COMMERCIAL LEASE NO. 03-821
ARIZONA STATE LAND DEPARTMENT
THIS COMMERCIAL LEASE is entered into by and between the State of
Arizona as "Lessor" by and through the Arizona State Land Department and BOWLINS
INC., New Mexico corporation as "Lessee".. In consideration of the payment of
rent and the performance by the parties of each of the provisions set forth
herein, and intending to be legally bound, the parties agree as follows:
PARCEL
AGREEMENT. Lessor hereby leases to Lessee for the term, at the rent, and in
accordance with the provisions set forth herein, the Parcel described in
Appendix "A" attached hereto (the "Parcel") for the uses and purposes specified
below, subject to the provisions of Article 4 (Use of Premises).
USE. The Parcel shall be used solely and exclusively for a convenience
store, gift shop, gas station with above ground fuel store tanks, Recreational
Vehicle Park (RV Park) and employee housing (consisting of one (1) mobile
modular unit).
PARCEL LEASED "AS IS".. Lessee makes use of the Parcel "as is" and Lessor
makes no express or implied warranties as to the physical condition of the
Parcel.
DEFINITION. "Premises" means the Parcel together with all rights
appurtenant thereto expressly granted by this Lease, including Improvements,
Removable Improvements, and personal property located on, below or above the
Parcel.
DEFINITION. "Rent" means Annual Rent, base rent, percentage rent or any
combination thereof, including any and all payments required of Lessee to
Lessor.
TERM
COMMENCEMENT; EXPIRATION. The term of this Lease commences on September 21,
1996, and ends on September 20, 2006, unless terminated earlier as provided in
this Lease.
RENT
ANNUAL RENT. Lessee shall pay rent to Lessor, without notice or demand, on
or before the commencement date of this Lease, and each year thereafter,
annually in advance, on or before the anniversary of the commencement date, for
the use and occupancy of the Parcel during the term of this Lease, without
offset or deduction except as provided hereafter. Lessee agrees to pay rent for
this Lease due and payable as follows:
Base Rent for the First Lease Year shall be $10,000. Base Rent for the
Second Lease Year shall be $12,000. Base Rent for the Third Lease Year
shall be $14,000. Base Rent for Lease Years four through Ten shall equal
the Base Rent for Lease Year Three as adjusted pursuant to paragraph 3.4
and paragraph 3.5.
PERCENTAGE RENT. Lessee shall pay as Annual Rental 2.5% of Gross Receipts,
except fuel sales and R.V. Park Gross Receipts commencing on Lease Year three.
Lessee shall pay one quarter of one cent (.0025) per gallon of all fuel sales,
Lessee shall pay 10% of all R.V. Park Gross Receipts for Lease Years three
through ten.
BASE RENT VERSUS PERCENTAGE RENT.. Lessee shall pay the Base Rent defined
in paragraph 3.1 or the Percentage Rent defined in paragraph 3.2, whichever is
greater.
ADJUSTED BASE RENT. Base Rent for Lease Years four through ten shall be
adjusted each year by the Consumer Price Index, but in no event shall the Base
Rent ever be less than the Rent for the previous Lease Year.
ADDITIONAL RENT APPLICABLE TO UNFORESEEN DEVELOPMENT. Lessee intends to
expend $100,000 (in addition to existing improvements) for additional
Improvements (as defined in Article (6) on the Parcel. Lessor is concerned that
if Lessee intensifies Lessee's use of the Parcel beyond the present expectations
of the Lessor and Lessee, the rent described in Article 3 hereof will not
reflect such unforeseen expansion or intensification of Lessee's use of the
Parcel. Therefore, Lessee agrees that Lessee shall pay to Lessor annually as
additional rent an amount equal to ten percent (10%) of the sum of the amount in
excess of said $100,000 which Lessee so invests. Such additional rent shall be
payable in the year in which completed, within 30 days of completion on a pro
rata basis, and shall be added to base rent each year thereafter. The date of
completion of the additional Improvements shall be the date on which the Lessee
is issued a Certificate of Occupancy from the appropriate Governmental Agency,
or upon final inspection from the appropriate Governmental Entity. Lessee shall
notify Lessor of the actual cost of such excess structures within 30 days of
their completion and provide to Lessor such evidence as Lessor may reasonably
require to verify such costs. Subject to Article 6 herein.
CPI. "CPI" shall mean the Revised Consumer Price Index, U.S. City Average
for all Urban Consumers--All Items (1982-1984 equals 100) for the pertinent
month, issued by the Bureau of Labor Statistics of the U.S. Department of Labor.
If the CPI shall hereafter be converted to a different standard reference base
or otherwise revised, adjustments of rent based upon the CPI shall be made with
the use of such conversion factor, formula or table for converting the CPI as
may be published by the Bureau of Labor Statistics, or if said Bureau shall not
publish the same, then with the use of such conversion factor, formula or table
as may be published by any nationally recognized publisher of similar
statistical information. If the CPI shall cease to be published, there shall be
substituted therefore such index as Lessor selects as a reasonable substitute.
ANNUAL PERMITTED CPI ADJUSTMENT.. The Annual Permitted CPI Adjustment shall
be the actual percentage increase in the CPI for the preceding twelve (12) month
period.
GROSS RECEIPTS. "Gross Receipts" shall mean the selling and leasing price
of all goods, wares and merchandise and receipts of all transactions and the
charges for all services performed at, within or from any part of the demised
Parcel, including all departments and concessions therein and subtenancies,
where permitted, pursuant to the provisions of this Lease, no matter by whom
operated, for cash or on credit, whether payment is actually made or not, the
risk of such payment being assumed by Lessee. Concessionaires, demonstrators or
vending machines, including those owned by others, operating upon the demised
Parcel shall be included within Gross Receipts.
ANNUAL STATEMENT & Percentage Rent Payment. On or before each anniversary
of the commencement date of this Lease, simultaneously with the payment of the
base rent, Lessee shall deliver to Lessor a statement signed by Lessor or
certified by a Certified Public Accountant, setting forth Gross Receipts during
the preceding twelve (12) months, hereinafter known as the "Reporting Period,"
ending September 20. The annual statement shall be accompanied by payment of
percentage rent, if any, due for the Reporting Period. Within sixty (60) days of
the date of expiration, cancellation, or termination of this Lease, Lessee shall
submit a final annual statement accompanied by any percentage rent due through
the date of expiration, cancellation or termination. Percentage rent shall
accrue from September 21,1998 to September 20, 2006. If any Reporting Period is
less than twelve (12) months, the percentage rent shall be calculated on a
prorated basis.
PENALTY; INTEREST; LIEN. Lessee shall pay a penalty of five percent (5%)
plus interest on any amount of delinquent rent. Interest shall accrue daily on
the delinquent amount and on the penalty at the rate set by the Arizona State
Treasurer under A.R.S. 37-241(D) (3) until paid. The delinquent rent, penalty
and interest shall be a lien on the Improvements and other property on the
Parcel.
USE OF PREMISES
USE. The Premises shall be used solely and exclusively for the purpose
described in Article 1.2 (Use) The mobile modular unit shall be used as employee
housing only. In the event the business ceases to operate, the unit shall be
vacated concurrently with cessation of the business. All other uses are
prohibited.
ARTIFACTS.
(a) Pursuant to A.R.S. 41-841 and 41-842, Lessee, Lessee's employees, and
Lessee's guests shall not excavate or collect any prehistoric or historic
archaeological specimens on the Parcel without a permit from the Director
of the Arizona State Museum and written approval of Lessor pursuant to the
terms of this Lease. Lessee shall immediately report any unpermitted
excavation or collection of archaeological specimens on the Parcel to the
Arizona State Museum and Lessor.
(b) Pursuant to A.R.S. 41-844, Lessee shall report to the Director of the
Arizona State Museum and Lessor any prehistoric or historic archaeological
site, or paleontological site, that is discovered on the Parcel by Lessee,
Lessee's employees, or Lessee's guests, and shall, in consultation with the
Director of the Arizona State Museum and Lessor, immediately take all
reasonable steps to secure the preservation of the discovery.
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WASTE; Lessee shall not conduct or permit to be conducted any public or
private nuisance on the Premises, nor commit or permit to be committed any waste
thereon. Lessee shall report to Lessor and appropriate law enforcement
authorities any known or suspected trespass or waste committed on the Premises.
NATIVE PLANTS. Lessee shall not move, use, destroy, cut or remove or permit
to be moved, used, destroyed, cut or removed any timber, cactus, protected
native plants, standing trees or products of the land except that which is
necessary for the use of the Parcel, and then only with the prior written
approval of Lessor. If the removal or destruction of plants protected under the
Arizona Native Plant Law is necessary to the use of the Parcel, Lessee shall
also obtain the prior written approval of the Arizona Department of Agriculture.
CONFORMITY TO LAW. Lessee shall not use or permit the Premises to be used
in any manner that is not in conformity with all applicable Federal, State,
County and municipal laws, rules and regulations, unless Lessor determines and
advises Lessee in writing otherwise.
GOVERNMENTAL APPROVAL. Except as provided in Article 4.5 (Conformity to
Law), failure to obtain, or loss of any governmental approval that is
prerequisite to the use for which this lease is issued or that is necessary to
construct, maintain or operate any facilities on the site in connection with
that use, shall constitute a breach of this lease, subject to the provisions of
Article 17 (Lessee Defaults and Lessor's Remedies).
RESERVATIONS. Lessor excepts and reserves from the Parcel all oil, gases,
geothermal resources, coal, ores, limestone, minerals, fossils, and fertilizers
of every name and description that may be found in or upon the Parcel, and
Lessor reserves the right to enter upon the Parcel for the purpose of
prospecting therefor, or extracting any or all of the commodities therefrom.
Lessor reserves the right to issue to other persons, rights to use the Parcel in
a manner not inconsistent with the purposes for which this Lease was issued.
Lessor further excepts and reserves the right to relinquish to the United States
lands needed for irrigation works in connection with a government reclamation
project, and to grant or dispose of rights-of-way and sites for canals,
reservoirs, dams, power or irrigation plants or works, railroads, tramways,
transmission lines or any other purpose or use on or over the Parcel.
NO WATER RIGHTS CONFERRED.. This Lease does not confer upon Lessee, its
assignees or sublessees, any express or implied rights to the use or removal of
surface or ground water from the Parcel. Any use or removal of water from the
Parcel shall be pursuant to an independent written agreement with Lessor and no
claim thereto shall be made by Lessee. Any water right established shall attach
and be appurtenant to the Parcel.
GROUNDWATER CONDITIONS. Drilling of well(s) is PROHIBITED without prior
written permission from Lessor per Article 6.2 (Prior Approval Required). In the
event permission is granted, Lessee must file an intent to drill with the
Arizona Department of Water Resources (ADWR).
(a) Lessee shall meter the well(s) on the Premises, record
water use on a monthly basis, and report annually to Lessor the amount of water
pumped on the form provided by Lessor and within the time period specified
therein.
(b) Lessee shall pay an assessment to Lessor, assessed each
year for the amount of groundwater used in conjunction with this Lease.
Presently, the rate is $100.00 for the first acre-foot and $85.00 for each
additional acre-foot. This rate is subject to annual reappraisal.
(c) ADWR requires an annual report of groundwater pumped from
nonexempt xxxxx) within both Active Management Areas and Irrigation
Non-Expansion Areas. If applicable, the Annual Water Withdrawal and Use Report
as well as the associated fees shall be submitted to the ADWR within the time
period specified therein.
(d) If Lessee desires to move groundwater from well(s) located
on the Premises off State Trust land, or to use groundwater for purpose(s)
different from those stated in this Lease, Lessee shall file an application with
Lessor for a public auction water sale. Movement of groundwater from the
Premises prior to a public auction is prohibited.
(e) Lessor, by issuing this Lease, makes no guarantee with
respect to groundwater availability or groundwater quality.
(f) Lessor's personnel will have access to well(s) on the
Premises during reasonable hours.
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QUIET ENJOYMENT. Lessee shall peaceably and quietly enjoy the Parcel during
the term of this Lease so long as Lessee is in compliance with all the
provisions of this Lease.
INSPECTION. Lessor, its duly authorized agents, employees and
representatives shall have the right to enter upon and inspect the Parcel and
all Improvements thereon at reasonable time, and in a reasonable manner.
SURRENDER. In the event this Lease is not renewed, Lessee shall surrender
peaceably the possession of the Parcel upon expiration of the term of this
Lease.
RECORDS
RECORD KEEPING; INSPECTION.. Lessee shall make and keep for the term of the
Lease and either (i) five (5) years thereafter; or (ii) until the conclusion of
any dispute concerning this Lease, whichever is later, appropriate books and
records concerning the operation of this Lease, including but not limited to
Federal and State tax statements, receipts and other records. Lessor, its duly
authorized agents, employees and representatives shall have the right at all
times during the term of this Lease and for either (i) five (5) years
thereafter; or (ii) until the conclusion of any dispute, whichever is later, to
make reasonable examination of those books, records or other material in order
to obtain information which Lessor deems necessary to administer this Lease.
Further, Lessor, its duly authorized agents, employees and representatives shall
have the right at all times during the term of any sublease or any extension
thereof, and for either (i) five (5) years thereafter, or (ii) until the
conclusion of any dispute, whichever is later, to make reasonable examination of
any sublessee's books, records or other material which Lessor deems necessary in
order to obtain information to administer Article 3 (Rent) of this Lease.
CONSTRUCTION AND IMPROVEMENTS
DEFINITIONS. "Improvements" means anything permanent in character which is
the result of labor or capita( expended by Lessee or his predecessors in
interest on State land in its reclamation or development, and which has enhanced
the value of the Parcel. "Removable Improvements" means anything not permanent
in character which is the result of labor or capital expended by Lessee or his
predecessors in interest on State land.
PRIOR APPROVAL REQUIRED. Lessee shall not place or construct or permit to
be placed or constructed any Improvement or Removable Improvement on or to the
Parcel, other than Improvements necessary for the operation and maintenance of
the purpose for which this lease is issued subject to Lessor's prior approval
Lessor makes no promise or assurance to approve Improvements exceeding the
amount in Paragraph 3.5.. All other improvements are prohibited. Prior to
applying for a building permit from the local government authority or prior to
beginning of the construction if no permit is required, Lessee shall submit a
current APPLICATION TO PLACE IMPROVEMENT ("APPLICATION"). No construction shall
begin until Lessor approves in writing the APPLICATION. The APPLICATION shall
include plans and specification (including but not limited to grading,
construction and landscape plans) showing the nature, location, approximate
cost, and quality of the proposed Improvements. Drainage, waste water, and
sewage plans must be submitted with the Application. Plans submitted must be
stamped by an Arizona registered engineer or architect. The work shall be
completed by an Arizona registered contractor. The location of completed
Improvements, as-built construction plans stamped by an Arizona registered
engineer or architect, and any other information required by Lessor, shall be
submitted to Lessor within thirty (30) days following the completion of
construction on Lessor's form known as a REPORT OF IMPROVEMENT PLACED WITH PRIOR
APPROVAL Any Improvements placed on the Parcel shall conform to existing laws
and ordinances applicable to the proposed construction in the jurisdiction where
the Premises are located, unless Lessor determines and advises Lessee in writing
that such conformity is not in the best interest of the Trust.
UTILITIES; NEW CONSTRUCTION.. Gas, electric, power, telephone, water,
sewer, cable television and other utility or service lines of every nature shall
be placed and kept underground unless Lessor grants prior written approval
otherwise. All buildings and structures shall be of new construction and no
buildings or structures shall be moved from any other location onto the Parcel
without Lessor's prior written approval.
ANNUAL STATEMENT. Upon request, but not more frequently than once a year,
Lessee shall file with Lessor a sworn statement setting forth the description of
any Improvement(s) placed on the Parcel during the prior lease year and the
actual cash value of such Improvement(s).
OWNERSHIP; REMOVAL. All Improvements placed upon the Parcel by Lessee shall
be the property of Lessee subject to the terms of this Lease and shall, unless
they become the property of Lessor, be subject to assessment for taxes in the
name of Lessee, the same as other property of Lessee. Not later than ninety (90)
days following the expiration or termination of this Lease, Lessee shall remove
those Improvements which belong to it, are free of any liens and can be removed
without causing injury to the Premises. At its option, Lessor may waive any of
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the above listed prerequisites to Lessee's removal of Improvements on the
Premises. Lessee may, with Lessor's prior written approval and within the time
allowed for removal, sell its Improvements to the succeeding Lessee.
FORFEITURE. Improvements made on or to the Premises without Lessor's prior
written approval shall constitute a breach of this Lease and the Improvements
shall forfeit to Lessor. This shall be in addition to any other remedies Lessor
may have against Lessee pursuant to this Lease, or in law or in equity.
IMPROVEMENTS DEDICATED TO PUBLIC USE.. Lessee shall have no right to
reimbursement for Improvements that are (or required to be) dedicated or
otherwise committed or transferred to public use, regardless of acceptance by
the public jurisdiction.
REPAIRS AND MAINTENANCE
LESSEE'S OBLIGATIONS. Lessor shall be under no obligation to maintain,
repair, rebuild or replace any Improvement on the Parcel. Lessee shall, subject
to the provisions of Article 12 (Damage) and Article 15 (Eminent Domain) and at
its own expense, keep and maintain the Premises in good order, condition and
repair in conformity with all governmental requirements and if applicable, those
of the insurance underwriting board or insurance inspection bureau having
jurisdiction over the Premises, unless Lessor determines and advises Lessee in
writing that such conformity is not in the best interest of the Trust.
MECHANICS' LIENS
PAYMENT; INDEMNITY. Lessee shall be responsible for payment of all costs
and charges for any work done by or for it on the Premises or in connection with
Lessee's occupancy thereof, and Lessee shall keep the Premises free and clear of
all mechanics' liens and other liens and encumbrances resulting from work done
for Lessee or persons claiming under it; provided, however, that Lessee may in
good faith, and with reasonable diligence, contest or dispute any such lien
claims in any appropriate forum so long as this Lease or the Leased Parcel are
not actually in danger of levy or sale. Lessee expressly agrees to and shall
indemnify and save Lessor harmless against liability, loss, damages, costs,
attorney's fees and all other expenses on account of claims of lien or other
encumbrances of laborers or materialmen or others for work performed or
materials or supplies furnished to Lessee or persons claiming under it. Further,
any contracts between Lessee or sublessees and any contractors and
subcontractors shall expressly hold Lessor harmless against any liability
arising from such contracts, as described above.
NOTICE. Should any such claims of lien or other encumbrances be filed
against the Parcel or any action affecting the title to the Parcel be commenced,
the party receiving notice of such lien or action shall immediately give the
other party written notice thereof.
UTILITIES
LESSEE'S OBLIGATIONS. Lessee shall be responsible for and shall hold Lessor
harmless from any liability for all charges for water, gas, sewage, electricity,
telephone and any other utility service.
TAXES AND ASSESSMENTS
LESSEE'S OBLIGATIONS. In addition to the rent set herein, Lessee shall
timely pay and discharge, without deduction or abatement for any cause, all
duties, taxes, charges, assessments, impositions and payments, extraordinary as
well as ordinary, unforeseen as well as foreseen, of every kind and nature
(under or by virtue of any current or subsequently enacted law, ordinance,
regulation or order of any public or governmental authority), which during the
term are due, imposed upon, charged against, measured by or become a lien on (i)
the Premises; (ii) any Leasehold interest; (iii) the interest of any of the
parties to this Lease or in proceeds received pursuant to this Lease; and (iv)
the rent paid pursuant to this Lease.
INSURANCE AND INDEMNITY
INDEMNITY. Irrespective of any insurance carried by Lessor for the benefit
of Lessor, Lessee hereby expressly agrees to indemnify and hold Lessor harmless,
or cause Lessor to be indemnified and held harmless, from and against all
liabilities, obligations, damages, penalties, claims, causes of action, costs,
charges and expenses, including attorney's fees and costs, which may be imposed
upon or incurred by or asserted against Lessor by reason of the following: (i)
any accident, injury or damage to any person or property occurring on or about
the Premises or any portion thereof; (ii) any use, nonuse or condition of the
Premises or any portion thereof; or (iii) any failure on the part of Lessee to
perform or comply with any of the provisions of this Lease; except that none of
the foregoing shall apply to Lessor's intentional conduct or active negligence.
In case any action or proceeding is brought against Lessor by reason of any such
occurrence, Lessee, upon Lessor's request and at Lessee's expense, will resist
and defend such action or proceeding, or cause the same to be resisted and
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defended either by counsel designated by Lessee or, where such occurrence is
covered by liability insurance, by counsel designated by the insurer.
POLICIES. Lessee at its expense, shall at all times during the term, and
any extension thereof, maintain in full force a policy or policies of
comprehensive liability insurance, including property damage, written by one or
more responsible insurance companies licensed to do business in the State of
Arizona, and each policy shall be written on an occurrence basis, which insure
Lessee and Lessor against liability for injury to persons and property and death
of any person or persons occurring in, on or about the Premises, or arising out
of Lessee's maintenance, use and occupancy thereof. All public liability and
personal property damage policies shall contain a provision that Lessor, named
as an additional insured, shall be entitled to recovery under the policies for
any loss occasioned to it, its servants, agents and employees by reason of the
negligence or wrongdoing of Lessee, its servants, agents and employees or
sublessees. Further, the policies shall provide that their coverage is primary
over any other insurance coverage available to Lessor, its servants, agents and
employees. All policies of insurance delivered to Lessor must contain a
provision that the company writing the policy shall give to Lessor thirty (30)
days notice in writing in advance of any cancellation or lapse, or the effective
date of any reduction in the amounts of insurance.
COVERAGE. The insurance as described in Paragraph 11.2 (Policies) herein
shall afford protection not less than $2,000,000 in combined single limits for
bodily injury and property damage and each liability policy shall be written on
an occurrence basis; provided, however, that the minimum amount of coverage for
the above shall be adjusted upward on Lessor's reasonable request so that such
respective minimum amounts of coverage shall not be less than the amounts then
required by statute or generally carried on similarly improved real estate in
the County herein described, whichever is greater. If at any time Lessee fails,
neglects or refuses to cause such insurance to be provided and maintained, then
Lessor may, at its election, procure or renew such insurance and any amounts
paid therefor by Lessor shall be an additional amount due at the next rent day.
BLANKET POLICY. Notwithstanding anything to the contrary in this Article,
Lessee's obligations to carry the insurance provided for herein may be bought
within the coverage of a so-called blanket policy or policies of insurance
maintained by Lessee, provided, however, that the coverage afforded Lessor will
not be reduced by reason of the use of such blanket policy of insurance.
COPIES. Copies of policies required by this Article shall be delivered to
Lessor prior to Lessee's occupancy of the Premises. Lessee shall provide Lessor
with a current certificate of insurance and at Lessor's request provide proof of
payment.
DAMAGE
LESSEE'S OBLIGATIONS. If the Parcel or any building or other Improvement
located thereon are damaged or destroyed during the term of this Lease, Lessee
may arrange at its expense for the repair, restoration and reconstruction of the
same substantially to its former condition, but such damage or destruction shall
not terminate this Lease or relieve Lessee from its duties and liabilities
hereunder.
TRADE FIXTURES AND PERSONAL PROPERTY
LESSEE'S PROPERTY. Any trade fixtures, signs, store equipment, and other
personal property installed in or on the Parcel by Lessee or any sublessee shall
remain its property subject to the provisions of this Lease. Lessee shall have
the right, provided it is not then in breach hereunder, at any time to remove
any and all of the same, subject to the restrictions of Article 6.5 (Ownership;
Removal).
ASSIGNMENT, SUBLETTING AND ENCUMBRANCE
PRIOR APPROVAL REQUIRED. Lessee shall not assign this Lease or any interest
therein, nor shall Lessee sublease any portion or all of the Premises without
obtaining Lessor's prior written approval. In no event may this Lease or any
interest therein be assigned or sublet unless Lessee is in full compliance with
this Lease. Lessor may require additional rent in consideration for approval of
any sublease. Lessee shall not enter into a contract of sale, mortgage, lien or
other encumbrance affecting this Lease unless a copy is filed with Lessor.
CONSENT REQUIRED. An assignment of this Lease shall not be made without the
consent of all the parties. Lessee may assign all or a portion of the Premises
as allowed by the terms of this Article provided Lessee shall assign Lessee's
entire interest in that portion of the Premises.
PURPOSE. There shall be no assignment or sublease made except to an
assignee or sublessee that will use the Premises for the purpose(s) described
herein.
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LESSEE PRIMARILY RESPONSIBLE.. Notwithstanding any sublease, Lessee shall
remain responsible to Lessor for the performance of the provisions of this
Lease.
PERCENTAGE RENT DUE. Assignment shall not be approved unless all accrued
percentage rent has been paid as of the date of the application for assignment.
ENTIRE INTEREST. The assignment of Lessee's entire interest in a portion of
the Premises shall not relieve Lessee of its responsibility to Lessor for the
performance of the provisions of this Lease as it relates to that portion of the
Premises not transferred by the assignment.
EMINENT DOMAIN
EXPIRATION. If at any time during the duration of this Lease the whole or
any part of the Parcel is taken by direct sale, lease, institutional taking
under A.R.S. 37-441 or acquisition in any manner through condemnation
proceedings or otherwise, for any quasi-public or public purpose by any person,
private or public corporation, or any governmental agency having authority to
exercise the power of eminent domain or condemnation pursuant to any law,
general, special or otherwise, this Lease shall expire on the date when the
Parcel is taken or acquired except as otherwise provided.
PARTIAL TAKING; DAMAGES; RENT.. In the event of a partial taking and if
Lessor determines that it is in the best interest of the Trust, the Lease may
continue an full force and effect for that portion of the Parcel not taken. As
against Lessor, Lessee and any sublessee shall not have a compensable right or
interest in the real property being taken and shall have no compensable right or
interest in severance damages which may accrue to the remainder of the Parcel
not taken, nor shall Lessee or any sublessee have any compensable right or
interest in the remaining term of this Leasehold or any renewal. Rent shall be
apportioned as of the day of such taking. Lessor shall be entitled to and shall
receive any awards, including severance damage to remaining state lands, that
may be made for any taking concerning the Parcel. Lessee's Rights to Award.. In
the event of any taking, Lessee shall have the right to receive any and all
awards or payments made for any building or other Improvements on the lands
fully placed on the Parcel by Lessee with Lessor's prior written approval.
BANKRUPTCY AND INSOLVENCY
LESSOR'S RIGHTS. If (i) all or substantially all of Lessee's assets are
placed in the hands of a receiver, and such receivership continues for a period
of thirty (30) days; or (ii) should Lessee make an assignment for the benefit of
creditors; or (iii) should Lessee institute any proceedings under any present or
future provisions of the Bankruptcy Code or under a similar law wherein Lessee
seeks to be adjudicated as bankrupt, or to be discharged of its debts, or to
effect a plan of liquidation, composition or reorganization; or (iv) should any
involuntary proceedings be filed against Lessee under such bankruptcy laws and
not be dismissed or otherwise removed within ninety (90) days after its filing,
then this Lease shall not become an asset in any of such proceedings or
assignment. In addition to all other rights and remedies of Lessor provided
hereunder or by law, Lessor shall have the right to declare the term of this
Lease at an end and to re-enter the Premises, take possession and remove all
persons, and Lessee shall have no further claim on the Parcel under this Lease.
LESSEE DEFAULTS AND LESSOR'S REMEDIES
CONDITIONS. All of the provisions of this Lease are conditions. Breach of
any one of these conditions by Lessee or any sublessee shall be sufficient
grounds for cancellation of this Lease by Lessor, subject to the other
provisions of this Article.
CANCELLATION. If Lessee fails to keep any provision of this Lease, Lessor
may cancel this Lease and declare Lessee's interest forfeited. Lessor shall be
forever wholly absolved from liability for damages which might result to Lessee
or any sublessee on account of this Lease having been canceled or forfeited
prior to the expiration of the full term, subject to the other provisions of
this Article.
BREACH. In the event of a breach of this Lease which is not curable or
remains uncured after thirty (30) days notice by Lessor of failure to pay rent,
taxes or other assessments, and forty-five (45) days from the receipt of the
notice to cure any other curable default, to Lessee of the breach, Lessor may,
in addition to all other remedies which may be available to Lessor in law or in
equity, (i) enter and repossess the Premises or any part thereof, expelling and
removing therefrom all persons and property (either holding such property
pursuant to Lessor's landlord's lien, or storing it at Lessee's risk and
expense, or otherwise disposing thereof), as to which Lessor shall not be liable
to Lessee or any sublessee for any claim for damage or loss which may thereby
occur, and (ii) either (a) terminate this Lease, holding Lessee liable for
damages for its breach or (b) treat the Lease as having been breached
anticipatorily and the Premises abandoned by Lessee without thereby altering
7
Lessee's continuing obligations for the payment of rent and the performance of
those Lease provisions to be performed by Lessee during the Lease term.
LIQUIDATED DAMAGES. If Lessor terminates this Lease for Lessee's breach,
Lessee shall be liable to Lessor, as liquidated damages and not as a penalty, an
amount, which at the time of such termination, represents the amount equal to
the rent due for the two (2) subsequent lease years. The liquidated damages will
compensate Lessor for the loss of rent from the parcel due to the default and
costs incurred to re-lease the Premises.
EXPENSES. Lessee shall pay to Lessor upon demand all costs, expenses and
fees, including attorneys' fees (or market value of attorney's fees) which
Lessor may incur in connection with the exercise of any remedies on account of
or in connection with any breach by Lessee, plus interest on all amounts due
from Lessee to Lessor at the rate set by the Arizona State Treasurer, according
to law.
REMEDIES NOT EXCLUSIVE. The remedies herein granted to Lessor shall not be
exclusive or mutually exclusive and Lessor shall have such other additional
remedies against Lessee as may be permitted in law or in equity at any time;
provided, however, Lessor shall not be relieved of any obligation imposed by law
for mitigation of damages, nor shall Lessor recover any duplicative damages, and
Lessee shall be reimbursed by any subsequent Lessee or purchaser of the Premises
for any amount by which the value of Lessee's Improvements exceed Lessor's
damages, notwithstanding any other provision in this Lease to the contrary. In
particular, any exercise of a right of termination by Lessor shall not be
construed to end or discharge any right of Lessor to damages on account of
Lessee's breach.
NO WAIVER. No waiver of breach of any provision of this Lease shall be
construed as a waiver of succeeding breach of the same or other provisions.
HOLDING OVER
PROHIBITION. There shall not be any holding over by Lessee or any assignee
or sublessee, upon the expiration or cancellation of this Lease without Lessor's
prior written consent. If there be any holding over by Lessee or any assignee or
sublessee, the holding over shall give rise to a tenancy at the sufferance of
Lessor upon the same terms and conditions as are provided for herein with a rent
for the holdover period commensurate with, but in no event less than, the
previous year's rent. Renewal Application. An application to renew this Lease,
properly and timely filed, may give rise to a period of interim occupancy if the
term of this Lease expires prior to execution of a new lease or the denial of
the application to renew.
INTERIM OCCUPANCY CONDITIONS.. Should interim occupancy occur, on or before
the expiration of this Lease, and annually thereafter, Lessee shall pay rent
established by Lessor (subject to A.R.S. 37-215(b)). Unless advised in writing
by Lessor to the contrary, all other terms and conditions of this Lease shall
remain in full force and effect.
ENCUMBRANCES
RIGHTS. Lessee, and its successors and assigns, shall have the unrestricted
right to mortgage and pledge this Lease, subject, however, to the limitations of
this Section. Any such mortgage/deed of trust or pledge shall be subject and
subordinate to the rights of Lessor, and nothing in this Lease shall be
construed to impose upon Lessor any obligation or liability with respect to the
payment of any indebtedness to any holder of a mortgage/deed of trust or pledge
of this Lease.
TERM. The term of any leasehold mortgage or deed of trust shall not be
longer than the remaining lease term.
REGISTRATION. No holder of a mortgage/deed of trust on this Lease shall
have the rights or benefits provided by this Article nor shall the provisions of
this Article be binding upon Lessor, unless and until the name and address of
the holder of the mortgage/deed of trust is registered with Lessor.
OF RECORD. If Lessee, or Lessee's successors or assigns, shall mortgage
this Lease in compliance with provisions of this Article, then so long as any
such mortgage/deed of trust of record remains unsatisfied, the following
provisions shall apply:
(a) Lessor, upon giving Lessee any notice of default, or any
other notice under the provisions of or with respect to this Lease, shall also
give a copy of such notice to the registered holder of a mortgage/deed of trust
on this Lease.
(b) Any holder of such mortgage/deed of trust, in case Lessee
shall have a monetary default hereunder, shall, within thirty (30) days from the
receipt of notice have the right to cure such default, or cause the same to be
cured, and Lessor shall accept such performance by or at the instance of such
holder as if the same had been made by Lessee, all as provided in A.R.S.
ss.37-289 (A)(2).
(c) Nothing herein contained shall preclude Lessor, subject to
the provisions of this Article, from exercising any rights or remedies under
this Lease with respect to any other default by Lessee during the pendency of
any foreclosure or trustee's sale proceedings.
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(d) Any holder of such mortgage/deed of trust, in case Lessee
shall have a default other than a default involving failure to pay rent, taxes
or other assessments, shall have forty-five (45) days from the receipt of notice
to cure any curable default.
(e) No failure on the part of Lessor to give the required
notice of default to the holder of a mortgage/deed of trust shall be deemed a
waiver of Lessor's continuing right to give notice of the default.
(f) Upon foreclosure of the mortgage or deed of trust, Lessor
shall assign this Lease to the holder of the mortgage or deed or trust if all
taxes rent and assessment payments are current. Nothing herein contained shall
be deemed to obligate Lessor to deliver physical possession of the demised
Premises to the assignee under any assignment entered into pursuant to this
paragraph.
(g) No agreement between Lessor and Lessee modifying,
canceling or surrendering this Lease shall be effective without the prior
written consent of the registered mortgagees and lienholders.
(h) No union of the interest of Lessor and Lessee shall result
in a merger of this Lease in the fee interest.
(I) If a default is not cured within the applicable time
period, Lessor may issue an order canceling the Lease. If a cancellation order
is issued, the order shall not become final until any foreclosure action by a
mortgagee or other lienholder, registered with Lessor pursuant to this Article,
is finally resolved, if the mortgagee or lienholder does both of the following:
(1) Within thirty (30) days of the date of issuance of a
Notice of Default, files written notice with Lessor of its intent to proceed
with a foreclosure action, and;
(2) Within one hundred twenty (120) days of the date of
issuance of a Notice of Default, has commenced either a foreclosure action in
court or a nonjudicial foreclosure of a deed of trust, and has provided Lessor
with a certified copy of the complaint or other document that officially
commences the foreclosure process, and thereafter prosecutes the foreclosure
with reasonable diligence.
CASUALTY LOSS. A standard Mortgage Clause naming each leasehold mortgagee
may be added to any and all insurance policies required to be carried by Lessee
hereunder on condition that the insurance proceeds are to be applied in the
manner that is not in derogation of Lessor's rights; except that the leasehold
mortgage may provide a manner for the disposition of such proceeds, if any,
otherwise payable directly to Lessee (but not such proceeds, if any, payable
jointly to Lessor and Lessee) pursuant to the provisions of this Lease.
ENVIRONMENTAL MATTERS
DEFINITION OF REGULATED SUBSTANCES AND ENVIRONMENTAL LAWS. For purposes of
this Lease, the term "Environmental Laws" shall include but not be limited to
any relevant federal, state or local environmental laws, and the regulations,
rules and ordinances, relating to environmental matters, and publications
promulgated pursuant to the local, state, and federal laws and any rules or
regulations relating to environmental matters. For the purpose of this Lease,
the term "Regulated Substances" shall include but not be limited to substances
defined as "regulated substance," "solid waste," "hazardous waste," "hazardous
materials," "hazardous substances," "toxic materials," "toxic substances,"
"inert materials," "pollutants," "toxic pollutants," "herbicides," "fungicides,"
"rodenticides," "insecticides," "contaminants," "pesticides," "asbestos,"
"environmental nuisance," "criminal littering," or "petroleum products" as
defined in Environmental Laws.
COMPLIANCE WITH ENVIRONMENTAL LAWS.. Lessee shall strictly comply with all
Environmental Laws, including, without limitation, water quality, air quality;
and handling, transportation, storage, treatment, or disposal of any Regulated
Substance on, under, or from the Premises. Without limiting the foregoing,
compliance includes that Lessee shall: (1) comply with all reporting obligations
imposed under Environmental Laws; (2) obtain and maintain all permits required
by Environmental Laws, and provide a copy to Lessor within ten (10) business
days of receipt of the lease; (3) provide copies of all documentation required
9
by Environmental Laws to Lessor within ten (10) business days of Lessee's
submittal and/or receipt of the documentation; (4) during the term of Lease,
provide copies of all information it receives or obtains regarding any and all
environmental matters relating to the Premises, including but not limited to
environmental audits relating to the Premises regardless of the reason for which
the information was obtained or whether or not the information was required by
Environmental Laws; (5) prevent treatment, storage, disposal, handling or use of
any Regulated Substances within the Premises without prior written authorization
from Lessor. Designated Compliance Officer.. Lessee at all times shall employ or
designate an existing employee (the "Designated Compliance Officer") who is
responsible for knowing all Environmental Laws affecting Lessee and Lessee's
business and monitoring Lessee's continued compliance with applicable
Environmental Laws. Upon request by Lessor, Lessee shall make the Designated
Compliance Officer available to discuss Lessee's compliance, answer any
questions, and provide such reports and confirming information as Lessor may
reasonably request.
AUDIT. At any time, Lessor may request Lessee to provide an environmental
audit of the Premises performed by an Arizona registered professional engineer
or an Arizona registered geologist. Lessee shall pay the entire cost of the
audit.
ENVIRONMENTAL ASSESSMENT. At any time, during the term of the Lease, Lessor
may require Lessee to obtain one Phase I environmental assessment of the
Premises performed by an Arizona registered professional engineer or an Arizona
registered geologist. If based upon the Phase I environmental assessment or its
own independent investigation, Lessor identifies any possible violation of
Environmental Laws or the terms of this Lease, Lessor may require Lessee to
conduct additional environmental assessments as Lessor deems appropriate for the
purpose of ensuring that the Premises are in compliance with Environmental Laws.
The Phase I assessment, or any other assessment required by Lessor, shall be
obtained for the benefit of both Lessee and Lessor. A copy of the Phase I report
shall be provided both to Lessee and Lessor. Lessor, in its sole discretion,
shall have the right to require Lessee to perform additional assessments of any
damage to the Premises arising out of any violations of Environmental Laws. If
Lessee fails to obtain any assessments required by Lessor, Lessee shall pay the
entire costs of any and all assessments required by Lessor, notwithstanding the
expiration or termination of the Lease.
INDEMNITY FOR ENVIRONMENTAL DAMAGE.. Lessee shall defend, indemnify and
hold Lessor harmless from and against any and all liability, obligations,
losses, damages, penalties, claims, environmental response and cleanup costs and
fines, and actions, suits, costs, taxes, charges, expenses and disbursements,
including legal fees and expenses of whatever kind or nature (collectively,
"claims" or "damages") imposed on, incurred by, or reserved against Lessor in
any way relating to or arising out of any non-compliance with any Environmental
Laws, the existence or presence of any Regulated Substance, on, under, or from
the Premises, and any claims or damages in any way relating to or arising out of
the removal, treatment, storage, disposition, mitigation, cleanup or remedying
of any Regulated Substance on, under, or from the Premises by Lessee, its
agents, contractors, or subcontractors.
SCOPE OF INDEMNITY. This indemnity shall include, without limitation,
claims or damages arising out of any and all violations of Environmental Laws
regardless of any real or alleged fault, negligence, willful misconduct, gross
negligence, breach of warranty, or strict liability on the part of any of the
indemnitees. This indemnity shall survive the expiration or termination of this
Lease and/or transfer of all or any portion of the Premises and shall be
governed by the laws of the State of Arizona.
LESSEE'S PARTICIPATION IN THE DEFENSE. In the event any action or claim is
brought or asserted against Lessor which is or may be covered by this indemnity,
Lessee shall fully participate, at Lessee's expense, in the defense of the
action or claim including but not limited to the following: (1) the conduct of
any required cleanup, removal or remedial actions and/or negotiations, (2) the
conduct of any proceedings, hearings, and/or litigation, and (3) the negotiation
and finalization of any agreement or settlement. Lessor shall retain the right
to make all final decisions concerning the defense. Lessee's obligations to
participate in the defense under this Section shall survive the expiration or
termination of the Lease.
RESTORATION. Prior to the termination of the Lease, Lessee shall restore
the Premises by removing any and all Regulated Substances. In addition, the
restoration shall include, but not be limited to, removal of all waste and
debris deposited by Lessee. If the Premises or any portions thereof are damaged
or destroyed from the existence or presence of any Regulated Substance or if the
Premises or any portions thereof are damaged or destroyed in any way relating to
or arising out of the removal, treatment, storage, disposition, mitigation,
cleanup or remedying of any Regulated Substance, Lessee shall arrange, at its
expense, for the repair, removal, remediation, restoration, and reconstruction
to the Premises to the original condition existing on the date that Lessee first
occupied the Parcel, to the satisfaction of Lessor. In any event, any damage,
10
destruction, or restoration by Lessee shall not relieve Lessee from its
obligations and liabilities under this Lease. Lessee's restoration obligations
under this Section shall survive the expiration or the termination of the Lease.
MISCELLANEOUS
RESERVATION. This Lease grants Lessee only those rights expressly granted
herein and Lessor retains and reserves all other rights in the Premises.
BINDING EFFECT. Each provision of this Lease shall extend to, be binding on
and inure to the benefit of not only Lessee but each of its respective heirs,
administrators, executors, successors and assigns. When reference is made in
this Lease to either "Lessor" or "Lessee", the reference shall be deemed to
include, wherever applicable, the heirs, administrators, executors, successors
and assigns of the parties. This Lease shall be binding upon all subsequent
owners of the Premises, and of any interest or estate therein or lien or
encumbrance thereon.
NO PARTNERSHIP. The relationship of the parties is that of Lessor and
Lessee, and it is expressly understood and agreed that Lessor does not in any
way or for any purpose become a partner of Lessee or a joint venturer with
Lessee in the conduct of Lessee's business or otherwise, and that the provisions
of any agreement between Lessor and Lessee relating to rent are made solely for
the purpose of providing a method by which rental payments are to be measured
and ascertained.
QUITCLAIM UPON TERMINATION.. After the expiration or termination of this
Lease, Lessee shall execute, acknowledge and deliver to Lessor within thirty
(30) days after written demand from Lessor to Lessee, any document requested by
Lessor quitclaiming any right; title or interest in the Leasehold to Lessor or
other document required by any reputable title company to remove the cloud of
this Lease from the Premises.
TITLE. The titles to the Articles of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part of the Lease. Fraud or Misrepresentation.. If during the term of this Lease
it appears that there has been fraud or collusion on the part of Lessee to
obtain or hold this Lease at a rent less than its value, or through Lessee's
fraud or collusion a former Lessee of the Premises has been allowed to escape
payment of the rent due for former Lessee's use of the Premises, Lessor may
cancel this Lease and the Parcel shall immediately revert to Lessor. If during
the term of this Lease it appears that Lessee has misrepresented, by
implication, willful concealment or otherwise, (i) the value of the Improvements
placed on the Parcel by a former Lessee or any other person; or (ii) Lessee not
being the owner of the Improvements placed on the Parcel by a former Lessee or
any other person at the commencement of the Lease term, Lessor may cancel this
Lease and the Parcel shall immediately revert to Lessor.
NOTICES. Any notice to be given or other document to be delivered to Lessee
or Lessor hereunder shall be in writing and delivered to Lessee or Lessor by
depositing same in the United States Mail, with prepaid postage thereon fully
prepaid and addressed as follows:
TO Lessor: Arizona State Land Department
0000 Xxxx Xxxxx Xxxxxx - Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
TO Lessee: Address of Record
Lessee must notify Lessor by written notice of any change in address within
thirty (30) days. Lessor may, by written notice to Lessee, designate a different
address.
LESSOR'S TITLE. If it is determined that Lessor has failed to receive title
to any of the Parcel, the Lease is null and void insofar as it relates to that
portion of the Parcel to which Lessor has failed to receive title. Lessor shall
not be liable to Lessee or any assignee or sublessee for any damages that result
from Lessor's failure to receive title.
LESSOR'S LIEN. Lessee grants to Lessor a lien superior to all others in
Lessee's interest in Improvements and valuable materials located on the Parcel.
Lessor has the right to recover any rent arrearage and outstanding liabilities
of Lessee from Lessee's interest in the Improvements or valuable materials.
NO PROMISE TO SELL. Lessee acknowledges that it has not been induced to
enter into this Lease by any promise from Lessor or any of its agents, servants
or employees that the Parcel will be offered for sale at any time.
CANCELLATION. Lessor may cancel this Lease, without penalty or further
obligation if, within three (3) years of execution, any person significantly
involved in initiating, negotiating, securing, drafting or creating the Lease on
behalf of Lessor or any of its departments or agencies is, at any time while the
Lease or any extension of the Lease is in effect, an employee of any other party
to the Lease in any capacity, or a consultant to any other party of the Lease
with respect to the subject matter of the Lease. The cancellation shall be
11
effective when written notice from the Governor is received by all other parties
to the Lease unless the notice specifies a later time.
APPLICABLE LAW. This Lease is subject to all current and subsequently
enacted rules, regulations and laws applicable to State lands and to the rights
and obligations of Lessors and Lessees. No provision of this Lease shall create
any vested right in Lessee except as otherwise specifically provided in this
Lease.
AMENDMENT. This Lease may be amended only in writing and upon agreement by
all parties.
ATTORNEYS' FEES. In any action arising out of this Lease, the prevailing
party is entitled to recover reasonable attorneys' fees and costs in addition to
the amount of any judgment, costs and other expenses as determined by the court.
In the case of Lessor, reasonable attorney's fees shall be calculated at the
reasonable market value for such services when rendered by private counsel,
notwithstanding that it is represented by the Arizona Attorney General's Office
or other salaried counsel.
EXECUTION. This document is submitted for examination and shall have no
binding effect on the parties unless and until executed by Lessor (after
execution by Lessee), and a fully executed copy is delivered to Lessee. Upon the
execution hereof, at the request of Lessee, the parties also shall execute, so
that Lessee may cause it to be recorded, a short form of this Lease.
ARBITRATION. In the event of a dispute between the parties to this Lease,
it is agreed to use arbitration to resolve the dispute but only to the extent
required by A.R.S.ss.12-1518; and in no event shall arbitration be employed to
resolve a dispute which is otherwise subject to administrative review by the
Department. SURVEY. At the request of Lessor, Lessee shall submit a current
survey prepared by an Arizona registered land surveyor of the Parcel. The survey
shall be prepared to Lessors satisfaction and the cost of the survey shall be
borne by Lessee.
MUTUAL CANCELLATION. This Lease may be terminated as to all or part of the
parcel prior to the expiration date upon written agreement signed by both Lessor
and Lessee. The agreement shall specify the terms and conditions of such a
cancellation.
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IN WITNESS HEREOF, the parties hereto have signed this Lease effective the day
and year set forth below.
----------------------------------------
LESSEE DATE
STATE OF ARIZONA, LESSOR
Arizona State Land Commissioner ----------------------------------------
LESSEE DATE
----------------------------------------
LESSEE DATE
By:
-------------------------------- ----------------------------------------
DATE ADDRESS
----------------------------------------
(Seal) CITY STATE ZIP
13
STATE OF ARIZONA LAND DEPARTMENT RUN DATE: 17-mar-1998
0000 X. XXXXX XXX TIME: 16:13:44
XXXXXXX, XX 00000
KE LEASE NUMBER: 003-000821-00-000
AMENDMENT NUMBER: 1
LAND # LEGAL DESCRIPTION C.C. ACREAGE
---------------------------------------
------------------------------------------------- -------------------
17.0-S-21.0-E-02-02-030-1003 M&B IN LOT 4 AND SWNW 0.0 16.820
---------------------------------------
------------------------------------------------- -------------------
TOTALS: 0.0 16.820
14
