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LEASE AND SUPPLY AGREEMENT

Requirements Supplier Agreement

LEASE AND SUPPLY AGREEMENT | Document Parties: GILA RIVER LAKE, LLC | Ready Mix, Inc You are currently viewing:
This Requirements Supplier Agreement involves

GILA RIVER LAKE, LLC | Ready Mix, Inc

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Title: LEASE AND SUPPLY AGREEMENT
Governing Law: Arizona     Date: 8/12/2008
Industry: Construction - Raw Materials     Sector: Capital Goods

LEASE AND SUPPLY AGREEMENT, Parties: gila river lake  llc , ready mix  inc
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Exhibit 10.19

LEASE AND SUPPLY AGREEMENT

     THIS AGREEMENT (this “Agreement”), is made and entered into this 5 th day of May, 2008, between Ready Mix, Inc, a Nevada corporation (“RMI”), and GILA RIVER LAKE, LLC, an Arizona Limited Liability Company, d/b/a/ Buckeye Sand and Gravel (“Buckeye”).

WITNESSETH :

     WHEREAS, Buckeye is the owner of certain real estate located in Maricopa County, Arizona at 10423 South Apache Road, Buckeye, AZ 85326 on which Buckeye operates a construction aggregates mining facility and more particularly described on Exhibit A , hereto (the “Property”); and

     WHEREAS, the Property has been designed to contain three separate sites or “pads” intended for ready-mix concrete (“RMC”) plants and a hot-mix asphalt plant that will use Buckeye’s aggregates products (collectively, the “Plant Sites”);

     WHEREAS, RMI wishes to lease one Plant Site consisting of approximately +/-4 (to be determined upon completion of site plan) acres and shown on Exhibit B (the “Leased Premises”) for a period of seven (7) years for the purposes of operating a RMC Plant (the “Plant”). and

     WHEREAS, RMI is contracting with Buckeye to purchase the aggregates necessary to operate its Plant in accordance with the Purchase Order (PO) attached hereto as Exhibit C , and

     NOW, THEREFORE, For One Dollar and other good and valuable consideration and in further consideration of the mutual covenants and agreements of the parties contained herein, the parties intending to be legally bound hereby and agree as follows:

     1.  LEASE .

     1.1 Grant. Buckeye hereby leases the Leased Premises to RMI for the purpose of locating, erecting and operating the Plant and, to the extent necessary and incidental to the operation thereof, the placing on the Leased Premises of fencing or other improvements and ancillary equipment. Buckeye represents that it is the owner of the Property, including the Leased Premises, and warrants to RMI quiet and peaceable possession of the Leased Premises under the terms of this Agreement. All plant and equipment located on the Leased Premises by RMI shall remain the personal property of RMI and shall not become part of the real property or otherwise the property of Buckeye.

     1.2 Restrictive Covenant. RMI agrees not to operate a RMC Plant within (ten) 10 miles of the Property during the term of this Agreement (the “RMI Restrictive Covenant”) without the express written consent of Buckeye. Buckeye may at

 


 

its discretion allow RMI to operate a RMC Plant on a project specific basis, within (ten) 10 miles of the property, provided Buckeye retains the right of first refusal to supply coarse and fine aggregate for that specific project.

     1.3 Potable Water Well. In the event RMI and/or proposed additional tenants install a potable water well and pressure tank for use in its operations, Buckeye shall have the right to connect to the water line leaving the pressure tank so that it can use the potable water at its office and quality control facilities. There shall be no cost to Buckeye for the use of the water and there shall be no cost to RMI and additional tenants for Buckeye’s connection and extension of water lines to its facilities. If RMI proceeds with the installation of the potable water well and it is sufficient to support two batch plants, Buckeye will require the second user to reimburse RMI for 1 / 2 (one half) of the development and construction costs of the potable water well, if and when they connect to the well water.

     2.  ACCESS . During the term of this Agreement, RMI and its customers shall have the nonexclusive use of the existing private roads on the Property for ingress and egress in connection with its activities hereunder provided such use does not unreasonably interfere with Buckeye’s operations on the Property.

     3.  TERM .

     3.1 Term . The term of this Agreement shall commence on May 5, 2008 (the “Effective Date”) and shall continue for seven (7) years unless extended (the “Term”). In the event Buckeye is not able to continue operations or extend its mining permit for any reason beyond the control of Buckeye, the conditions set forth in Section 9 “Force Majeure” shall apply.

     3.2 Renewal Term . RMI shall have the right to renew and extend this Agreement for five (5) additional one (1) year terms subject to negotiating annual material purchase agreements with Buckeye prior to the expiration of the Term. Buckeye may terminate the lease after the expiration of the 7th year if a development plan is submitted and approved by the Town of Buckeye or Governing Agency to convert the upland part of the property owned by the Company to another use. Buckeye shall give RMI six months written notice and pay the actual costs incurred by RMI to relocate its concrete plant not to exceed $250,000. The maximum amount of the relocation cost will be reduced by $50,000 for each one year option exercised by RMI.

     4.  PRODUCT REQUIREMENTS .

     4.1 Minimum Tonnage . In partial consideration of the rights granted by Buckeye hereunder, RMI agrees to purchase from Buckeye all of its requirements for fine and coarse aggregates for use in the manufacture of ready mix concrete at the RMC Plant (the “Products”). On or before January 1 of each calendar year during the term of this Agreement, RMI shall notify Buckeye of its expected requirements for the next calendar year, including those requirements for Products for use in an RMC Plant (the “Annual Minimum Quantities”).

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     RMI agrees that, commencing on January 1, 2009 and for each year thereafter as long as this Agreement remains in effect, the annual payment Buckeye receives (the sum total of the twelve monthly payments due and paid for each year of the Agreement) shall not be less than an amount (the “Annual Minimum Payment”) calculated on the basis of the minimum annual combined sales of fine and coarse aggregate and the price of Washed Fine and Coarse Aggregate during the year pursuant to Exhibit C. Beginning on January 1, 2010 and thereafter as long as this Agreement remains in effect, the Annual Minimum Payment shall be adjusted January 1 of each calendar year of this Agreement based on the Adjusted Price for fine and coarse aggregate determined in accordance with Exhibit C, Paragraph 2 hereof, provided, however, effective January 1, 2009, the Annual Minimum Quantities shall not be less than 100,000 tons for the first 12 months of this agreement, 150,000 tons for the second 12 months of this Agreement and 200,000 tons for each 12 months thereafter.

     RMI agrees that commencing on January 1, 2009 and for each month thereafter as long as this Agreement remains in effect, the Minimum Monthly Payment Buckeye receives shall not be less than an amount calculated on the basis of the Monthly Minimum Quantity (as defined herein) and the price of Washed Coarse and Fine Aggregate determined in accordance with Exhibit C, Paragraph 2 hereof. Effective January 1, 2009, the Monthly Minimum Quantity shall not be less than 6,250 tons per month for the first 12 months of this Agreement, 9,375 tons per month for the second 12 months of this Agreement, and 12,500 tons per month for each 12 months thereafter. If in any month RMI’s payment due is less than the Minimum Monthly Payment (“Monthly Overpayment”), RMI shall be given a credit (“Monthly Overpayment Credit”) equal to the amount of the Monthly Overpayment and Monthly Overpayment Credits may accumulate except that each Monthly Overpayment Credit shall have a term of 12 months. RMI may use any portion of accumulated unexpired Monthly Overpayment Credits to reduce the amount of any future Minimum Monthly Payment, provided RMI’s purchases exceed the Minimum Monthly Payment by an amount equal to or greater than the credit taken.

     RMI shall be obligated to purchase and Buckeye shall be obligated to sell and deliver to RMI the Annual Minimum Quantities during the calendar year. In the event RMI fails to purchase the Annual Minimum Quantities during such calendar year (other than due to Buckeye’s failure or inability to supply such Products or due to a Force Majeure as provided in Section 9 below), RMI shall pay to Buckeye, as liquidated damages, an amount equal to 25% of the price of each ton of the Annual Minimum Quantity not purchased by RMI in such calendar year.

     RMI may at its option request Aggregates deliveries in any calendar year in excess of the applicable Annual Minimum Quantity and Buckeye shall, if and to the extent it has the capacity to do so, supply such aggregates to RMI; provided, however, that Buckeye’s obligation to supply aggregates in excess of the applicable Annual Minimum Quantities shall be subject to any contracts or commitments to third parties entered into by Buckeye with third parties following RMI’s notice of Proposed Annual

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Quantities for such year. Subject to the Annual Minimum Quantity, Buckeye shall not be obligated to provide RMI more than 40% of the total concrete aggregate and washed concrete sand produced by Buckeye.

     4.2 Price. The price for the Products shall be as listed on Exhibit C hereto, subject to escalation as provided in said Exhibit and payment shall be made on the payment terms as set forth in said Exhibit.

     4.3 Delivery and Weights . The Products shall be delivered by Buckeye to stockpiles at locations near the Plant. Measurement of materials used by RMI for payment purposes shall be made by RMI. For material used in the production of ready mix concrete measurement shall be based upon the quantities of coarse and fine aggregate as shown on the RMI’s computer printouts for the plant located on the RMC Plant site.

     4.4 Quality . The Products sold and delivered under this Agreement to RMI shall satisfy those specifications set out in Exhibit C hereto

     5.  FINANCIAL ASSURANCE . RMI hereby acknowledges that Buckeye has provided financial assurance to the State Mine Inspector in connection with an approved Reclamation Plan for mining and ancillary uses on the Property. If additional financial assurance is required by the State Mine Inspector due to RMI’s operation of a RMC plant on the Property, RMI will be responsible to provide a bond or other form of financial guarantee satisfactory to the State Mine Inspector, at no cost to Buckeye.

     6.  COMPLIANCE WITH LAWS . RMI shall comply with all applicable laws in the conduct of its operations hereunder, including without limitation those relating to environmental protection. RMI hereby acknowledges that the Leased Premises are within the floodplain and/or floodway of the Gila River and further acknowledges receipt of a copy of the mining permit from the Maricopa County Flood Plain District.

     7.  TAXES AND UTILITIES . Buckeye agrees to make payment for all real estate taxes on the Property. However, RMI shall pay that portion of the real estate taxes attributable to the Leased Premises when billed for same by Buckeye. RMI shall also pay when due all ad valorem taxes assessed on any improvements or personal property located on or used in its operation of the Plants on the Leased Premises. RMI shall pay all utilities, including but not limited to, electricity, gas, and water, consumed by RMI on the Leased Premises in the operation of the Plants. If such utility costs are not separately identified and billed to RMI, but are charged to Buckeye together with those for the Property generally, RMI shall promptly reimburse Buckeye for those utility costs attributable to RMI’s operations on the Leased Property. In addition, RMI shall reimburse Buckeye for that portion of the cost of extending electrical service to the Property based on the percentage of amperage allocated to the Plant.

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     9.  FORCE MAJEURE .

     9.1 Force Majeure . Neither party shall be liable for damages for any delay or failure in performance of this Agreement, other than to make payments due hereunder, resulting from acts of God, including, but not limited to floods, storms, earthquakes, hurricanes, tornadoes, or other severe weather or climatic conditions, acts of public enemy, war, blockades, insurrection, vandalism or sabotage, fire, accident, wreck, explosion, strike or labor dispute, embargoes, governmental laws, orders, regulations, or third-party transportation disruptions, which cause interruption in the production of Products at Buckeye’s operations on the Property, the receipt, use or consumption of Products by RMI at any Plant or the manufacture and sale of ready-mix concrete by RMI from the Plant.

     9.2 Notice . The party experiencing an event of Force Majeure will send written notice to the other party describing the nature of the Force Majeure, the estimated volume of Products expected to be effected thereby and its expected duration. This notice shall be sent within 5 days of the beginning of the event of Force Majeure and within 10 days of the end of such event.

     9.3 Duties. The party whose performance is affected by such Force Majeure shall, to the extent practical through commercially reasonable efforts, remedy such condition with all reasonabl


 
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