authorization within thirty (30) days of Lease expiration. The terms and
conditions set forth in this paragraph will survive termination or
expiration of the Lease.
(2) Two-Year Extension. If the City requests a Two-Year Extension, Lessee
must, within 45 days following the date of City's request, submit a scope
of work for expenditure of one million six hundred thousand dollars
($1,600,000) in addition to the five million dollars ($5,000,000) specified
therein for Capital Improvement Projects for City authorization; and the
second to last sentence shall be amended to provide that Lessee shall not
be obligated to expend any amount in excess of the amended total of six
million six hundred thousand dollars ($6,600,000) of the Capital
Improvements Funds on Capital Improvement Projects. If the City
terminates the Lease before the expiration of the Two-Year Extension,
Lessee shall only be responsible for a prorated amount of the additional
expenditure, calculated as one twenty-fourth (1/24) of one million six
hundred thousand dollars ($1,600,000) for each month, including partial
months, that the Two-Year Extension is in effect. If Lessee has invested
more than the one million six hundred thousand ($1,600,000) at expiration
of the Lease or more than the prorated portion in the case of early Lease
termination due to an emergency event requiring additional expenditure
of Capital Improvement Funds authorized in writing in advance by the
City, the City shall remit to Lessee an amowit equal to the difference
between such amowit and the actual amount that Lessee invested
pursuant to the City's written authorization, within thirty (30) days of
Lease expiration. The terms and conditions set forth in this paragraph will
survive termination or expiration of the Lease.
(3) Three-Year Extension. If the City requests a Three-Year Extension,
Lessee must, within 45 days following the date of City's request, submit a
scope of work for expenditure of two million five hundred thousand
dollars ($2,500,000) in addition to the five million dollars ($5,000,000)
specified therein for Capital Improvement Projects for City authorization;
and the second to last sentence shall be amended to provide that Lessee
shall not be obligated to expend any amount in excess of the amended
total of seven million five hundred thousand dollars ($7,500,000) of the
Capital Improvements Funds on Capital Improvement Projects. If the
City terminates the Lease before the expiration of the Th.ree-Year
Extension,. Lessee shall only be responsible for a prorated amount of the
additional expenditure, calculated as one thirty-sixth (1/36) of two million
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five hundred thousand dollars ($2,500,000) for each month, including
partial months, that the Three-Year Extension is in effect. If Lessee has
invested more than the two rrrillion dollars five hundred thousand
($2,500,000) at expiration of the Lease or more than the prorated portion in
the case of early Lease termination due to an emergency event requiring
additional expenditure of Capital Improvement Funds authorized in
writing in advance by the City, the City shall remit to Lessee an amount
equal to the difference between such amount and the actual amount that
Lessee invested pursuant to the City's written authorization, within thirty
(30) days of Lease expiration. The terms and conditions set forth in this
paragraph will survive termination or expiration of the Lease.
4. Addendum. The Citys written request for a Term extension shall be deemed an
addendum to this Amendment and incorporated by reference herein.
5. General Provisions.
A. Limitations . Except as expressly modified by this Amendment, all provisions
of the Lease shall remain in full force and effect.
B. Recitals. The .recitals to this Amendment are true and correct and are hereby
made part of this Amendment.
C. Interpretation and Severability. The terms of th.is Amendment have been
negotiated by the Parties and the language used in this Amendment is deemed to
be the language chosen by the Parties to express their mutual intent. This
Amendment shall be construed without regard to any presumptions or rules of
construction against the drafting party. In the event of any ambiguity or
inconsistency affecting interpretation of this Amendment, this Amendment shall
be interpreted to effectuate the Pru:ties' intent as set forth in the recitals . If any
provision in th.is Amendment, or portion thereof, is determined by a court of
competent jurisdiction to be illegal, invalid, or unenforceable, the remaining
provisions or portions thereot shall remain in full force and effect.
D. Effective Date. The Effective Date of th.is Amendment is the date of full
execution of this Amendment by the Parties, as set forth in the initial paragraph
of this Amendment.
[Signature page fallows.]
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WHEREFORE, the Parties agree to the terms of this Amendment as witnessed by
their signatures below.
CITY OF CUPERTINO
Date: {I /17/-z._o-z.. I ---------
ATTEST:
By:
Kirsten Squarcia, City Clerk
APPROVED AS TO FORM:
By:~~ P. ~
Christopher D. J~ Attorney
LESSEE: SAN JOSE WATER COMPANY
Alfi}re-w-, ~ 99"' By: ___________ _ Date: .Oct 22, 2021
[ name, title J
Andrew R. Gere
President and COO
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AI\JF:NDEI> AND RESTATED AGREl•:MENT
FOR LEASE OF REAL PROPERTY (\VATER SYSTEM)
THIS Ar-.H '.NDIJ) /\ND RESTATED AGREEMEN .T FOR U:ASE OF REAL
PROPERTY ( W,t\ Tf.R SYS ff.Ml r·Lease ") i'..i entereJ into as of-~_._ 1 .·'. . b~t\\ecn th~
CITY Of CUPERTINO <h.-:rcinatler rc~crrcd to as ·•Cit:f-). and SAN .I< isr: \\' ATER COMPANY.
a Cnlifomia Cl1rporntiun r--Le.ssec··i (collci.:tivcly "Parties")\\ ith rcfercm:e Ill the li.1 llowing facts
aml intentions:
RECl1ALS:
WI I ER FAS . rriur tD City·s incorporation in 1955 . anu continuing thereafter. thi:: Cupertino
~rea was provided with wiiter si::n ic e by i1n·es1or-o,, ned private utilit) com pan ks including s~n
Jose Waler Works. the predecessor to Lessee: and
WHEREAS. in 1958. Cit~ granted San J11se \Vut<!r Works (the: !()1111er niime or Le5sec) a
fr~mchisc t0 construct. opcrnlc . mainlain. and improve a portion nf the ,, ater system \\ ithin tht
City of Cupcnino. \\hid1 l.c~scc pri\ald} O\\ n~ anJ uperutes in exchange for payment ur a
fram:hist fee <;et by Chapter,; 6 16 unt.l 6.20 . rcspccti1.dy . of the Cupcrtino Municipal Code: ~md
\VlffREA~. from :ib11ut 1960 until ncwbcr I. 1997. in the ar~as nl)I alreauy sencJ by thi.:
privat..: watc:r r.:omp,mi..:s. ('il) j1J\1vidl!d water si.:rvice to arrroximately 4.200 (c urrently
appro:-.:imatel::, 4 .400) mctt"rcd cuslumcrs in the ::;ervice an:a Jt::-;cri bed in Exhibit.-\ attached here IL•
(as ,;;uch sen ii.:~ area ma::, chungc frum lime tn timt in acc o rdanee-,vith this teas~. the "Sen'ict!
Arca"J: and
WHERl:.AS. as a result. Cupertino \\'as scn,cd hy tlrn::c mughl} c~ua!-sizt: 1,vatcr S).':items :
a city~(1wned system 1,,ithin the ~ervii.:I;' Ari:a an<l t,w others o\vrn:d and operat~d b) imestor-
O\\ned utilities : :.1nd
Wl ·H:.REAS. within th~ Service Area , Cit) is the O\\•nc-r of certain rt:-al prorc11y. casein ems
anu rights nf \\a) and those certain rip~s. mains . pumps and appurtenant facililit:s ( including
without limitation buildings, pump house~. ~hcds and other ,;trudures) constituting all L)f City's
\\Uler S)stem (the "Watl'r System··) as gc:nerall::, depic-1..:d in Exhibit B attached hcrt'lO anJ 11W)
be upuatcJ from time to lime. anu
\VHt::Rl ~/\S. Cit) hu~ no kgul obl1gati r1n tu pnwidc public \\n(cr gc1-vice ti·1 it::. resident~
anu desired LP terminate its wlc in th\.' pr1n'i)i1)n of w::ih!r -;ervi1.'e ~md allm, those sen kc:-to be
provided cit)-\\tdc exclus ive!) h) i1m:'stilr-O\\Jh!u utilities: and
WHLRFAS . Cit)-nm} lt>as c rrorerty IL) private pnrtics rursuant LI, Cilifornia (\mstitutinn
;\rticle XI Si.:ction 9: (,civ-:rninent C ,1dc ~ecli(lns .17350. 37380 ~rnd J7>CJ5 : and Puhlii.: liri!ities
Code ScctiLms 10003_ 1non-1. and 1006L nnd
WI IERL.\S . pursuant tu tlie requiri.:m..:11t::. Lil' Publil' L. tililii.:., C11Ji.: s~•<.:Lil,11 I 006 Lin 1997
Clly <:nn sid i.:ri.:d t\\ o ll!asi.: propt)sals l'rom i.:~ ist ing im t.·stnr-ln,,neJ uti I it ies upi.:ral ing. in Cuperti1w
tu orernll.: the \\':11er Syst<:111 . 1\s a n:~ult. thi.: C iI) C1)lJ11cil f1.1und th.it Lc·ssec wa:-the hest qualitied
oper.i!ur tlwt cou Id con, i nuc tu rmv iJc c:quul or better service lo the L'L1Sto111ers oflhe \\ mer S~·stem
rorjust cornpcns,uiun: nnJ 1m tlwl basis grantl'tl a conee)sion tti Lessi.:e: and
\Vl ·IEIUJ\S. the Parties en tcrtd imo an .'\gn:e1rn:nt l't,r Lease nl' R1.:al Prupert) (Water
System) dati.:d O<.:tL1ber I. 1997 /"Original Lease"). \.\hich provi(.bl nir a IW ~lll)•livl' i25) )l!:.lr
term. a ...:cinl'cs:-;inn foe ot' .'So.800.000. and lltl1<..!r tl!rn,s and i.:unditions a~ cuntnine<l in the Original
Le:.isl:'.: and
WI IERl.:1\S. Cit) and Lessee mutunll} de-sire l l' mn~nd and restuli: the Urigi11.1I L.:a~e 1n
its l'ntircty I\., rdkcl up<.Jatl'd tc-rms and eondi1io11, agrt'cd tL, b) !ht: Parties : an<l
W l·lE.RC ,\ S. tht' nml!ndm.:111s ~re intended. umong othi..·r things. 111 i.:lari I') thi..· inti::nt ol' thi..·
Parties in proviJing compcnsution. prnvidtc for cupital in\·estmcnts in 1hc Water System. and
simpl if::, SJ WC s rate setting procedure with r~gard to the Lea:;;..:: ;1nJ
WHEREAS. City hus detcr111i111.:d that thi..·st' re\'bt'd knm and condition!'i (if thi: Lease
assure th:."lt rhc Waler Systt'111 ,viii continu..: tll be upcratcd anJ maintained. und th,H wnt,·r :-en kc
\\ill be pnn·idcd within the Ser\'ice /\rcu in a manner that bendit:i thl' public and l'ultills the public
purposes ril' tile Water S:, s tern: :ind
\\'I I FR[AS. such public hcnclits :111d publk purruse ., \\ill be Jll'l:'So:ncd by. nnwng ,ithers.
rl'qt1iri:mc11ls that th'.! \\'awr Sys11:m bL' clfH~ratcd and nrnintaincd . and th i: L1tili1~ sl'n·ic1.:,.; bt:
p,:rl0rnwd. i11 ;1,:,:,1rd:1ncc \\ ith 1his l.l'aSL', and in a 111<tn111.:r t.:Pn:--istt.:111 with th.: nrl!rational and
111:.iintenancc sw11Jards .. 1pplicahk IP l.1..·ss~·c ·s t 1 \\ll r~gulakd \\akr s~sk'm . :-uch as licneral Or(.kr
10] .·\ .111J Lt:-.sel'·~ c:--i~tin~ tari!h a~ appr11\d b'.I the Cilil~1rni.i Puhlic t.:1ilitii:s C\ln,111ission
("CPllC'") l(ir dtllllCSlit. \\tltcr .rnd fire 11l'" -.l!n·il'e. as ma~ be amcndcJ fnim lime t(i time (the
··Opl'r,1tioll,i I StanJ,1 rus .. J: and
\\ l·ILRE.-\S. City anJ Ll:'ss,:c mi..·t .. rnd i.:onli.:rrcd about amending the Origin.ii 11..'.l:i~. shan:d
rcle\'ulll inl<.mnation :.ind.\\ ith thi.: :iid of\.:ornpeti:nt rn un sel and a<.h isor!>, mutual I~ ncgolialt:d the
amc11dm1.:nts in .in ar111·s kngth transaction. taking in11\ account \\h<ll ctrns1i1u1~s fair and
rl.!asonable compt:11s:1tion fur 1h1:.· value ()ft he glH·crntrn:nta l prop1::rl). rights, ~,nd pri,·ilegt:"s being
l·onwyl'd lo J private 11arl y: :md
\\ HERE:\S. this Lt",lSC -;up.:rscdl?s and rt:placcs the Origin.ii L1?nse in its entirety .
.,
:\O\\'. Tl IEREFORE. in c1insiJcratit,11 or the mutual promises anJ Co\cmrnts C(Hltaincd
herein and l1x ~ot1d and v.iluablc consickra1ion . the rccc·ipl anJ a<.b7um.:y nr which the Parties
hen::by .ickntm blge . City ,rnd L~SSl.?C he1\~by :igrec ;:is fol k1ws:
Se;ctioo 1. Lease or Wnter S\'stem and Grant of Conrcs~ion.
City hereby leas~s to Lessee. anJ LcssL•e herch~ ll!a!icS rr~1m Cit). the \V.iter Sys1cm as
described nn Exhibit 13. The Wntet' System is leasecl in an ··as is"' ct,nJition . (it)· also gran\s a
conccssil)ll to Lessee 1t1 rrovidt.: \Htti:r scr\'icc \\ ithin the Scrvic:c /\rca. and in ~{111!1ectil)l1 there,, ilh.
to use. posses~. operate. rnan:1ge. 111aint:1i1). rehnbilitmc . c:,.,:pc1nd. :ind i1riprn\'c the Water S~ slcm in
exchange t'or those rates nnd c!rnrg1.'s Lessee estahli~hes in accordance ,vilh and pursuant to this
Lease. In conn:ying this interest in govemmcnrnl property to a private party. neither City nor any
0r its agcn!s hus made nny reprc.!>cnt<1tion or \\arranties with respect to the Wntcr System except as
spceificall} scl fnrlh in this Lcasc. City provided Lessee \\'ith copies of mJps. dnmings. plans and
specifications lll° the 1997 system. along with customer service :111J a<.;eount rccnrds pri~1r to lhc
Clt1sing Dille {uefincd b~lm, ). Lessee agrees t,) us~ ib best cff'orts h.ccp all i.:uswmer information
conlidential. \\'hclhcr rccei\ cJ fro in C ily nr dcwk,pcd during the Term or the Lease.
SecCion 2. Term of Lease.
The term or the I .case of the Water System shall be twenty-five (25) )Cars unk~s
tcn11in:llcd e,irlier as pw\·idcd in thi~ Leas,· < the ·T cr111 ·· ). hcginn i ng 1)11 Ck to her 1. l l}()7 ( 1 he
··Closing Datc··i.
Section J. Use of \Yater System.
Subject to the provisions of this Lc:.Jse. Lessee agrees tn use th~ \Valer System for the
purpose of furnishing potable wnter service to customers connected lo the Water System. Les.sec
ngrccs to furnish w.ltcr. including water -.crvic1c fpr fire protection. lo .ill customers in the Service
Arcn in .iccordancc \\ ith the applicable Operationnl Stand::ircls relming to sen·ice :ll all limes during
the Te rill or the Le:ise.
Lessee ha!:> ,w nuthurity t1) and shall nlH retire. sell. transfer. r.:onvcy. m encumher any rc::il
property uf the Water System ,vilht)Ut prior written permission <.•f the City. Lessee has no authority
to retire. sell nr othern isc dispose or any rNso11:il rmpeny ur the \Vat .er System without prior
\\ rittcn pennissil1n uf the Cit~
Cit: l'l.!t::iins th-: right tu ut'tli1c nr cnntinu-: t,1 utilin: :m~ pnrtion l)(' 1wrtil1ns of the \\':1t~·r
System. induding easements. l,111ks. buildin.~:;. nnd arpurtcnanccs for .in) legal ruqw se ,, llich
docs nor intcrteri.> \\ irh l.e~~ce ·-; use or the \\' mer Sy~lcm w runiish pu1:1hli: dl)lllCstic \\ ntcr service
to customers c(inncckd t1_) th.: \.\'akr System .
.-\ 11 e.\bting and rutur~ capita I imrrnvcmcnts slrnl I be Jt'l"meJ pan ll r the \\'nll..'r S) stt:"m and
titk ll) such Capital lrnprovemt:nts sb,1ll \'est in City l'olluwing inspcclil111 and written appro\'OI by
the Cit~ f:ogincer and ti.)l'rnal acceptance by Lhe City. ,\ny other im;t:.1!kd water utility
infr:1strlll'turt: nJdeJ to or incorpor~ted inh> th~ \\'nli.?r Sy~tl.'m by Lc'iscc pursuant to it:-nbligi.ltiun~
under this l.c,1se t,r whkh :ire ndJcd by nc,, Jevclopmcnts shall be deemed pc,rt or the Water
Syskrn nnd title tu sud, properly shall v.:s1 in City l'c.dli.iwing inspt>clion and written appro,al b:,
thi.> Cit) Engine-er and formal acceptance by the City. Lcssc..: shall not own the w~1tcr System or
any part ther~ur ur any interl!st thi:rcin during the Tc-rm or this L.c:ise .
Section 5. Concession Fcc.
Thi:-Lease ,;;cb forth th;n th1: \\'atl'f' S~s\..:111 he k,1s~d and thi: potable dumcstic \\:Her
SL'nrc..: he suppliL'u cxclusi,t:IJ b: l.c,s('<.:, ~, n.:gul~1tL'd utilit). us a cunccssi0n. ;\:; partial
1.·onsidcrnti1111 li.1r 1h~' pr1i111.'11). right':>. and rri\ ilegc::, grantt:cl lmth:r thi~ Lt·usc (along "i1h the
..:11n:;id~rntil111 pro\' i<.kd llir in Sc<.:tinn 6 and Sccti<)11 28 l. Lcsse;.: :111<l Cit: met ond conrcrr1::d ahou1
this 111:Hl~r in goou foith and muttiall) ncg ti {iatcd u co11ccssil1n kc. taking inw account the fair
market value of thr: Water System being ka'.-i1:d :rnd tilt> :-;en ice accounts. urnong ulhi:r n:lcvant
l'actnrs in determining wh.\l i.:unstitute s fair ::ind re:1sonahl0 cnmpcnsnti on tmui!r the krm~ and
condition,-; of this Lease . L..:ssc:c: agrcl..'d \ti p:i) and did pay the Cily a 011..:-tirnc conces:;ion fee (!he
'"Concession Fee'') or 6 .8 million Juliar:; (S6.800.000 .(J0) upon the ewcutiL111 01' !his Ll.'us1::. The
Parties und1.:rstm1cl w,d ackmm ledgi: that the Conccssi,)n r-cc wa:.,; rwt a h:v) imposed by Cit) on
Lessee in its govl!rnmcntnl capacity : i1 was \nlumarily paid. ncgotiu1ed rnrnpen~ation resulting in
:1 !':-1ir and rc-:.1·:m1wble payml!nt for a valuable imeresl in the \\'~1ler S;,·~ti.:111 <11HJ w.iter S(!rvici;:. The
Conccs:.'iilm h:e i:-. 1101 u sccurit) deptJ:iit and is not rcfund::ibk. Tile Concession Fct \\as legally
inciu..:111 on l.!.!SSi.'L' :111d thi.:' legal dut) to r:1~ rcm:1i11ed \\'ith Lessi.:-c r\'.'gard ll'.':-S (1f hO\\ Lt!~S<.:C vplc:u ,
in it:; snk dhu-~ti1in. tu (u11J thL· C,m~·c ssinn h:c .
Section 6 . Bns"' Rent.
A:-ndditi(1n~·r1 cnnsidi:r:,tion (ak)Jlg with the considl'rnlinn prnvidcd for in Section 5 Lllld
St!dil)t1 28). fnr the pro pert), rights , and p1·iv i leg es granted under this Lease, Lessc:-.-agrees to ra>
to City as annual rental (hereinaft~r c,llkd the --Base Rcutul ") l'nr th .. · us e 0fth-: \\'atcr System, the
surn lll -l)nc (follur rcr }e,1r (S l .OO ·}em·J_ The 13a~c Rt·nt,11 ,;hall be paid w City un th~ basis of-City ·::;
ri si.:nl )l'(II" \\ I, id1 conuncnc..::s .Ju I} I ..ind ,:nd.s 011 .I une 30. Ci I> and Lessee agree lhnt th is rent
provi,k'.--!;LJl'lkii.:-nt considerntinn ciinsidcring th.:-be nefit s :md hur\kns phKl.'."U upon ti,(! Parties
under the tcTms ,111d conditilms u!" this l.e::is,:. The [\mie s un(krstand and ,Kl-n1m ku~~ that the
Hase Rt.'n!.1 1 is not .1 kv y imro~cd b~ City <>n l.<!ss<:!I..' in it ~ g,i, ,-r11mental .,:,1p,icit): it is, ,,lun t-ir!ly
p~1id. ncgntiatcd ct1 111pL'ns,1tiL1 11 resulting in a foir :rnd rc ,N 111ahk-pay1m:n1 ror a \ alu:1bli: int1:rcst in
1h~ \1..'atcr S)stcm l'lic Basc Rental sh:1ll b~ kg:ill:, in..-1dcm nn l..~'.--~C1; and Lh\..' l.;g:tl Jul) lll pit)
5.hall ri:111::iin '"ith l.c .-;si:e rcgardlt.!s, ur ho\, Les-:,,:(• upt :i. in its :-ule di~-:rt:tion. L<.1 fund tht l3:lS('
Rcnt:il.
Section 7. Operation of \Yntcr !SV .'itcm.
A . Repair. i\,fointcnancl'. Operation nnd Cc1pital lmprovc-mi;:111.
( ! ) Rcrn1ir. M,iintenancc. and Operation . Lessee shall at its 0\\11 e;,,.;r~nsc thruuglwul the
Term or this Lease. t111clcrt::ikc any utility plant addititm. b~tlermcnt. replacement. improvc,m:nt.
:rnd repair and also pcrri1m1 routine und emergency muintennncc of the Water S) :;tern in
accordance \\ iLh ull applicabk Operati<.)1wl Stand<1rds and ,iny l'cdcral. state or Inca) bw. rule .
ri;:gulmi,111. wck. or ,1rdi11.1ncc (ctilkcti,cl) "'System Mait1t{'n,rncc··). and -.hall 11wn;1gc and
operalt' t hi.' \\' atcr ~ y5tcrn and pay nll costs and c:qJi::nscs of' ,1pcrnt ing the S:.t111\! / i 11c I udi ng the cnst~
of ,Ill utilities. plant imp1merncnts . \\Ott:1 · and all publk cha rges . taxc~ ::md asse:,sments l11' a11;
nature,, hatsocvcr) (collecli\'c!y ··Syslcm Opcrai-ion"). ii being undcrs100<.l and ugrced lhat City
slrnll be unJt.?r nn obligati o n t1.1 pay nny cost tll' expense n(' any kind M diaracter in connection with
nr rchnc<l to the S)st~m /vlaint~nancc nr S:slcm Operation during the Term of this I.cuse .
(2) Lcssec ·s Capital lmnroverncnts . In addition Lo the f1..1rcgoing System Maintenance and
S1 sl1::m Oper;:itinn nbligations. Lessee shnl I be rcsponsibk r,,1· nil capital imrrovcme111s with
rcspt::ct to the \Vatcr System required to lie designed. constructed and complctccl during the Tenn
in accordnncc with the terms Llf 1l1is Lcnse. including tlrnse Cnpital improvements as n.:quircd by
the appl icable Opc1·ational Standarcls . a11J as 1·cquired b> any federal. slate OI' local l:m. rule.
rcgul::tiion. code. or r,rd inane.:. r or the purpL)Se!-. 1.1 f th i~ L .. ·rt<;e. ··c" pita 11 m pron'mcnC is dt:lin..:d
as an> project lrnYing. nn estimated cost in c:-;ccss nr one LIK1usand dollars (~!.O()lJJ. ,,-hid1
cnnstitutt:s an expansion tn nr .:1dclition. bcttcnm.·nt. r~placcmcnl. imprnvcmelll and ·1.1r repair lifthe
\\'ater Syst..·m lhat will either cnhnncc the Water System ·s overall \.._tluc . increase it:,. useful lik or
adapt it to new uses, and has a useful lifo of ten ( 10) years for pumps. mechar1icnl and electrical
equipment. fony (-W) ycnrs for abtin:-ground buildings and strncturcs. nnJ (irty (.50) years for
underground pi pL's and I incs.
rurther. to amicabl: r~sol,·c u di~rulc betw1:>1:>11 the l'artks regarding the ndc~1unc.:) ol"
Lcs~cc · s i1n est mcn1 in the-C upital I rn rwm cmi:nt or the \-V atcr S yskrn during th~ time p~r iod prior
to the amcndmcnt and n:-stalcrnent nf th is l.cus~. and .;u b,icct ltl th~ terms and c11nd i lic,ns bdon .
Lessee shall also be exclush-el) responsible for expending ur to liH n,illion dollars (S~.000.000)
nr Lessee's funds r 'Capital lmp1 '0\·cmcnts Funds .. ) prk ,r \n Scpti.:111ber }O . '.:'.O ::i2 to remu~e and
lcga I ly di:,posc l1 f ex is ting rac i I itics . an<l t,1 design. wn'>truct and complctc \\'utcr S) stem C'npiw I
lmprove111cnl prnje.:ts a17pr0Ycd b) the Cit:,. in tht' Ci1y ·'i s,;k discrcti ,m. and reasnnahl~
nei:~ssnry as clctcrmincd by l11e Cit:, f<JI' S)':>tc1n i\laintenanL·c-and Syst~111 Opi;-ralion (each a
"Capital Impro,·cnwnt Pt '<ljecf'). T11 fa.:ilit8te the timel> iniLiati,111 or Cipitul lmpnwement
Projects, during the Tern, or this L1;:o.se. Cit;-and Lcs:,ec shall meet and conl~r from time tti time
in gocici faith tu make rcasl1110.bk 1::lfons to c<1ordi11ate n11 the Capital lmprovemenl Pro_jei.:ts that
slwll he initiated pursuan t lo this Sci.:ti,111 ..
Le'.:>see·s cost to tksign. bid and manage a Cnpi1nl lmprovcmrnt Project puid for with the
Capital Jmpn1vc111en1 Funds shall he c.:1nsblcnl wi th tHh.::1 · capital projl'ct~ cnnstn1c:tcd in Lessee's
regulnkc.l waler~:-stern.
The J~~i i;n ;ind i.:L>nst ruct ii,n , , r a Capi wl I 111 pru\. -:rncnt l'n.ij~cl p~1id fN \\ 1Lh Capita I
lmpr~,,emenl Funds :;hall bl.' h.is1;d upi,n ,md i11currl1rnte tlw applic.ibk Operntional St::rndarus .
.tnd :in) rcd\:'ral. ~1:1k ur k,cal la\\. n1k . rcgubt iun . i.:uJc . c,r 1,rdinm11.:e. :rnd shall pro,·idc ,1
minimum do.:::-.ign 1i le of ten ( ! 0 J yi.:nr'.:i l~)r pumps. 111cch :rni1.:al and clcctrk:11 cquipnwnt. !'orly (-J.ll)
)l':l!'s fi.>r above-ground buildings .ind structun:s. nnJ til't) (50) yi.:ar!) rnr u111.lcrground pipes and
line!S,
(3) True-Up c•t' Cnpit,tl lmpron:rnent FunJs . fol{o,Ying the compktion \1f each Capital
Improvement Project paid for with the Capital lmprov1."m1::11t FunJs. the Lessee and the City ~hall
conft:1· in ~O\Kl f"aith n:garding any true-up of the Capital Improvement Fund thol may be necessar:,
,.1 r arpropriati.: based un the Iota I costs, fees ;111d ~xpcnsc-s i ncurn:d hy Lhc Le-ssce un such prnjc1,;l.
Once an inJl\idtwl Cupi1al lmp1·ovc111cnt Pnijla!l't paid for ,dth the Capital lmpro\'c:rnent funds is
<.:omrktc. an.! umisc<.l l,r u11appr~i\1.:u unl\HIIH:; :;hall he returned w till.' Capi!al lmpro\'t:111\!nt }-unJs
delined in P<1ragraph ( 10) bclo,,. The P:1rties shall proceed in good faith h) negotiate and agree
llf)l)ll th<-' cru<?-up o 1· thL' C npi tal lmprll\'emcnt F u111.h.
(➔) Contrnctors . Tht: City aclrnuwlcdge!.i and agr..:o.:s that l.~s~ec m~-i) engage cr•nllw . .:tt,rs 11.1
perform '.inm.: or all ur the st:"rricl.'s associ,lled \Yith the J,;:sig11 and construction or Capital
lmprn\'cmt!nts to the 'Nater S~ stern . The L.:sscc may . al its :wle discretion. subcontrm:t to
cuntra(.:turs nil t)r portions or the ;;c:rviccs to be providl!d l'L'g:nrding the ucsign and C1)l1Sll'lll . .'til!ll or
lilt: C;,1pilal lmprnvemcnts. prm ided, lll1\\c,cr. tlwt Lessi.:e sha!! remain liabk for an:i \\'ork s,)
c;ubcrintrnctc:J. ff an: Ct>nlr:.ictor ddau Its on its contract. th,: Lt:"s.see sh al I mab: al I rt:a:sc1nabk
-::l'ti.>rts to en fun:i.: it:, rights ~111(kr such i.:1)ntracL. but sucli ch~fou It sfw 11 m11 re I in ... • the Lessee o l' its
llblig~1lil111 t l) compkti: the Capital Improvement:. in ~K·cord:tnc<..' \\ ith thi , Lea~c,
(5) Prol!r~~s Schedule . Citv mid Le.sscc sldl meC'l nnd Cl111fer l'rl>n1 tim-: tn tirrn.: in l'nod
. . -
foith w ni.:gntint..;-:md inuwnll:-, ,1grcc uron schedule:; l\) c:xc-:utl" the Cariwl lmpl'l)\'i::ment Proj1:ct:;.
t6l Proje-d Cost, A minimum 1_,f thirty (30) Jays priur t,> beginning uny \H1 rk un n C::irital
Jmprlw1.'rnc11t Pm_jci:t rniu lor \\'ith C1pital lmpro\cmcnt runds. Lessee -,hall submit to the Cit)• a
\\·rillt>n <.:chedule L'f anticirmcd custs rm all Lesset:-desig.n. labor. material. nverh<?ad nnJ suh-
l'l·,ntra1:wr C'O:-IS fi.>r i,!,11,,' h C:ipi t:11 f !11 rnlVCll1<..'l11 r'rujel'.l i<.lc11ti fkd i I) purng,raph (2) ;ibovc,
( 7) LJes i1cn Pl.ms/As Bui It Plans . fhc l.essc<: shal I rrn,·idc a ,;cl or .. ~1s-bui It .. plan'.> fi_,r l'.ach
ol' the Capiwl lrnpro\·ement Pl\1jccls c11mpll'td , all manuals rl'quireJ for op1m1ti,.1n and
ma intcn:i m:e nf the Capi1:1! lmpnl\'cmcn t. und l.'.l1pic~ u f ,, nrr:mt ics is~u-:-d hy the· m:inufai:turer or
thl' Cl]llipm..:nt und rnmeria ls instn I led as pan tl!'thc C;,1pit :1 l ! inpnn Ctn('lll. ,\ i:npy pf the ··,1s-hu i 1t··
plans fi)r i:ach l1f the C:irita! lmprow111cn1 Prt)_iec:t shall he pn),-idi:d Lu \he City hy Lcsscl' in
L'l(.>ctronic form The Lessee ~h.111 m~1kc :1\a i lable Jiir rl.'v i..,·\\ h) 1hc Cit~. :-i p:q1.:-r~(lpy ,1fth..:: ";1s-
buil1" plans ,111d spt:1c i fica1iuns fi.ir cad1 t)r 1hc C.1pital lrnp1 ·(1\1.'llh:n1s. all nrnnu:ih. r~quircd !i.1r
1.1pcr:1ti1H1 anJ maintcJHllKl' Lil' till' ('apitnl lmprt1\ 1cn11.·11L. and c:1.lpil'S ti!.,, u1T:inti~s i:;succi b~ thl'
111anul~1ciurl'r or thL' ..:quip111t'11 I and lll(tlLTi.tls 111stal kd a:, p,1n ot · the Capital Imp rm cmt>nt s.
18) C:1pi1al ltnprn,ernl.'nl S1nnu11 . The L~s:--~·t' :-hall pn,\i,l1..: all 11-:..:1.•:::sar) :::en i1.:c:, in
..:unn.:1.'liun \\'ith pl:inning . dil'<..'l'li~rn and supCf\ i:-,iun. :lnd ~h:dl 1,ro, id~· all in~1IL'ri:ds. suppli..:::: and
l.'quipmcnl required for the slnrt-up. testins. cnmnn:'>sioning ,mJ pcrfonn:\ntc L)f the Capit.11
I mpro\'c111cnt.s .
(8) Cm)pcrntion. The Lt!sscc nnJ City shall. in good foith. cooperate in .'.111) and nil llctil.)ns
nccessnry or nppropriale for the rnn1plctit,n of th~ design. l..'.onstruction . start up. !~sting.
commi~siL11ti11g nnd p\.!rf<.mnance ol .thc s~n·iccs relating 10 Curitnl lmprovcmi:nts.
(1)) Rc1wr1s. Tl11: Lt:sscc shall prep.ii'<.: quarti.::dy repl1rt:; Jescrihing the progrt.!s~ \\ itll re'.-lpccl
10 th~ design. constn1dion and cost or each Capitnl lrnpro\'l:111c11t Projccl pt\id for\\ ith Capitul
lmprnverncnt Funds. In additi<.,n. tile Lessee shnll keep. and f'l1rnish to the Cit;,. ul the Cit) ·s
n::que:;t. ... uch infonnuti1111 nn the design. 0.:<111s1ructi()!l and ..:n.~1 ol'Capirnl lmpn.1,c111c11t Projects ,b
the City ma;, n::~1so11Jbl) request. l 'p(\11 lh.:-cornm~!lCdlli!ill nr ,.;p11strui:1io11 11r :1 Capital
· lmprnn:mcnt Project paid for" ith Capiwl lrnprnv.:mcnt Funds. th(' Lcss..:c £Ind the City :--h;ill hC1ld
regularly c;d1c,folcd constrncti011 prngrcss meetings. rhe frcquem:y of the-regularly schedukd
constructil'n r1\1grcss me~1ings -;hall not be mo1-..:: than once per quai1er unlcs.s otherwise agr~ed
upon between the Panics. The Lessee shnll prepare .rnd submit information rcgarcling progr~ss of
construction. dollars expcm.kci 10 dote as a p<:rcelllage nf the total project, and percent project is
complete to the City at least l'ive (5) days prior to the regularly sd1cduled construction progress
meetings. The infrmnntion Lo be prcp:1rcd by the Lessee shnll generally include the follt1\.\ ing: (il
updates rcgarJing the costs anJ expenses in curred with rcspccl to the design and construction or
each C'npital lmp1\1,·emen1 Project. ~rnd ~ny updates of the cost esllmotc for each C □pital
lmprovcmcnt Project; (ii) update and narrative with respect to rrngress schedules: (iii) overview
or the ,,ork performed on each Capital lmpnwcmcnt Project ClllTt:nlly being constructed: ( iv)
nnrrati,·c or ,iny c:-;pcc1cd upcr,ming issues nr changes in the design of a C:1pital lmprmcmcnt
P1\)jcct: anJ (\') updated li~t nf..rny nutslJnding issues and action items.
( I OJ Capiwl l111pni\c1rn:nt Funds . Nn lc11a than thirty (30) day:, artcr th!.': e:-i~i.:utiun of this
,\mcndcJ and Restated Lease. Lessee shall remit ti) the City the sun, of live inillin11 dollars
(S5.000.000) which shall be used b) the Cit) to reimbmsc Lessee for fees amJ costs to be incurred
for the C npital lmpnwemcnt Projt·cts ll1 be unde11aken alkr the ctkcti, e dale of thi$ L~<1se, Tl1e
fin: inillion dollars in Capital lmpr(1vemcrH funds are to be nrnintaineJ by Lhl' City sokly for thl:'
benefit nr City and tl1c Les.sec. free from nny lien or cl.ii in r)f' any creditor ol' City or the Lcss1;c .
Lessee shall invoice City monthly f'nr reimbursement frnrn the Cupilal Improvement r:und l<.1r custs
incurred with rl'.!sre-ct to a Caritnl lmpro,emcnt Prn_ji.:ct meeting the requirements under this Lease.
ProviMd that the in\'oicc5 reflect costs that ore 1,;onsistcnt wilh other capital projects c11nslructcd
in Lcsscc ·s rcgulnted \\'ater system. such im~)iccs shnl! be due and payable by City after thirty /30)
days or receipt b: Cit>. !nn)ice:i that arc disputed shall be addre:-.scu as part or the true-up
rrocedurl! Jescrihed in :--uhscction ( ~ l aht1\e. Le .~sec ~hall n<:it he nhligated to e ,\.fJCnd an~ a111out1Ls
in exc~ss or lhi: $5.000.0(J() Cnpiiul l111prme111c-nt Funds \'11 Cupilnl lmpr\)\Cll1C11I Pt\ijo:ct~. 1r
11wnics remain in the Capital lmpr(1\·cmcnt Fund~ upon lh~ l(:1·111i11ati \,n (1r c~pirnLi,in nfth1:: Lt.:a::ic.
the muncy shall H'St ,,·ith tht: Cit) :ind be used for Waler System ~:-;pcnditures which ma) inclu<lc.
but are not li111itcd to. costs lo eomplctc nny Capital lrnpnwcmcnt Pro,iccl that is incomrlctt:.
l1. Cuswmcr Services Obligations.
faccpl 1n the case l)f' cbelopcr projects. Lessee slwll M its ,,wn e.\ptns~ throLJglwut the
!'crm of this Lea se bt: 1:xdusi\d: r ... ·sp1111sibk -fr)r satisli-ing nny and all i.:L1. .. rnnwr scr\ke
ubligatitins pursuant w the Opi.:rating Stambrds . assuci:ited \\ilh Les:;,;;i;·s pro,ision or ,,atcr
si.:rvki.: in the ~i::rvkt· Area . Pursuant 11 1 the Opcra1ing Stumbrc.b, 1h1.:si.: cus101m.:r service
oblig:itiuns include, but nrc not limited h1 · n!ntkring p('ritidic bills t1.1 all \."ll'-ll111Krs receiving water
s..:n•il:e in the S1.·rvicc Art"a; pay1m:11t rrocessing: responding tu l'11stumer inquiries on water
service , bills, k,1k-s nr olher t"(1nci:rns: Cl1lb:ting bills: rrnces-;ing applicatiuns fllr new Dr tramkr
llf scrvii.:i:: i.:olkct ion of custoim:r dcpo~its li1r nc\\' sen i..:i.:; i.:t1ll-:c1i(111 or Cllnstru,·tion meter
,.kpl1sits: and i11vc,tigut1011 L1f 1..:ust1)J1h:r c11111plui1Hs.
C. EmcrQc11cv Sen il.'.1.' Obliuativns.
Lessee shall at ils O\\ n c ., pcnsc throughuul tht: lcrm of th i:i Lensc bl' cxc!us h ·dy
re~ponsibk for 1m1i11t;Ji11ing t,,,.znty•four (2-1) hour on-call n:sponse lo emcrgl!nq t.::.d[::; or r.:ustomer
inquiri..:s; prnviding :.111 emergenc) or natural disaster operntiL)llS pl::in: maintaining an em-ergency
i:oirnnunirntinn:-: systl.'m: pruviding nr ha\'ing access t11 CllUipment required to pcr!'orrn emergency
ri:rair \\lirk to viLnl system equipment and \\'atcr 11mins: induding e\·clluati11g ::md if 11t.·cessary
p1\1, iding cmergcnc~ dicsel rn\\'rred backup gi.'11cn.llor at i.:ritical pumping '-tatiun~.
D. \Vu1..zr Oualil, Test in!! Obliuations .
Lessee sh~ill :it its u" n e.,p1:11se througlhiut the Term of' Lhi:; Lc:ise be l.'.'Xc:IL1sivcly
re~punsibk l'ur pcrfl1rn1i11g. or musing Lll bc perlonm:d, b~ a Sta(<.: of C:1lil'omia cenilicd
l.iboralor). ,111)' and all water s:impling. anal>'.-i:ci . te s ting anJ rqwrting as required f'or wat~r
-;nurCl.'!>. dis1ribL1ticJn mni11!> nr 1:uslC1111cr premi:.-.\.!,. 1c:-1i11g ,111d reporting as required lt.1r \\ atcr
~Oll!'Ct>s . distribution mains or customl!r prcmi~es, b) the L:.s , 1:1n-irnnmemal Prokdiun Agency.
Slate:· 11!" Ct! i ll)l'll ia Dep~irtmt:nl 11f l ka Ith S1:rv ices and Oflicc of Ori nk i ng \\'nter and the C1.1t1nt)
l:.nvironmcntal l-lculth Dcpartmu1l lll' act~ 1.)r Lhc U.S. Congn~ss or California Lq;islatun:;
si.:heduling ,md i.:olb:ling wakr ,arnpks 10 LC:-l lt1r micn.,biL1k)gical. i1101·g,~111ic anJ organi.:
c1.lll!>li t uenb: trnn ~111.irt,11 i\111 t,1 1.:crt i fit>d l:i b: pre pa ml iun 111' 111011it\1ring plans: 'iampk 1:01 lecl iun
training: ri.:11Prting 10 :ipprupri~te l'cgul..itort s ): r-.:..:nrd kL'cping: ana I~ ~-;j s in1crprcw1 iun: !ipe..: ial or
c:merg.cm:y 5amplc collel'lion .. 111c.J annlysis enh:rg~rn:y 11otifi<:,1ti1.111 to affci.:tcd customc:rs. if
rel.juired : prepmatio11 and Jistributi1.111 ol'any ,md all published and distributed customer ri:pons on
\\'i1ler ,1uality: 111nnngl':m~nt urn cross-control program: new well or \\'atcr source snmrling and
analysis: rcsronsi;: tl) customer inquiries on w:ui.:r quality i':>Sucs: conducting annual system survey
,vith California Stale Dcpa1·t111ent nl I le3lth Services: obtaining permits ,111d cornpli;.incc '"ith
appropriak air distrkt: providing lwzard0us materials conlrtd pf'llgr:im. ond ensuring all operator
n:niiirntil111 is in c.:omplrarn:e with State and Fe(kral requirements .
Lessee' :-hall at its o,,n L':-penst' throughout thl' Tcrn1 Lll' th1:; I .case be t:XClusi,d)
rcspt'•nsible for impkmcnting any City. Count:,. v~i1 k: \\.:Iler.Stale nr Fede ml\\ ater r.:011,ern1Liu11
pn.>gra111; nrnintai11ing dbtrib1ninn sy~tem map~ ,ind plul m,111~: preparing an_\ n:quircJ urban \\.Her
111:111:ii;L'fllclll r!.in,: ,111d in general. tk1i11~ ~ill ::such al·ts ;md pt:rl~•rrning all su~h )en ic..·I.'.~ :.is n.:,1uir.::J
t1• (,pt·ra IL' the \ \ all.'.r System inn man 11.::r si 111 i I.Ir tu that in "'Ii ii.:h it 11p!..'rntcs it~ n\\ n di~trict S) sl.::ms.
:-iuli,ii:ct. h(11\ncr. w 1h~ prn\'isiun:-. \,r this I .~as\:'. All 111:111:;, plan) and r~curd:; r~quin:d b) tllb
sectil111 anJ ·\)r ll11\)Ugh the t1pi:ratin11 . maintenance aml 1mpr1)\ cment of the \\' atcr System ,;hal I he
trnnsn1itted t1i C it) nt u mininn1n1 frcquenc) a s spccifkJ in the rc,!lo\\'ing subsection regarding
l'CPl) 1'($.
F. Reports: Les.sec ~hnll al ib l)\\11 e~pcnsc thn..1u~hnut the Tenn l)r this Lease be
~xclu.si,cl) respl'111sihle for rmwiding City ,,rillen reports . in ::.i form s uitnbk to both Pa11ies, rrlMcd
to Lesscc ·s opel'ation anJ 11rni11Lcm111cc \11' the Water SyslL'lll. ns described herein , The f'rcqucnt.:y
m1J C:(1nti:-n1s (lf the rep1111s shall be as 11.11101\s:
(I) t'\nmrnllv . Summary nf extnwrdinar~ 111.1.intcnance . caritul impn.wcment:,
cornplct~d rind in Lle:;,ign . dcvel1)pcr installatitrn~ "i1h _inh Jcscription . ri=-1·ccnuigc or comrlctil)ll
and pertinent com111cms relative lP the project: sen ice a111.l 1.:nmrlai111 reptWl ,, iLh li,,ting tlf
customer cumr,loint:; and i 11quirics. n:us,)n ror customer t.'ontnct and resolution or the matter: \\ atcr
C]Lli:tlily analysis 1)f microbiolngi~nl Lcsting; 8n<.I status of operntion and maimennncc activities .
(21 Peril)(licnllv. Any 1lthcr rcpol't or informati1.1n tlun is reasonably request..:d by City
in conncclion \\ ith tile opcr:.ition, m:1i ntcnance und betterment of thi;> W ,itcr S yste.111 as
co11te111platecl uncler the tenn s 11(tbis Lease .
(3 l CcJnlidcntial lnfr,rniation. The Po11ies ;Jcknowle<.lge and agree thnl the Non-
Disclu;;urc. Limited l;sc. and Conlidc11tiulit) .-\grccmcnt by anJ hct,\cCn the Pnrtics dated .lune
13 . ~O 16. "-" nmcndcd (the "'Confidcntialit) Agreement'') :-1,nll ddcrmine the rights and
nbl igali1)J1~ \\ ith re~pcct to ··1nJiwma1ion .. as ,uch 1..:rm i:-c.k!incd in the Conlith?ntralit y .t\grccmcnt.
G . Gencrnt Operation.
Unless inco11:;iste11t "ith th~ ~pccilk term s or this I.case. LcsseL: shall opcratc thc Water
S)stern riccording tli the prnc~Jurcs and administrntin: rules by ,,hich it operates its othi.:r ,,atcr
-;y::;tems in the City or Cupertino.
H. Transition Period.
Lessee shall l'ully cooperate and not hinder in any \\ay with City 's eff1.)rts lo operate . lease.
and /nr sell the Water Systt.'m to a part) 1.)ther llian the Le$sec . /\II records required umkr this
Lease shall be 1m1dc c11rn:nl by the Lessc..: at the frequency previously delin~d or as rca~on~bly
requ1.:sti:-d by City and\\ ithout u11Jue burden or cost tn Lessee. ,\II customer billing information
shall be kept current and cuc1rdinatcd \\ ith Cit~ during the last twelve ( 12.) monrhs of the Lease
Term .
Section R. Rates und Charges.
Lessee shall. in its snk and exclusi\ e clis(retion. he rcSfJ l11lSible for wltinu. !en i1111 and ,_ • e ..
prfr,,-idi11g noticl! l,fany and all of'the rnLcs. surdrnrges, ~urcrcuits and othi::-r ~!.!nice charg(!s anJ /or
Ices and penalties that Lt!s-;ee \\ill ar,ply t<.1 \\atcr sen kc to bc dclivt:rL'd tn thL' customer~ s~rvcd
b: the Waler System.
I() L'ns urc that the prnp crt:,. illl c t't'st s . righl'i . and pri\'ih::gt::-. grn1Hed b_\ Cit) t 1) Less..:(.'
hc reutkkr a re nl)l Dbu s ccl . the n.11cs, surcha rge s and o ther '::ier,·rce ..:lwrg,·:-und ,\w kes ~ind penaltie s
k, ii:d b) l,t.."SSl;!C 1)1\ Water Sys tem cust11111i:-r s sha ll 1101 c xi.:t o:d the mi es . sun::hargi:s . surcn:Jits and
o Lh\!r <.cr"i~·e i.;hu1·g e:-ancl i or fees and p-:nullic ~ upprnv cd anJ ,-\,r nuthmi.:<:d by the CPUC and in
cfkct un Lcsscc ·s CPL'C rcgulnlcd watt:r syst<:'m k11:atcd in arcns of Cit> (ll1:rei11nnc:r ··Rl'guh.1to1J
Cap"). City and Lc~sec agree that this Rcguk1t o1') Cap ,1f!i.1rds L!.!sSCi: ,, ith SL11'17dcnt tle:-;ibilit)
lo <:stahl ish n.Hes and charges ,, hilc ensl1ring Lessee ·s <.·u s tniner5 ,ii"\:' ~ul~icct tu just. reasonable.
and n1111di si.:1·i111i natory rnte s :md i.:hargc:; regardl ess t i !'\\ hcthi.c:r I bl!y :ll 't' n:i.:ei\' i ng 1\ uler ~crvil:e
fr o m the kase-J Wa1cr Syslt'.rn 01 · 1.e s~ee-'-; CPLJC rcgu !t\t<:d \\atcr system . The Regulatory Cap
}tpplkable to Water Syskm c:us to mc r:-s hall nol in c.:lu cl e the "Sur<:lrnrge lL) runJ Pllbl ic Utilities
Commi ~:-iL)n Rc imburscmt..·nt Fee·• an ::iJministrati\ c 1~c irnro sed by the CPLIC L,n th..: tariffed
s ystem .
P1w vidcd th~11 l.c!->:-Cc is in mat e rial l.'.nmpliam:I.' with thi::-ScctiLm 8, Cit) shall haw no
.1L1tlwr i 1~ 1)1' Liblig.'.lti o n to impr,'.:ic . sc.:l, rnudir~. appn,,c. ur pni\iJe nulii:C (11' the r;11c s anJ charge s
kvil:J b) Les see un Water Sy:;Lcm cust,11111:T'>. 1.e s:.-.cc.: shall lllit il~, Cit: or any proru sed
111odilica1i11ns to l,c.sscc 's r:ites. surcha rge s a11J \llhcr :-.~n ii.:c drnrgcs .111J .:or Ices and pL'naltic~ at
IL"□s t thirty (30 ) days r r ior to their cffecti\'c date and provid e d1)C.:lllliL'l1tat io11 LO dcrnonstrate that
the prorwseJ rates. surdrnrge s .inJ othl.'r Sl.'.r\'icc charges anc.Jio r fres and pcm1lt i-cs wi 11 hi! 11! t)r
bdow the Rcglilatory Cup a s described abO\ e . City. ,1cti11g in its r..:gi1l:i1ory capacity. may ~·onfirm
that Les!>cc is in compliance with this subsrnncivc rcquin.!nH:nl. ln the cn~nr ora discrcp.incy. C'it)
may req uest add itional informatiun for clririlic:mion . \\hich Les s ee s hall pro\•iJe within fifteen (15)
bu si ness day s. Ir. in City's rca s nnabk Je1 e r111inatiu11 . Lessee·.:; rmcs . "urdrnrge~ and l)lher se rv icl.'
<:harg1.:.s and /or l'ci:-s and pcnallies cxcel.'d the RL·gultitory C.1p and Lessee cann1 1t Jemonstrate th r11
its rntes arc in rnmrli~nc~·. City 111c1 y c1rde r Less ee lo re\ ise its r:ncs 11.1 achieve cumpli.im:e with
this Section 8. Sul.'.h a n.:v isil1n ma) require that Lc~scc pw\ idc a refund and /or creJit tu the
1..:ustomeis Lo make them" hole , as ,1ppl icable .
\Pl\\-i t hsta11J i ng the l'oregll ing. thl." Cit~ rr:s1:n cs th L' right ll l i1111xi s1: jnJ co I !ect l~ts ! ,11·
1w,, c,r c.,;panded \\atcr s t.:rvi-:c comH'Ttion-. nn th.: \\'m.:r ':-)Sl~·m :,;uch a s connc.:1i\°1n f..:..:!> an d
de-\ elll171n~nt i111p,1ct !'!!es .
In Lill! c, l:'lll, t!rnt rates. sun:harges :.md n tho:r sen kl:' .:liargc-:; and .11>1· fees m1J pt:naltics are
ri..·Jun:d h) t>n.kr or the Cf'LC. induJ ing an) di.:tc.:r111in.1tio11s nt:1..·L'~sitating a refund nr creJit. or
\ldunlari l~ b~-Le sscl.' on Lcssi:-c·s CPUC regulated \\.llcr ~~~IL'm ll)C :1lcd in ar\:~b or the City.
Lc:-~,;,-c sh.'.111 fr1rthwith r1:duce ib rati.:s ... mch.irgt'S anJ other sen ii.:e charg~·s uml nr fel.'s and
penalties ,,.,i,hin the Servkc ;\r..:a o! the Lcnsc c0n:-is1i:nl ,, ith sud l\:du~·ti\111.S. re fund s ,;r cn:d ih.
:\n i.:ha rgc \\ill be mac.J c: !'or · w:it..:r JL'livercJ 1,, Cupcrti1hi firL' Jc-1Mtimi:111 f,Kiliti~s . '\J u
c:hargi.: "ill be m:idt' t'ur lir1.•fighti11::! ac1ivi1i~:-.. All municipal propcnil'S u::;i ng ,, til e r s ~rvkc \\'ill l.r<:
t:liargcd gl'nl:'rally nrplicabl c rates as describl'J h;:r cin .
In th t L'I L'lll ur m:mdal.M) \\ at\.'r ratit•ning imp,ls ,:d b) Va!k) \\ ,1tt·r. '::itut\.' of l a li rumi ,t , 1.ir
an~ 11Lhc.'r ,1u1h 11 ri 1.~d pub I il· ut i I it~ nnd ,.,t hcr :iuthoriLcJ puhl i,: a uth(lri t) und t,, the ~;,;tent ,11 h)\\'~d
b~ la11. L1:s:;ce llW) imp ose \\ ,lt<:r 1.'l.ln~cn :11 i(111, munJattlf) "all'r r,11i1111 i ng . :ind appl k,1bk
pe1wltil's l1n Wall'r S) stem cust1lml:'rs that \ iolatl' duly uu1lw ri1.ed rtstriL'liuns .
Il l
Section 9. f.rnl11ntio11 of Srst~m/Arhitrntion.
Lc:-scc. up1.1n \\ rillcn request l)f Cil) oi· City"s ~,genl. ~hall permit Cit~ 1w Cit~·~ agent to
c1.)11duct c1 cnmprl!hcnsi\·c inspe-:tion or the Water System. including. but not limited lo. field
inspections. maintcrnmc~ 1·ecoi·ds and reports. custo1m.•1· complaints. cupital imrrcivctnL!lll
instalbtion~. schedules. and plans . in order to ass1:ss the condition of the Water System.
In tht! c\ent that Cit) determines that all or pun 1)f the \Vatcr S}stcm is not being opcr::ili.!d
or mt1intnin~J in uccorJancc \\ ith □pplicahle Oper,itinnal Standards. 1.)r other uppl it'abl~
n:quirements or this Lease. City slrnll 1m)\ ick "rith:n notice In l.essc~ describing the dt:-liciencics
whii.:h Cit) wishes lo be corrl!ctcd. l,cssi.?c shall. \\ilhin sixty (60) days thcreallcr. file\\ ith City its
written response desi.:ribing "hich dclicieni.:ies Lessee agrees me valid together with a plan l(i
correct said dericicncics. r:iilure nf Lessee to provide ~aid written response\\ 1th in said peri{1d shall
be deemed by City as an admission thut said ddicicncic s exist and Cit) may through .u1 action for
specific perfornrnni.:e or other legal adion cc,rnpcl l~csscc h) perform the \\Ork neccssar.:-, w co1Tci.:t
said deficiencies .
lt1 the event thtit l.css1.:c. in it~ written response to City disa;;rees \\ilh any or all or the?
detickncies JcscribeJ in City· s notice or in the event lhat (' ity doe:,; not agree to the plan for
deficiency corrections. then. in tlrnt e,·enL. the parties sh:111 meet in good rnith. in an attempt to
rcs1.)lve all issues.
!11 th-! further(:\ t;nt th;;.it agreement cannot be rcachcJ h-:tw~cn the parties nr ;\11) or all
isst1es. lhcn the panics agree to submit till;'. unsolYcd issues In arbilration t1nd(!r the rule:-of the
American Arbitration A:,;sociat ion nr such otl1cr as~ociation as selected by the Presiding JuJgc 01·
the Santn Clara County Sup1:rior (\)urt. St.:lt~ 1.)fC:.1lifomia.
Section IO. Water Supply.
Lessee shall not modify or Lake nmcr suppl) \\'ell~ out or permanent service \rithout lhc
express written permission or the City ·s Drrcctor of Public Works.
Section 11. Cu.'itonu.•1· Billing ,rnd Collectiofls,
,'\. Lcssec:·s Obliµation.
Lesse<;· ..,Jiall at it:. ()\\ 11 exp<.?nse thn,ughout the ·r en11 o!' th1~ 1.ea -;c he c.,dusin:-1\
ri:spnnsil1tc ror remkring r~ri( ic!ic 1,i I !:s to ,md col feet inf ,1 11 rm,:::; nnd 1-.:1:~ lh.,m all cu:;101 111.:;.,
receiving \\:Iler thrc,ugh th ... · \\ alcr System . Lessee :-.hall mtn. keep nnci re1ai11 all proceeds frnm
such collcctirins ;is the srik propi:rl) l)f Lessee . 1...-:sscc ma_\ proposi! pO.) n,cnt :l11J credit ruks
subslnntinll) simila1' to those imposed hy Lessee in -;i111ilar ad_jnccm localities. :111d more
paniculorly 10 customer-, served b) Less,;>!.? in othl.'.r pans n!'thc City. Cit~ shall have no rnle in the
f'endel'ing c,f pcriodiL bill~ nr colli:1.:Lilln of rm~s and fees. or tile 1·rcqul'ncy thcrc1ll'.
11
To the extent required b) luw . L.~ssec :;h~l I hi ti ;rnd cul ki.:l t 1ll bchal 1· (1 r Cit> lh>n1 custLimcrs
n~ccivin1.t w.iter throuuh thi: \\';Her S\"stem :1nv :idJitional ;.imounts \\hi<.:11 Citv 1110\ as~ess as n .,. "'-.,. ., ' r .,
utility u:;cr's rnx on .such cust1.1tn1;"rs and shall promplly ray nll :rnd1 i.llllLHll"lls to Cit).
C. Unpuit.l / Ddingucm Accl)llntS.
Lessee shall .'."It its O\\ n c .,pcnse thrClughout the Term nf this Le,1se be cxdusiv,..ly
responsible: for the collection or unpaiJ ;.ind/L1r delinquent accounls. Cit) slrnll h:i,-e no rok in
colkctiL1n n!' unpaid/delinquent accounts. Cit) sh<1II not be obligated to pursue collection 011 beh:1lr
of the Lessee or rmy '-iltc:11 amounts unpaid b} i..:ustLimeT:i.
D. Trnnsitiun P~rinds.
Cit) and l.cssee join LI) read the mdcr:-. 11Ldl cust tl ml'r~ in Lht." Sl'n ii:e :\reJ \\ ithin riftccn
( 15) bu-.;i 11.:ss dafS prcccJing th,.· C ln:'>ing Dati:: and .ii lul·:1tcd ;111 rnuni~~ f,1r sen ices rendered and
\\ :lll'l' su Id rric,r Lo the Ch ,._j 11g l ),11(' as prlip,.·rty L' I' Cit::,. :\It in1..in 1,;:s !'or ~\.'I'\' ic:l'S rendered and v-. ati:.·r
sold after th<: Closing Date nH:ll'r n:adings through th<: o.:xpiration llr Lcrminatillll of the Lease shall
b\'. :.rnd l\.'lllain th<: pn)pcny uf Lcs~cl.'. Acc:ru.::d e.\penses will be allrn::.ited in ,1 similar rna111ic·r. All
l111)11kS ru1 · sen iL'CS rendcreJ ,1fl\;.'I' the cxpir:itilin or Lcnnirrnth,n llr lhi.: LcaSl' sh.ill be the pr()perty
orCiL).
Section 12. lnsun1n('e.
,\. Oblig:HilrnS of Lessee. During the 1cnn o!' this L.ea~c. Less~<: at ib 0\\'11 cost and
expense shall m::iintnin in$Urrnwc. issued b} a <.:al'rier 1.)r carriers acccptnbk to Cit}. as f;Jllo\vs :
(I) Commcrci,11 gi:ncrnl li:1bili1::,, insurnncc in the sinl,!.k limit anlllun\ of 1101 kss than
$:'i.ll00.000 \\hid1 ,lll1llltnt 1m~ bl..' satisfied b) :111), excess liabi!iL~ insurance carried by Lcs~cc.
wrilli.:n nn an 01.'\.:urrt·ncc basis. Such i11suran1:~ -sh,tll indude t.:l'\"1.'.rngc: l1_\r injury I including Lkath l
or dam.ige L,> persons anJ /or properly ari:;i ng Gut l)r th.! op~r.'.ltinns or Lessee pursu:mt 10 lh is Lease .
The pnlicy shall includ~ coverage for liobilil) assumed unJl..'r this Leas~ for personal injmy .
prnpen:-,: danrnge and all other insurable cbirns ,is an ··in:-urL:d rnntrat.:C fur the perl'nrmnnce nr
Lc ::-.scc ·s indemnity obligation:, under this Lcn:se .
(2i Workers · compcn:;mion insur:111cl..'. ,·1r a certirr<.::.Jtc ol" sdf-insurance. insuring
again sr I i;1 hi I ity und1:r lhc \\'nrkt.'rs · C,1111 p1.'nsntiL)l1 111-;unmcc :md S,1 kt~ /\ct 110\\ in ti.m.:c in
Californi,1. c,r any ;.1ct h..:rc:it'lc·1· cn:1ctcd as ,1 11 amc-numcnt or suppkincrll 1hcri::to ,win li1:u th..::rcol'.
Sui.:h insm:1111:t: shall ti.di~ cu\'er al! per~on-; i..•111plll)CJ b:-Lc.:ssc-l' in nrnn~c.:lion \\ilh its ,)reratio11s
tmde:r thi :; Lease fl,r claims ur Je:11h N buJil) injur") ~1ri~111g in i.:nn1k:cli1111 1\ ith thi:ir cmpl~))lllC'nl
h~ I .c.'SS('(' rursuanl 11.1 its \lp~n.ttio ll S under lhi .-; l .C.ISL'
(31 ,\llllmwbik 1,1:hkkJ liabilil) ms1m11K1.' 1111 an LKrnrr~·,H.:~ bosi :, for budil> injur)
:1nd.'~1r prnpcrty domac:e-in a sing.le limit rnnotml ()r111·,t lcs:s than Pile;'. 111illi,m l.klllar:.--(SI .OOU,OU())
13. Lessee · s comrncn.:ial gcnL"ral linbilit) pnl il.') o l insuranl.·e shall coma in ,111
en do rsement in fovor or City nnd its olTiccrs. agents and ernpk))C.::s listing them as aJJitiunul
insureds .
C. Thi: purtics shnll periodicnlly rcvie\\' the insuruncc n.:quiml hen:b) /1.1r the purpose
or agreeing c1n increases in the minimum limits or such insurance . from lime tu tinie. to amounts
which inny be rcasunuble anJ customary for similar facilities of like size and opcrnlion.
D. All insurance shall he ::ilTcctccl under policic.<. is-;uccl b::-inSlll'Cl'S of n.:cognitcd
rcsronsibilit). licc:nscd 1)r r..::rmilled In do businl.':::s in the Stntr nf Calif0r11 io and rcaslinabl~
acceptable lo City.
E. ;\II pol1cii.:s of insurance is:-.ucd b) lhi.! re s pective insurers 5hall pmviJe that such
pl1licics shall nPt lw canceled 1,r mate r ially changed \\ilhnut ut least lhirt) (30) days· prim\\ riltcn
11<..11icc to Le sse e and It' Cit~. h idencc or .ill rcne,veJ l1r new pl1lici1;s, tngcthi::r with evidence of
payment. <:-hall likewise be JcpositcJ with City prior to expiration dates of expiring or non-renewed
policies.
r. The limits or insurance rcquirL·d by this Lease or as carried by Lessee shall noL limit
the linbility or Lessee nor relieve Lessee of any t1bl igution hereunder.
G. Lessee shall CHllS~ each insurunc;;: policy obtnincd hy it lo provide that the insurance
company" aivcs al I rights nr n:cnvcry by \\ ay of ~ubr1.1gatillll agninsL Cit) in eonnec\ion ,, ith an)
damage CL)\ acd by any pol icy .
Section 13. Liens .rncJ Encumhrauccs .
Cit) ugrt!~s to keep the W mer S) stem free nnd c \ear (if a II I icn.s. security i ntcrcsts and
cncumbnrnccs except for tho.~c conscmeJ lob) Les::;cc . Lcssi.:c ::igrec5 to keep the \\'::iter System
rrcc and clear of all liens. security inl~n::sts anJ encurnbranc..:s. e:-.cert for those consented to by
the Cit~·.
Section 1-t Surrender Upon E~pirution nr Termination.
Upon expiration or tcrminminn or the l.ei.1se. Lessee a!lrces that it shall surrender 111 Cit\ --the Watc1· System in gooJ order and co11dititm :mJ in a state of repair that i5: consistent \\ill, the
applil.:ablc Operational Slundards. 1\fter exrirn1i011 tir terrninntion of th~ Leosc . Lessee shall
proYidt: City \vith an updated Water System milp ( ArcCilS or l;!c.Jt1i\'.tlt!1ll). !he uccurac~ of which
Les:scc cannot pro,-ick Hri lkat Jpn to tl1.: cxll:nt in rnnnat inn \\ a~ or is rrov idcd hy Cit: or third
parLic!"-or to tile extent or clrnngcs or such infornution with the passage l)r ti111c . sho,ving. spatial
lnc,1tic,n of nil !>Urfacc nnd subsurface ass~ts incluJing all nssel typi:s. o.gt. diameter and tn the
extent kno\\'n by Lessee . 0h,1,,i1hstnndi11g. the rorcgoing. City nckn0\,·kdges nnu agrees Llrnt
Lcss~i.: ~hall 1wt be liable to Cit) or :iny third party bnsed upon tho;: inlorrnation prnvic.lcd hereunder
nor :-hnll Ci1y rely on :rny inforrnntion provided lo City under in thi~ Section .
13
Sl'<.'I iou 15. Default and l{cm<.>dics.
lkfoult .
(I) If Lessee 1:iils to make any raymcnl to City r,r tn iln) third party required by this
Li:risc as and \\hen due:. ur to obtain and mnintain any inSlJranc..: rcqtiin::d by this Lease. "h~re su1.:h
l~1i lun; c,1ntinues lor ten (IO) J.1y:j following n:cc i pt 0f "rittcn 1wticc from City speci I~• i ng th1.:
failure:
(2) If Lt:ssee t'uils tu perform any or its otheri.:ovenunls m agn:cmcnls herein contained .
,\ht>re such lnilure continues for thirty clay~ lullo\\it1g rt'ceipt or ,,rillen notice rrom City
srccifying tile failuri.:::
(3) Nor'.\•ithstanding :;ubst'ction (~ J ah11\·~. it' a l:lilur~ t,) pcrrorm e:inn,H kasihl~ be
r.:urcd within thi11y (3/Ji J;iy:;. fpr ~~ample. u major repuir. i 1· then Lesser..• fails to commence and
diligt:ntl) proc~cd 1,,wnrJ full pcrlormann: Mtb~ r.:ure ,, ithin thil'ly (30) day:.; !i.1!luwing receipt or
written 1101 ice from City spe(;i]) ing th,: foi lure. L)r i r Li.:S':>Cl' r.:i i Is to CLll11 pktc such p1.:rfo11rn.111cc
withi11 n l't:usorn1bk tinw; or
(-+) (.:i) Ir Lessee is or becomes b:.mkrupl or inso I\ ent or makl.'.s :m) general :i.rrnngemi:m
or ~1~:,,ig11111cn1 for the henelit 1)f creJilurs; (bl if 1.esscc hccorncs" "Jd1lor .. ns del1ned in 11 U.S.C.
S,:ct i(111 IO l lll' an> -;ucccssor st:.ilute therehJ ( unks ~. in I he case o I' n ri:1 i1i-.m Ii bl against l~cssce.
the same is dismissed \\ ithin nincL~ !_90! dn) ~): <c) ir a ll'l!Sll'C or 1·eceivcr is appointed tu lake
rossc=.-sion of subsianti:tl I y :1! I l1 r Lessee· s uss\.'ls lll' 1.11' Lessee· s i111eri::-t in 1h is Lease and p,1s~ess iL1n
is m1t restored to Lessee\\ ithin si.\ty (60) days: 01· (d) ii'~, ,, rit Llf ~1nad11m.·11t ur exccuti<.in is kYicd
on. or thi.:re is u judh.:ial sr in1rc oC ~ubstant i:i !!;, al I uf L e~s~c ·-; aSSl'b-nr or Lc::,see ·s interest in this
Lease: and SLtl.'.h sdzure is n,)t disch,1rged \\ ithi n ~i:, l) ( 60 l Ja:, s.
tr Cit~ shall dt•!~1ull in thi;: perlu1111ance of nn~ of its 1.:menants ,ir agreements contained
her..:in nnd such default -;hall Clmtinuc for a period of thin: (30) days after receipt by Cit) from
Lcssc-c ul' \\rillcn notice specifying the· na1url' or the default. thcn l.c.sscc-ma) m its OpLinn. upon
thiny (30) days \\rillcn 111.11ii.:e. i.:ant.:d ~mu tern1inate this I.case . In the case uf a cldault which
c,1111wl n:asl111:1bly be rnri.:J within 1hirt) (J{)J d;iy:;. if City fail::; Ln cnm111i:111.:e performance .iml
diligently pnicccd ww;ird futl performance \\ithin thirty t3P) cbys artcr r\.'ceipt of notice b) Lessee
ul" Cit)·:;. failure ti, 1,-.:rf'orm l.11" foil::; \1) ~:~1111pkl~' pi.:rli,nnancc \\ i1hin" rc.i::-l1n-ibk tirn~ thcr-:ulh:r.
I csse\.' may. up1Jt1 filli:en ( 15 ) tk1ys' n~itici.:. tcnni1rntt' tlfr, L.i:a"t:·
C. R~mcdi~s .
C" i 1~ -,ii al I h:1\·e I I,._-1;:i1 k,\, lll,:! r'-·11h::d ii.."" i r 1.~~,_l."..,. .. -.,inin i1:,, ,1 d<.:l:.nil L Thc'.ile' n:1111.:di'-"~ ar<."' not
L·xclusi\·i:: 1l1l'.·y are l·umulati, r..· in ;idditil)ll tn an~ r,::medi..:s 1h l \\ "r lak'r ~1llm\'l:d b) l:rn ,,r rnn idcd
!'t ,r cl~('\\ llci'l' in this l .ca~i::.
( I l l.cssee·s Right to Po ssession Not Terminated. In the i?\'C11l of a default by 1.cssce.
dui-in " the contimwncc pf the default and ror so 1011~ thcrcani.>r ns nnv danrnl.'.c:s 1)1' nlhcr ~ums ~ '-.. ....
pa)ablc by Li::ssc.-e in c1 .J1111cctiun \\ith sui.:h ,kfoult remain un1x1iJ. City 111.i) c:o nlinuc this Lens«: in
full force n11J ef'fecl. amI the Lease ,,ill continue in effect :1~ lung as. City docs 1wt lerminate
l.essce·s right to fK1SSCssinn . ,111J City shall have the right to collcl't the rent \\'hen due. In the l'\'Clll
that L~ssce ceases to op~ratc the \\'ater S~~tcm. Cit~ can ente r the Water Syst<:111 and rell·t the
\V.itcr System and the grPund,\ati:r. nr an:;. p..in 11f" it. 10 1hirJ rartic!'. fur Lessl.:'.~·s account. Lessee
shall be liable immediately w City for all L'no.,ts Cit) incurs in rdclting the \Vutt:r Sys1c111 :mJ th~
grnunJ\\'atcr. RC'!elling nu1~ be filr ,1 period shl)rter or longer than the remaining 1 crm of thi~
Lease . Lessee shall pa~ lli C ity the rent Jue under this Lc:1 :-c lll1 the d..itcs the rc11L is due. less the
rent City rl?ccin~s from an) rckni11g. No act b) City allo\\cd by lhis section sh~tll 1er111ina1e this
Lea se unless CiLy no1ific!i L<:ssce that City cll.;'cts to lcrminate this Lt·use.
Tern1i11ation ol' l_esscc·s Riuht to Possession . In the event ol' a default by Lessee .
during th1.: eontinuance ol' the default 1111d for so long thcre~l'ti.:r as any damages or other sums
pay:ib!e b) Lessee in connection \\ith such default remain unpaid. if Lessee is not taking prornp1
and n.·asL)1rnble efTorts to cure the default in City's reasonable discretion. City may terminate
Lcsscc·s right to posscssi~111 of the Water System and the groundwater upon liftccn (!5) Jay<
notice. No act by City L)thcr than giving l<)imal written notice 10 Lessee sha ll tcr111inn1~ th Ls Lease .
r-\cts of'111aim~nancc. cl'l'ons to rc!cl the Wutcr System ond the g1 \)t111dwatcr or the appoint,m:nt 01·
fl rel't'i\'cr tin City·i;; initi:itive lC1 rru1cct Ci1y· ~ inlcrc!-1 under thi.r;; Lease (olhi:r lhan the appoi111m~J11
or a rccc her tr1 perform u 11 11 I" Lessee·, t 1bligati1ms hereunder) sh al I m1t constitute a tcrn1 in al i()ll or
Lc:,sce·s ri!;hl w po%1.::.sirn1. On tcrminatinn. City hns tile right!() rcc1wer from Lt!s.scc an::, anh)Ullt
necessary lL) compen~i.ltC Cit_\ for till ~ktrimcnt pro:-.imutcly causeJ b) L~sscc ·:, dd".iult.
(3) Cit, ·s Ri1.d1t 10 Cure Lessee 's Def.iull. Cit). ill any time nrtcr Lessee cc,111mits a
Jefault. ma) cure thL' dcluult al Lessee 's cost. pro,·iJed that Le ssee has not pro,idcd City notice
that it will nccJ n,.klitional time to cure the: default and Lessee is 1101 using reasonable efforts to
cure the default in City·s rensonnble Jiscrdion, unl ess immcdi:H~ action is necessary lo ensure
uni11Li.::rrupteJ l1171.:ratil'>11 of the Water ~ystern. If Cit}. at any time. by reason of Lrssec·s cfefaul1.
jXl) s m1y sum or docs any act that requires the payment nf any sum. the sum paid by Cit) shall be
due immediately f'rom Lessee 111 City at the lime the sum is p.'.li<l . and if not paid within liftecn ( I 5)
day,:; or notice sh~ill b~ar interest at the nrn:dmum rate i.111 individual is permitted h) la\\· t(i charge
l'rom 1he date the sum is paid by Cit) until City is rcimbur:'icd b~ Lt.:ssee .
D. Correcti\·e ;\ct ion . Notwith s tanding .in : rrm is ion (11' this Secti o n 15 t (, the
l'.lllltrar ~. if u d.:fou It or fo i lure: en perform by Lessee poses a threat to pub I ic: health or s:.i let~. (' it)-
s hal I so nnti!\ Lessee. and i!"Le:;see foils Lo take ..:orret.:tive actilll1 \Vi thin the Lime spcdfi..:d in such
n,)ticl!, City may enter the \i,.:ati:r System nnd take all necessary action at Lesscc·s cxpcn~c. Lessee
sh::ill prnrnptly r~irnburse Cit> for its costs .
St>ction 16. force ,'\ lajcu re.
Ead1 Party·s n.::spccli\c obligation s unJcr 1h1s Lease shall be susrcnclcd l)l11y 1~1 the extent
thal und 0111~ l'nr the durati<Jn in ,\hid, the rerl(1r111ancc ol ' its ohligatillns hereunder i:-. precluded
13
b) ads ol' nalurl·: \\'ar: riots: ci\'il in!:>Ul'rL·i.:tiun : at'ts of civil or mi!itar~ authurit) tak~n tn protci:t
publii.: health and s::i!'cty; !ires: floods: cartllqur,kl!s nr other 11~1tm:II phenorncn:.i . labor strikes ,
:i1.:s:icknts or inciJcnts: la\\·:,: ruk:, and n.:gulati,)ns or tm! ft'ckral. slalc . (1r uthcr governmental
ngcm:y: changes in lnw. rules . or rcgulatk111s cl ;Jn! !cJcrnl. stale or other govcrnm~ntal agency :
ur other cause or th" s::irn~ 1:i1· other charai.:l~r. any 1)!' which arc bey0ml the rcasc1nablc Cl)lltrnl u1
sud, f'nrt} ( colkcti vel). a .. Force M ,1jc11 re··). In the e, i:111 ~)r ,1 suspension due to the li.irL'gtiing.
the Party wlwse obligati11ns me sus[)endcd sh.ill promptly nntil"y the other !'any in ,,riting of' such
suspension ,md lhi! cuuse and estimated Jurntion or such susp~nsi,m.
The Part) providing such noticl.' shall be c:-:tuscd from folfllling it.s obligations under this
Leas1: 0111:, until such time anJ onl) w till! extent that the Force f\.lojcurc has ceased to prevent
pt:rf'urmanc~ ur olh<::r rc1rn:din! al·tion is taken . al whid1 limi;: lhc Porty shall promptly notil~ the
othi;:r Party(s) in ,,riting. of the rcsumplion t)l'its oliligati,1ns unLkr this l.casc. An~ rarty n:nd~r~d
unable to rul fi 11 any of its ob 1 igat ion:,; by n:aSl)H nr a forr.:c \llajcure shall cxcrcbc due di! igc111.:c to
rt:nwve such inability \',ith re,1'.:-nnnbk dispntch within n rc::nso11:.1lik time peri(id und 111itig.11i: the
cffl.'cts l1r Lile Force ~vl.1.ieLire. Tht> rdiet' from pcrfom1:i111;1;: shall bi.: \)f 1m ~rL·atcr scnpc and ,1r nl)
lnngcr dur .. 1tio11 than is required h~_. the Force Majcun:.
Section 17. Assignment.
Ltsscc agrees nnt to assign this Lease lll" sublet the Wnti:r System Lll' nny ponkin thereof
\\ 11hout the i.:l1Jls.:nt l)f City. ,, h id1 Lt>nscr1l :;hall not be t111reason,1bl) \\ i thhd d: provitl<.!1.I. howev..:r. ·
that City's consent sha II not he rcq u ired in i.:onni.:cl ion with any ass ignml..'nt by l.essi::~ or al I or its
rights anJ obligation s hereunder to an uni liatc-J i.:ompan>· ,, hkh b controlkd by. controls. 11r under
cPmmon 1:ontrol with l.~ssec.
Section 18. Disclw rgc of Liens.
Le;;see agrees 10 pay and Jisch.irgc <111 duims t'or material s . rarts. labor.,, atcr. power und
other n,n:rnmabks and '.illl)p!ies rurnisill'd at ll·ssei:·s instance or requi.:<jl upnn or Lt1 the Water
s.;y.,tem ~ind tn keep the Wat1.,r S~sh::m t'ri.:1.· ancl i:le:ir or.ill liens ri:sulting frum sui.:h claim:-:. Cil)
.igrci.:::. \ll p:1) ,111d Jisdrnrgc all daim~ and ohlig;.1Liuns r\,r rnati.:ri.ib. parts. lab,1r. \\,lll'I'. pL1,,t:r and
l ithl.'r l'.1.lnsumublcs and sL1ppl ies f'urn ishi.:<l at City· s i nst:1nc1.• l)I' request upt111 or If> the \\'.Hl..'r S) stem
prior l1.> th,: 1..'l)ll1ll11.'.llCCmcnl of the Tenn (if this .-\~rcemcnt.
Sc-l"tion 19. lndcmnitY.
1.csSl..'C ngrec~ to hold City. and its ol"licer~. age.mt~ and o.!111plv)Cl'~. free and harmless ul
;111J from. u11-I t<..1 de rend. indl!rn11 i (v. :rnd pr,>LC<.'L C' ily. mid its o ffi1.:~•1·:, . .ig.:nt-, ,md empl,J) .;-es.
against all k1bili1y. loss. cl:.1irns. demands. clmnage. C:\pcn::.c. n,::;ts (irn:luding. withot1I limitn1io11.
rc~1sum1bk UllUl'llC> S. r.:..:s and all rnsl':, and r~cs Of I it I t!,ati<.111 ,l!ld ib thrc:1 t ) or nny kind nr na{Ul"l'
nrising t'UI 1.1f ur in an) 1\.l) i.:1.>tllll..'l'ti..·J \\ 1th the I c:1sc Pr Lessc1.: s pcrt"orrnam:e t 1rohligatin11s under
thi~ Lt:ast> 1\1 1hr: ma:\imuin c\tcnt permitted 61 L.t\l• Till· c:-.;p irati()n ur tenninul ion 1.1f this L~aso.:
a11J lll" thi..-Lcr111 i natinn tif Less,:,:· s right to possl.'s5i\)!1 s!1a 11 lll'l n::I iic\\.' L~::.scl' fru111 I i,1bi lily undt..:r
,lll'.-i11drn111 it:, prm i~ions uf this l L·a-,1.: a'i to 111:Hlcrs uci::urrin!,! t)r al.'.cruing during 1hi: ·1 l.:'nn hi:re1.i1 ·
tir h~ reason ,1r Li:·sscL··, 11i.:cu1x1111.·~ ,i1· thl' Water S:1 sLcm. \\'itholll in :111) \\:,:, limiting the
16
l1,n:goi11g. L~ssec shall hi.' -",)ldy rcsp1)11sihk Im. and agrees tn dcl~nd a11J indt'n111i!~· Cil.), and
hold City hannles s li.ir any third pMl) claim or action 1.:hallenging the validity ol'thi!, Lease. In the
event lhis Lease i<; Jec!arcd invalid. l.t'SSC'~ \\'Hives :111y clnim it ma!· ha,·c agnin.st City 111
connecti1111 therewith.
City agrees to hC1ld Lc::ssct!, and its officers. agents and cn1ployccs. free and h~tnnlcss of
and lh,m . and to defend and indcm11il') lessee. and ils orticcr::.. agents and employee:;. ng.iinst all
I iabil i Ly . los.'I. claims . demands. damage . e:xpens(•. cc,sts (including. \\ ii hmit I im i l:.H iPn. all u.1sts·
and fees(,!' litigation and its threat) of any kind or 1wturc mising from claims by third parlit's m
go\·crnml.!nla! agenci~s and rcsu !ting frnm negligence. gros.s ncgl igencc. reek!cssness or wil I fu I
111isco1tduct by City in connei..:tion with City's ownership or op~ration or the Water System
nccurring or accruing prior lt) the Closing Date .
Section 20. California Law.
Thi.s Lease slrnll be glwcmcd hy the l.l\\s l 1 f the :-late of Californiu und the-Sama Clara
Count} Supcdor Cuun shall have c,i.:lusi\e and mandalory jurisdiction O\er any and all
contrl)Hrsics .irising from. rclntcd to 01· c(1nnec1cJ \\ ith thi!-Lease and all Parties hereby sub111il to
suc h juri sd iction and any and all procc-cdint!S imoh in~ :such ,1 c@lron:rsy shall he brought in
the se courts. and not cbc\\hcrc .
Section 21 . Notices.
All notice s. ~ln lcml·nts. demands. rc:qucsts. consents. uppn.wuls. nuthorizatil1ns. 0llers.
agreements. appoint1111::nts m· Jcsignalions hereunder by l:'ilhcr party to the other shul I be in \\Tiling
anJ shall be sufficiently gin::n and served upon the other rarty: if scnl by United States rcg.istcn.xl
n,1;1il. return receipt requested. poswgc prcpaiJ anJ ndJressi:d as folllWvs:
City: City of Cupertino. City CI erk
I 0300 Torre t\ venue
Cupertino. CA 95014
I.es.sec: San .lose Water Company
i\llcntion: Legal Dcpartmcnl
I I() \\'. Ta~ lor Street
San .lose. CA 9) 1 l 0-213 l
ur at such other address as either party shnll later designate fnr such purpose b> written notice to
th\.' other part_:,. j\.fo i led not ice sh a l I be ciei:111cd g i vcn on thl.! dell,.: r,t · deliver) shO\\H on the rccei pt
C<.l!'U.
Section 22. Waivcr.
The \\'aiYcr b) City 01· any lm::m:h h> Lessee ()f any lcrn1 . c.:0ve11ant or conJitinn hl::!rcof shal I
not operate c1s c1 wai\·cr or any sub:-cqrn:nt breach of the sa1nc or any other term. covcmmt or
conJiti(\11 herl!of. The \\uh·cr h~ I ,cssee ,·if any brcnch h~ Cit~ 1,f nny term . i:m ·enant l1r cnndition
17
hcrcor :;!wll nut upci-ale ris a \\ai, er 1.lf. an> suhsequi.:111 brt:ad1 ,.,r the s:.1111i: nr <111) \Jlhcr 1cn11 .
covenant m condition hel'<.'.llr.
Section 23. Rcpn:scntatiun.
Cit, hereby represent~ and \\ rn-ru111s t~) Lessl·e that the Cit) ~1\\ m the \\' utel' S) sh:m fr<:c
anci cl..:ar t,l · ,ln y and al I liens. securi Ly interests and encumbrnn~cs.
Section 2-l. Nondiscrimination.
Ll!ss..:c covenants by and l1)r itself. its officers nnd as.signs. and all persons du1ming under
m thwugh it. and this Lease is made and accl!pted upon and subjed lD thl:! roll1m ing conditions:
tlrnt there shall be no discrimination agc1inst or scgn::galitrn or any person ur group or persons. on
account 1)f se.\. rucc. col0r, creed. national origi 11, am.:i;.:str>·. religion. c itizcnship status . age, marital
'it:.itu:;. medical t.:onJition. mentul pr physical disabilit), se .,wtl oric11t,1tion. \'Cleran 5(atus or an:,.,
l1ti1<.:r churadcristic rrokttr..'d b) fcdcr:11 nr ,;\,HI.' l,m nr lo(.;al on.lin,mcc in the leasing. tran~fcrring.
LJSl.", or <.:njuyrncnt L)r the \Vtlh!I' Sy:,;te111 nur -;hull I .r..'S!,r..'\! ibell: LIi' any pi.:rS1)1l dnirnin~ u11d~1· \It'
through it. ,·stub I ish L)r perrn it an~ sud, practi<:I..' ,1r prnL·t ke~ or 11 is-:rimina\ ion 1~r segregnt ion.
Section 25. Counterparts.
This Lease may be executed in an) number or -:(1Lmh:qx1r1::;, each of wl1ich when so
t:xc..-:L1tcd shall b~ Jecmcd It) be nn origin nl. but all tugeth1:r ~lrnll constitute but one and the same
Lcu.sc .
Section 26. Merger and ;\·1odil1c.ition.
Thrs Lease. including thc recitals and atlad1mi:11ts tlicrc!L). ,\h1ch ure im:,1rpt1r~ncd b~· thi.s
rderi:n~c . set forth the entire rigrccmcnt bet ween the panie~ \\ ith ri:srect tu the s11bject mailer
hcreor. and su11crsedes all other oral or \\'ritlt.!n provisions. rl1is Lca~e m;i) be modified or
1ern1in:.1tcd (IJ1ly in a \\riling 5igncd hy :.111 P:irtic~.
Section 27. T.ixcs and Assessments: Posscsson· I ntcrcst.
L~sst>t sh:111 pa~ all t:1.,cs. ,l:isl.'s:-.mcnts, fi::cs. k:, ic::-. 1.'h.'.lr!:(C'>. licl".nse nr permit fees :rnJ
.ither g1wcrn111l'nlnl charges tif.in~ kind l)J' 11.11u1·l' \\ hich are nr 111ay Oc' ;ll any time or frnin time 11)
time during th~ Tenn of thi~ Leas\.' le\·icd. charged. :1~,o:ssed ,,r impO'iL'J l1run nr :1gainst the \Vntcr
Systi:111 c,1· the gn,llt1d \\ater ,,r tilt.' le:.isd10 Id 1;.'State i.:re:111.'d hL'r~ry , 11· \\hid, may he iinrused up,111
tin) tax:1hk imercst of Lessee :it'tJllin:d pursua11t ,.._, th~ Lelis~. \\'ithLnl\ limiting the gcncroli!: t>f
the frircgoing. Li:ssec :11;k11 0 \\'kdgcs Lha1 1hi:-. Lc·a:,;e ma) i;rcatc :1 ptissesstiry intt'rt!'st which ma)
bl.' 5t1bjL'cl to property 1.:1.xation ::m d !lrnt L.css('c ma) be s ubj~cl tu Lhe payment 11f pl"llp<:rt) t:1x.i.!~
kvii:d nn sucll i111crest. .'\n) )uch ta:-: o.;h:lil be lht: SlM l'l'S[Wnsibili l~ 111'l e~see.
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Section 28. Frnnchisc Fee:,
.\s partial con:;i<krati('!l l~1r Lhe rror~-.rt~. righls. anJ pri,·ikgcs grnnted umkr 1his Lcnsc
(along \\ith tile consideration pn,vidcd ror in Section 5 :111<.l Sccti1rn 6 ). Lessee shall pay City during
the 1~r111 cI r th i.s Lease a franc fl i:;<;> foe sirn i lar 11.1 the rrancl, ist:! fee .:barged t1.) Lessee by the Cit~ l(.11'
it:-otllcr\\'ntcr system ~xis1i11g ,, itl1in the City (and which is 1101 pan of this L~nscl a~ prescribed
by Chapter 6.20 of the City's i\-lunicipill Code. City and L..:ssec considered various methods nf
cnmpensnting City for the rnlu~ o!'the \\'.111.:r Syslcm concc~sinn ::ind dctermin~d a cc11nin formula
li:ir computing complementary francl1ise recs bascJ 1.m receipts attribut::ihle lo the ust:. 11pcnition
□nd possession of the franchise is equally applicabk to the eonc~·ssion granted here and n:presents
a foir and rt:asonablc form or compensation thal provido:s for practical nnd accountable
administration. The frani.:hi$c rec is not a le\ y i111rt1~i:J by Cit) 011 Lessee in iLs g(•vcrnmcntal
capacity: it is, 0luntaril~ raid as foir and rc:1~011::ibk compensation fr-,r Lhe use of City · s property
and restiurces related to the Water System. Till' franchise fee shall be legally incident on Lessee
and the lr::-gnl duty tn pay sh.ill remain ,, ith Lc::;see regardless or how Lessee npK in its snk
discretion. to 11.md the fran1;hisc fee.
Section 29. Attornevs· Fees.
If □ny pany Ill thil-Lca:;e commences legal prncecdings or arbitration Lo interpret this
Uusc. Lo cnlorce any of its Ecrms or for Jarnages for ils breach. the prc,·ailing party shall be entitled
lO recLwer reasonable attorneys· Ices.
Section 30.. Net LcnsL'.
This Lease shall be tkem~d and construed !Cl he a "ncl lease" anJ Lessee hereby agrees that
th~ rental pwvidcd for herein ~hall be an absLilute net rclLU"n lo City ll·ec and clear ofnn~ expense s .
drnrgc~ or sctofT~.
Section 31. Lessee's Compliance with Luw.
Except as othcl°\\•ise p1·0\ id..:d in lhis Lease. Lessee .:,hall. at Les~ec ·s sole c0st and e;,,;pense.
diligently ancJ in a timd~ manner. cnmpl:, in all mu11:1 ·ial rc"-ped:; with all .. Applicable Law:·
,,..hich term is used in this Lease to incluJc all hm-;. rules , rcgulacions. ordinance. dirl'.ctin~s.
covcnanrs. c:is~mcnt:, and rt'.strictil1n::. til' rccorJ. pcrmils. and rclJllin.:mcnls or nn) applil:ab!e tire
insmance underwriter or raling burc:1u . r~lating in an~ 1nanncr tn the Water System c,r the
ground,\ater (including nu1 not limiteJ lo matter, pel'l:iining tn : ( i) indu-;trial hygiene . < ii I
cnvironmcntol conditinns on. in. under nr aboul th<: Water Svstcm or the !..!rL1undwn1er. includin~
:mil and grL1und\\•ater Clinditic,ns . anu (iii) th~ use. ge;1eratiun. ma71L1foc1urc. productil",1;
installatk1n. maintcnan~c. n:rnrnal. Lrnnsrortntion. str,ragc. spill (1r release l)f ::my Hazurdou~
Sunslanc(; !as Jdin~J hekm) or storage lank. nm, in effect or \\hicl1 may hereulkr Cl)l11C into
effect. and \vhcther nr nol rellcct ing n ch.1nge in policy Ii-cm, any pre,·iously existing rol icy . Lessl!e
:shall nNil) City in \,riting (with l:t)pies or :1ny dLKuments iJ1volveJ) ~ir any thrcaten1:d cir uctual
dai 111. 11ntiC1..', inqt1ir~. c itati,)n. wnrning. ~ornpl::iinl or report pertain i ng lo or in\ 01 v int! fo ii ure b)
L~ssee . the \\' alcr Sy~1c111 1 n the grou11<fo ater to comrl y \\ i th an~ Apr I icablc Lu,,.
19
lfaz:1 rdous Su hstances.
-\ Lc,;5sei: \\ill not 1.:aus..: ur p1.:rm11 l,1 U(.'1.'llr an: rckas..:, g.cn...:rnliDn. 111anul~1ctmc.
'il<.)l';.igc. trc:atrn~nt. 1ransp0rw1inn. or displ1.s.il tir I lu1.ardt)L1s ~ubst,m..:\: (dc!inl:'d hd~)\\) on. in.
lllH.kr. or from the Wali.:r Sys1i.:111 ur the ~round\\atcr ,11· an:-pu11ic111 of'it in viol.Ilion nr ,\pplicable
Lu\\. If Lessee docs cirnsc or permit nny rclc,ts, {1r di5DO~a! nf an) Huzardtius Subs1m1ec ,111. in. or
under the \Vm...:r System or any po11iun of it. Lt>sse1:. al its (1\\·11 eo-:;t lll1J c;.;pc:nse. "ii l imrncdiatl.'ly
take ~uch .:ii.:tion as is IH.'Ccssar~ w detain the spread of and rcrnov..: thi.: 1-hiznrdous Substance to the
CtHnplete satisl'action nf City :111J other ,1pprnpri:.it..: governmcnt~d authorities, Lcssee shall
prornrtly noti ry City of uny releasi;: or disrnsal (of ,vhkh Lessee has knowledge or bci.:oml!s aware)
ol'any I bzardous Subsc:rncc on. in. unJl!r nr from the Wnter S)'stem or the groL1ndwater.
13. Lesse\? agrl!es to indemnify. di:lend (\\-ith couns~J 1\'u :wnabl:, acceptable to C it y)
und hold City ;md Cit:,.'s of!ic~rs. agents arid cn,ploycl!s rn.:c :md harmless from and ngainst . nil
I o.sses. l iabH it i~s. obli gnt ions, pcnullil!s. clai rns. I il igat ion. Jc111~md:,. di:f~nscs. costs. _judgments..
suits. prrn:e<.'!din~s. dumagcs (including eonscqucmia! damagi:'.i), Jisbursi:111ents or c.,pi:nscs uf an)
kind (including attorneys· nnd experts· !ec:s and c:,,pL'n:.-i.:s ,rnd fees and i.:xpenscs incurrcJ in
imi.-:stigating. deti:nding. or prosecu1i11g any litigatiun. 1.:lairm. 1.w prucl;'eding) that niay :it any time
hl' irnposl.!d upon. incum:d h:, ,t:-si..·ni:d. ur ,rn ardr:d ugain :-1 Cil) in c1.m111:·ction ,, ith or arising fn.1111
\>I" \Hit ol':
\I) :in~ I l.u:.mlou:, Substanl'\:. or1. in. t11H.kr . ur affecting all or any ponion n!"thc \V:ucr
System c,r th.: gr~1u11dwal1.:r. ,:\duding ail) 1-1:lznrduus Substan<:.: rd~:,s'-·d. ge1k-rat<..'d nr disposeJ
b.\ City:
<2) any hr.:uch nf nny cc,,-cnant tX agreement ,.11 · Lc:s::.i::c c1.1ntuined or rctlrrl'd win lhis
sl.'i.:tion;
(..J l the imposition or any lir:n for the rccuwry of nny ,:t",sts for environmental di:'anup
or either n:spo11sc costs rduting to th!.? relc,1sc nr 1hn.:atcncd n:lc~\:--1? or Hazardous Substance.
\!,\cluJing ,my I !a1..,11\k,us '.->ubswn1.:c rt.·leased. gcncra1cd \ll' Jispt)SCd by City.
1 ·ht.· o:'s:pirnt inn or terminal ion 1)1' th is Li:.1sc a11d.\1r th\:' !L'rn1 in:1tio11 n r Lessee·" right Ill
pusscssion shall 1K)l rcli~n:: l .cssci.: rwrn liabilit) umkr an) indl.'mnity provisions of this Lcasl:' :i:;
ltl 11wncrs <.1ccun·i 11g or □ecru ing during I ht> l"cr111 herl'l1!' or b) n:ason Ll I' Ll'SS,;1.' · s t11.:cur:mcy of lhc
\Vmcr Sy.;;tcrn nml !he groundwater.
C. hw purpt)Ses uf this l.i:<1s.i.::. ··J ·lazllnlous Suhstancc·· rrn.:ans ~11l) SLilid. iiL1uid. g<1s,
odor. hc-<11. :-1>und . \'ibration. rnclirnion or L1lhi:r sub::;t:U1(:-'. m:1t..:ri~d or \\astc ,, hich is dcfincJ as
et)ntaminant. pul luwnt. Jung"rous );ubst::im·i.::. t0"i1.· .wb:,;t:111~1.,'. h:.i1.ardmrs \\·astl:'. h,1zardou :c.
material. ha7.ard, 1t1s sub:,;t:mcc. c.xln.·ind ~ lrnzrn·J(1 u:,; \\astc.·. rcstricti:d h:11.:1rd1)L1 :-i ,, ask. rc.;;idun I
\\ as te. Stll id \\'~Isle ur sirn i lar term \\ h idi 1s ur h,.:c(>!11t;:-. n.:gulat..:d h~ ::ippl ii:abk [nv iw11111,:,nta I
1.:rn S ( ,IS Jc fined hrn: j n) llf \\ Ii id i:-. -:l.1!--.;ifii:d "" ha1;1rdt)l1S tlf l L1\: it· l!lldcr ;1prl ic;1hlc
l:11\'irPllllll'IWil l.a\\'<; ( irKluding.. \\ ilhnl!l li111itali1)n . 11) drnL"ad1Prh. pi:lrL)kum. gasLdini..:. dil'sd
l'ud. crude oil or an) producb. i)ther petroleum h1 dnicurbons. pl)lychlorinatcd bi1)hcn) Is . asbestos.
and urea fonnaldch~dt: ri)0111 111sula11on. or their by~product.s or fra(·ti~,ns !hcn:of).
"Environm~ntal Lnws" mcun~ an) l·eden.il. <;tatt {)I' local laws or any regulations rromu!gntcd
purstwnl ti) such l,m s. as such law,;; 0r regulations may from time to lime be nml.!ndcd. nrplic::ible
lo th ~ Waler System. gn)undwalcr t'\I' th~ uti I it~ ..;en ice~ rt?gulating or imposing liabilit y or
stand:ll'(ls tlf conduct ct,11cerning or relating tn ( i l tht:> protection t)f human he.ii th l)f" 1he
c1l\'il'()Jll1H.'111. (ii) tht:> regulat ion. U'iC L•r t:\pl1,;urc Ill I la1..1n:fou~ Suhstunccs or (iii) the Pperati1111 .
nrnintennncc. constructit111. repair 0 1· rehahilita1io11 ,11 the \\':.1tel' Sy-;tcm .
Section 33. Cit\''s Access.
City and City", agents -;ha!I ha\'e Lhc right to enter tile \.\':Iler Syslcm at ::my time in th~ 1.:a&i.:
ol' an emergency. and Cllhcrwisc at rcnsonahlc times and on rcasonnbk prinr notice for the
fnl lo\, ing 1n1rposes: Ii) to determine ,, hclhl?r the Water Systcn1 1s in good rnnd it ion as rcq uircd by
this Lease and ,vhcther Lessee is complying\\ ith its obligati,ins under this LcJse. (ii) to :<.cn'c. post
or keep posted any notices required 1)r nllowed by luw or under this I.case. and (iii) ns City may
otherwise rcas011ab!y deem neccssnry.
Section J-4. Execution.
This l,ease b d!ective upon rull cxccution. It is the product l,r ncgutiation and tlleri.:fore
-,ha ll nnt be constrncd against any Part}
Section 35. (;cncral Pro,·isions.
A . Recitals.
The recitals ln this Lcusc .irt; trlll: and rnrrect :md are heri:by made part of th is Lt:asc as i 1·
l'u I ly set forth in th<:!ir cnli rel).
B. lntcl!rnti1>11.
This L..-ase. including the e:xhihits incorporntcd herein. C()l1Slitutcs tile entire undcr::-lunding anJ
agreement pf the Purties and <;upcrsi:d~s all negotiations or prcviuu<; agreements bct\\'cen the
Ponies with respect to all or an) prtrl of the 1crn1s disCllS5t'd in this Lc~1sC'.
C. lnterp rctminn and Sc\crnbilitv.
The-terms r)I . this Lease h.J.ve heen ncgotialcd h) the Pai1ics hereto und the langunge used
in th is Lease shall he Jcemed l<1 be the l.inguuge ehn.:.en hy the Purties hi:rcl o to express tlicir
mut1rn! intent. This Lea~e shnll be construed without rcg:.ml lu ,111) presumrtion or rul e 1\!tJUiring
construct ion ag.iinst 1/Jc Party causing such instrument nr any portion thcrerif 10 be drafted. or in
favor of the Part) recei\'ing a p □nicubr benefit under this Lcnsc. ll'one or more pro,·isions or this
Lerise arc hdd t0 be uncnfi,rcenble or invalid under any !c1w:;. rules. or regulations applicable to this
Lease. such provision. or su~h ponio1, o!',uch provision :-is may be necessary. shal! b~ excluded fi·om
21
th is l.l!a:;c ;ind the ba ktnci;: 01· tb1.: Lc ,1!5c sha I! be interprl'lcu as it' s ud l rrll\ is i(,n wcrt sro cxduckd
a11d sha II b1.: lhcrealkr en forccablc i 11 ai.:coruanci: I\ i th iLs k r rns
D. G1..•ncral Cn111plir111ce with I.a\\.
b..:11 Pany h~rdo shal l n1mpl~ "ith all la1\ 'i. ruli.:~. u111.I regul.iti,·111, applicabk to Lhis Lease
induJin g. but nnt lirnitcd 1,1. pri.?\ailing 1\agi.: pa)1111..·nts . 1x1)r()ll n:cLirus. 1wrki11g llm1rs and
11ur"-crs cc.1mp~nsa1io11 in~urrn1cl'. u11crnpk,~mc111 insr 1r :rnc:c h.:nc:lits. FIC1\ law:-;. and City ':-
()rdinanc1;s, in..:luding business l iL·..:nsi.: ri.:quin:1111..•nt ~.
E. r:.tlcctivi.: Date.
Upon approval by 1be l'1ty Cuunc1I and lull cxei.:ution by th<:> Pan 1cs, this Lease sha ll gnvern
tl1tc' rights and obligations of thi? Punies from and att~r the date tif this Lease . and th e Origin a l
Lc:isc shall gln·crn such rights ond nbligatil)ns pri or \ll the dnt.: o l"this Lease.
1\ WJTNESS WI-II:::REOF. the p:111ie s hereto have-<:ausl!J Lhi s Leas e to be executed and
ullcst~d by thl:!ir proper ortkcrs thereuntu duly mnlrnri1.ed. and their oflki a l seals to he hereto
ani:;.cJ. a-, oftllr: dny and )c:ir li rst abnve written .
. ,
!,
CIT\' OF Cl'PERTli\O
By .~ t}-._
Sti..:vcn Schnr[ ;'vluyM
ATTEST:
APPROVED 1\S TO FOR~vf:
By: ~(~~-v=\_
I leather ;\l M innt::r. City Attnrn~y
LESSE E.
!Jy: C.
James . ., ncl
List or Exhibits:
Exhibit A -ScrYice Arca
Exhibit l3 -\\'ater Svstcrn
EXHIBIT A
Service Area
This document ce1tifies that a tnie and complete map detailing the boundaries of the service area
for Cupertino Water. California Water, and San Jose Water (Revised .lune 1991 and September
1997} and listed as Exhibit A in this Agreemenl./<>r Lease of Real Property is on tile in the Office
of the Cit y Clerk.
Date: --'r'--.... .).__,\._ .. ,_,_l__=-c_· _:_..,.ll_' ____ _
24
-~City Clerk
AL~
Qty of Cupertino ♦
Water Service Areas
0 2!i O'S ,
M<t,:n
CD
ii
.E
X
UJ
First Amendment of Amended Restated Lease
Fina l Audit Report 2021-10 -22
Created: 2021 -10-22
By ; Julia Kins! Oul iak@cupertino.org)
Statu s; Signed
Transaction ID : CBJCHBCAABMcH7CHcYHwx1 MkSHRVnZVOmA0J\/hqctV3
"First Amendment of Amended Restated Lease" History
'El Document created by Julia Kinst Ouliak@cupertino .org)
2021 -10•22 • 8:42:59 PM GMT-IP address : 216 .198 .111 .214
C.. Document emailed to Andrew R. Gere (andy.gere@sjwater.com) for signature
2021-10-22 -8 :44:22 PM GMT
'El Email viewed by Andrew R. Gere (andy.gere@sjwater.com)
2021-10-22 -9:00 :50 PM GMT-IP address: 104.28 .123 .70
6o Documente-signed by Andrew R. Gere {andy .gere@sjwater.com)
Signature Date : 202 1-10-22 -11 :56 :46 PM GMT• Time Source : ser11e r-IP address: 134.238 .196.28
(') Agreementcompleted .
2021 -10-22 -11 :5t.N6 PM GMT
First Amendment of amended Restated Lease
San Jose Water
Final Audit Report 2021-11-09
Created : 2021-11-09
By: Araceli Alejandre (aracelia@cupertino.org)
Status : Signed
Transaction ID: CBJCHBCAABAA5aJNiP-eaqy1ZEPBpDEVJslaFSETO3i9
"First Amendment of amended Restated Lease -San Jose Wate
r" History
~ Document created by Araceli Alejandre (aracelia@cupertino.org)
2021-11-09-0:24:54 AM GMT-IP address : 64.165.34 .3
lg Document emailed to Christopher D. Jensen (chrisj@cupertino .org) for signature
2021-11-09 -0:26:05 AM GMT
~ Email viewed by Christopher D. Jensen (chrisj@cupertino.org)
2021-11-09-0:26 :35 AM GMT-IP address : 104.47.46 .254
0'0 Document e-signed by Christopher D. Jensen (chrisj@cupertino.org)
Signature Date : 2021-11-09 -0:27 :16 AM GMT -Time Source : server-IP address : 136.24.42.212
0 Agreement completed .
2021-11-09-0 :27 :16 AM GMT
I
POW~REDBY
Adobe Sign
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