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July 15, 2024 Page 54 City of San Leandro/ACI Franchise Agreement the State of California that has a rating of A or better in the most recent edition of Best’s Key Rating Guide, 2149 and that has a record of service and financial condition satisfactory to the City. 2150 In lieu of a performance bond, City and Contractor may agree that Contractor will provide for the issuance 2151 of an irrevocable stand by letter of credit (the "Letter of Credit") by a bank approved by City in its sole 2152 discretion (the "Bank") for the benefit of City. Under the Letter of Credit, City may draw, in one or more 2153 drawings, an aggregate amount up to two million dollars ($2,000,000) (the "Stated Amount") upon the 2154 occurrence of: (i) an Event of Default defined in Section 10.1; (ii) Contractor's failure to timely pay any 2155 monies due City; (iii) Contractor's inability to regularly pay its bills as they become due; or, (iv) Contractor's 2156 failure to timely pay any Solid Waste management facility for Recyclable Materials Processing, 2157 Composting, or Disposal services provided under this Agreement, as evidenced to the satisfaction of City. 2158 City and Contractor may agree that Contractor will increase the aggregate amount of the Letter of Credit 2159 in conjunction with the adjustment of Rates in accordance with Article 8. Any incremental costs or savings 2160 incurred by Contractor to secure the increased aggregate amount will be included in the calculation of 2161 Rates for the next Rate Period. The expiration date of the Letter of Credit must be sooner than the Term 2162 of this Agreement provided in Section 2.1 (the "Stated Expiration Date"), unless it provides that it will not 2163 be terminated, modified, or not renewed except after prior written notice by certified mail, return receipt 2164 requested, to City sixty (60) calendar days in advance of termination or failure to renew. The Letter of 2165 Credit may expire on the date on which the Bank receives a certificate from City saying that the Term has 2166 expired, or this Agreement has been terminated and Contractor owes City no money under this 2167 Agreement, or that Contractor has substituted an alternative letter of credit or other security document 2168 acceptable to City in City's sole discretion. The form of the Letter of Credit, including the procedures for 2169 and place of demand for payment and drawing certificate attached thereto, is subject to approval of City 2170 in its sole discretion, following the notice procedures defined in Section 12.9 below. The Letter of Credit 2171 must be transferable to any successor or assignee of City. 2172 ARTICLE 10. 2173 DEFAULT AND REMEDIES 2174 10.1 EVENTS OF DEFAULT 2175 All provisions of the Agreement are considered material. Each of the following shall constitute an event 2176 of default. 2177 A. Fraud or Deceit. Contractor, its Affiliates, any Subcontractor, or any other Person employed by or 2178 with an ownership interest in Contractor, its Affiliates, or any Subcontractor practices, or attempts 2179 to practice, any fraud or deceit upon the City. 2180 B. Insolvency or Bankruptcy. Contractor becomes insolvent, unable, or unwilling to pay its debts, or 2181 upon entry of an order for relief in favor of Contractor in a bankruptcy proceeding. 2182 C. Failure to Maintain Coverage. Contractor fails to provide or maintain in full force and effect the 2183 Workers' Compensation, liability, or indemnification coverage as required by this Agreement. 2184 D. Violations of Regulation. Contractor violates any orders or filings of any regulatory body having 2185 authority over Contractor relative to this Agreement, provided that Contractor may contest any 2186 Docusign Envelope ID: 908A450D-1F36-4C09-B8A4-C1D639B5A05A