COMMERCIALLEASE NO. 03-824 ARIZONASTATE LAND DEPARTMENT

 

3.1           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.  In the event that the Lessee appeals the initial rental value set by the Land Commissioner for the Lease, and the Board of Appeals determines a rental value different from the initial rental value set by the Land Commissioner, either party may terminate this Lease within thirty days after the decision of the Board of Appeals is final.   Lessee agree to pay rent for this Lease due and payable as follows:

Years 3 and 4:

$36,000.00

Years 5 and 6:

$38,000.00

Years 7 and 8:

$42,000.00

Years 9 and 10:

$45,000.00

 

3.6           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 an 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.

ARTICLE 4

4.1           Use.   The Premises shall be used solely and exclusively for the purpose described in Article 1.2 (Use).  All others are prohibited.  The four (4) mobile home units allowed under Article 1.2 shall be occupied only so long as the convenience store, gift shop, gas station and restaurant, herein referred to as the business, remain in operation.  There is no intent for their use as home sites; rather they are intended as temporary employee housing and must be vacated immediately if the “business” ceases operation.

4.4           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.

4.5           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.

4.6           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).

4.7           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 therefore, 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.

4.8           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 from the Parcel.  Any use or removal of water from the Parcel shall be pursuant to an independent written agreement with the Lessor and no claim thereto shall be made by Lessee.  Any water right established shall attach and be appurtenant to the Parcel.

4.9           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 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 I conjunction with this Lease.

(c)           ADWR requires an annual report of groundwater pumped from non-exempt well(s) 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.

4.10           Quiet Enjoyment.    Lessee shall peaceable 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.

4.11           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.

4.12           Surrender.    In the event this Lease is not renewed, Lessee shall surrender peaceable the possession of the Parcel upon expiration of the term of this Lease.

5.1           Record Keeping; Inspection.    Lessee shall make and keep for the term of the Lease and either (i) five (5) years t hereafter; or (ii) until the conclusion of any dispute concerning this Lease, whichever is later, appropriate books and records concerning the operation of t his 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 4 (Rent) of this Lease.

6.1           Definitions.    “Improvements” means anything permanent in character which is the result of labor or capital 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.

6.2           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.  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 nay 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.

6.3           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.

6.4           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).

6.5           Ownership; Removal.   All Improvements placed upon the Parcel by Lessee shall be the property of the Lessee subject to the terms of this Lease, and shall, unless they become the property of the Lessor, be subject to assessment for taxes in the name of the Lessee, the same as other property of the Lessee.  Not later than ninety (90) days following the expiration of this Lease, or, subject to A.R.S § 37-289.B, sixty (60) days following the cancellation of this Lease, Lessee may remove those Improvements which belong to it, are free of any liens and can be removed without causing injury to the Parcel.  At its option, Lessor may waive any of the above listed prerequisites to Lessee’s removal of Improvements.  Lessee may, with Lessor’s prior written approval and within the time allowed for removal, sell its Improvements to the succeeding Lessee.

6.6           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.

7.1           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.

8.1           Payment; Indemnity.   Lessee shall be responsible for all costs and charges for any work done by or for it on the Premises or in connection with the 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 ling 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 material men 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.

8.2           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.

9.1           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.

10.1           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 the proceeds received pursuant to this Lease; and (iv) the rent paid pursuant to this Lease.

11.1           Indemnity.    Except to the extent occurring or existing prior to the Commencement Date hereof, 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 any: (i) accident, injury or damage to any person or property occurring on or about the Premises or any portion thereof; (ii) use, no-use or condition of the Premises or any portion thereof; or (iii) 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 nor to the intentional conduct or active negligence of Lessor’s against, servants, contractors or subcontractors.  If any action or proceeding is brought against Lessor by reason of any such occurrence, Lessee, upon Lessor’s written request and at Lessee’s expense, will resist and defend such action or proceeding, or cause that same to be resisted either by counsel designated by Lessee or where such occurrence is covered by liability insurance, by counsel designated by the insurer.

11.2           Policies.   Lessee, at its expense, shall at all times during the Term of this Lease, and any extension thereof, maintain in full force a policy or policies of commercial general liability insurance, including bodily injury, property damage, personal injury and broad form contractual liability coverage, written by one or more duly licensed (or approved non-admitted) insurers in the State of Arizona with an “A.M. Best” rating of not less than A-VII, 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 commercial general 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 occasion ed to it, its servants, agents and employees by reason of the negligence or wrongdoing of Lessee, it servants, agents and employees or sublessee.  Further, the policies shall provide that their coverage is primary over nay other insurance coverage available to the Lessor, its servants, agents and employees.  All policies of insurance 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.

11.3           Amounts.   The insurance as described in Paragraph 11.2 (Policies) herein shall afford protection not less than:

 

Personal Injury:

$1,000,000.00

Each Occurrence:

$1,000,000.00

Blanket Contractual Liability – Written and Oral:

$1,000,000.00

Fire Damage (Any on fire):

$   500,000.00

 

 

 

 

 

 

 

 

 

 

 

TO Lessee:

Address of Record