DRAFT LEASE 4A03.pdf

Station: NAS Fallon Parcel #: 4A03 Contract: N6247326RP00004

DEPARTMENT OF THE NAVY

LEASE FOR AGRICULTURAL PURPOSES

NAVAL AIR STATION FALLON, NEVADA

LEASE between _____________________hereinafter called “LESSEE,” and the United States of America, acting by and through the Department of the Navy, represented by the Commanding Officer, Naval Facilities Engineering Systems Command Southwest, San Diego, California, hereinafter called the “GOVERNMENT.”

1) LEASED PROPERTY: Under the terms and conditions of this “LEASE,” the GOVERNMENT hereby leases to the LESSEE a portion of the NAVAL AIR STATION, FALLON, NEVADA, hereinafter called the “STATION”. That portion is hereinafter called the “LEASED PROPERTY” and is described as follows:

a) Parcel 4A03, consists of approximately 164 acres (AC), is identified and delineated in Exhibit “A”, attached and incorporated herein.

b) The 164 acres consist of the following:

+/- 132 acres of Water-righted Area (Irrigated Cropland) +/- 32 acres of Maintenance/Rangeland

Total: +/- 164 acres of the LEASED PROPERTY

2) TERM: The term of this LEASE will be for the period beginning February 1, 2026, and ending on January 31, 2031, UNLESS sooner terminated or extended in accordance with Clause 2.a, OPTION TO EXTEND THE TERM OF THE LEASE, hereof:

a) OPTION TO EXTEND THE TERM OF THE LEASE:

This LEASE may be renewed at the sole option of the GOVERNMENT for One (1) additional

N6247326RP00004

five-year option period, under the same terms and conditions contained herein. The GOVERNMENT shall exercise its option to extend the term of the LEASE by giving written notice thereof to the LESSEE at least one hundred eighty (180) days prior to the expiration of the LEASE’s initial Five-Year base term, or any extension thereof. Any extension of the LEASE pursuant to this Clause shall not otherwise modify the terms and conditions of the LEASE set forth or referenced within.

3) RENT:

a) LESSEE shall pay GOVERNMENT rent in the amounts set forth below:

Term Rent

(Acre/Year) Farmable Acreage

Annual Rent (Rent per Acre per year x Farmable Acreage)

Total Rent for the Term

(Total for 5 years)

Firm Term:

Feb 1, 2026 to Jan 31, (Five-Year Firm Term)

$______ 132 AC $______ $______

Option Term 1:

Feb 1, 2031 to Jan 31, (Five-Year Option Term)

$______ 132 AC

Total Rent for Lease Term (Five-Year Firm Term and One (1) Five-Year Option Term):

b) LESSEE agrees to pay the GOVERNMENT an annual rental in the amount of $________ for the initial LEASE term payable in advance at the rate of $_____ per annum, semi-annum, quarterly (circle one). Rental payments shall be remitted by check or postal money order made payable to the U.S. Department of the Treasury, or as otherwise unilaterally directed by the GOVERNMENT and delivered to the Real Estate Contracting Officer, subject to any allowance for credit for work approved and performed pursuant to Clause 7 of this LEASE. Checks must be issued and drawn on the account of the LESSEE. If a check is not issued by and drawn on the account of the LESSEE, the check will be returned to the LESSEE. If a check issued by and drawn on the account of the LESSEE is not received timely in accordance with the LEASE, the payment will be deemed delinquent and interest will accrue at the rate published by the Department of the Treasury's Bureau of the Fiscal Service each year. LESSEE’S who are chronically delinquent in the submittal of their rental payments may be deemed as a not responsible bidder for future Navy Agriculture Lease advertisements. The date of receipt of rental payments will be the deemed date of payment.

c) As additional consideration, the LESSEE also hereby agrees to pay all 100% of the annual irrigation charges, and associated operations and maintenance costs due by the date established by the Truckee Carson Irrigation District (TCID), as well as any additional and/or supplemental fees, charges, or related requests for payment that are assessed and associated with the LEASED PROPERTY, received from TCID and/or its successors and assigns, regardless of the amount of irrigation waters delivered to this parcel. The GOVERNMENT does not make any guarantees regarding the quantity or the quality of irrigation water available from TCID. The TCID normal water allocation is

3.5 acre feet per acre.

d) If TCID water allocation is equal or less than 60%, a rental rate adjustment shall be applied. The revised rental rate shall be determined by the allocation set by TCID. Upon final allocation determination, the GOVERNMENT shall initiate a unilateral modification to the LEASE to adjust the annual rent accordingly.

4) USE: The primary use of the STATION is for military activities. The agricultural LEASE operation is secondary and subject to the military requirements for the land. The LEASED PROPERTY shall be used solely for agricultural purposes, with grazing allowed upon request from LESSEE and written approval from the STATION, and the use of the LEASED PROPERTY for personal or private use is prohibited. The LEASED PROPERTY shall be used primarily for agricultural purposes, with grazing upon request from LESSEE and written approval from the STATION. Grazing approval will be based on current conditions and forage availability.

Human occupancy is not allowed. Commercial wholesale or retail sales operations are not allowed on the STATION. It is the express intent of the GOVERNMENT not to let the water-righted land lay fallow, but rather to have the available irrigation waters used to the maximum extent possible with sound agricultural practices. All uses of the LEASED PROPERTY must be in accordance with the Soil and Water Conservation Plan for Agricultural Out lease, attached hereto as Exhibit “B”. The LESSEE shall in no manner substantially change the contour or condition of the land without express written authority from Naval Facilities Engineering Systems Command Southwest, “GOVERNMENT” and with the concurrence of the STATION. Operation of unmanned aerial vehicles (also known as “drones”) is prohibited on the STATION, in accordance with 10 United States Code §130i and Federal Aviation Administration regulations.

All uses of the lands of the STATION shall be in accordance with and in full compliance with all applicable federal, state and local laws, regulations and/or ordinances, including but not limited to laws, regulations and/or ordinances concerning air emissions, water pollution prevention, and permitting requirements.

The cultivation of and harvesting of low-labor intensive crops (grasses, and/or legumes for hay or silage) shall be permitted. The planting of corn, vineyards, orchards, rice crops, or sod farming is not allowed.

5) PERFORMANCE BOND SECURITY DEPOSIT: To secure the faithful performance of LESSEE'S obligations hereunder, LESSEE shall provide the GOVERNMENT with a security deposit in the amount equal to 50% of the annual rent for the five-year firm term of February 1, 2026 - January 31, 2031, shown in Clause 3 (a) or $5,000.00, whichever is GREATER. If the GOVERNMENT shall at any time determine that an increase in the amount of security is necessary to make same commensurate with LESSEE's obligations hereunder, LESSEE shall furnish additional security promptly upon request. The Security Deposit provided shall be in the form of either:

a) Certificate of Deposit:

i. Certificate of Deposit shall be accompanied by a Security Agreement, as provided by the Government, fully executed by LESSEE and GOVERNMENT and acknowledged by the financial institution issuing the Certificate of Deposit; and

ii. Certificate of Deposit shall be made payable to the LESSEE and the “Department of the Navy”; or

b) Performance Bond issued by a Corporate Surety and satisfactory to the GOVERNMENT in all respects.

i. Performance Bond shall be payable to the “Treasurer of the United States.”

The term of the Certificate of Deposit or Performance Bond shall be secured for the entire five-year firm term of the LEASE. For the one (1) five-year option period exercised thereafter, the Certificate of Deposit or Performance Bond shall be secured for the entire five-year option term.

If LESSEE shall fully and faithfully comply with all the terms and conditions of this LEASE, the security deposit shall be returned to the LESSEE upon the expiration or earlier termination of the LEASE. In the event the LESSEE breaches the LEASE, the GOVERNMENT shall have the right to withhold the Certificate of Deposit and use the proceeds therefrom to cure such breach, or make demand on the Surety under the Performance Bond.

6) INSURANCE REQUIREMENTS:

Prior to award of the LEASE, the LESSEE shall submit a certificate of insurance meeting the following requirements. Public Liability and Property Damage shall meet the following requirements at a minimum:

$2,000,000 Third Party Property Damage $3,000,000 Third Party Personal Injury Per Person $3,000,000 Third Party Personal Injury Per Accident

The policy/certificate of insurance shall contain the following endorsements:

a) The insurer waives any right of subrogation against the United States of America which might arise by reason of any payment made under this policy.

b) The GOVERNMENT shall be given thirty (30) days written notice prior to making any material change in or the cancellation of the policy. Please strike out (and initial) any clauses that state “…failure to make such notice imposes no obligation or liability of any kind upon the company, etc…”

c) The United States of America (Department of the Navy) is added as an additional insured in operations of the policyholder at or from the LEASED PROPERTY at Naval Air Station, Fallon, Nevada.

d) This insurance certificate is for use of the LEASED PROPERTY at Naval Air Station, Fallon, Nevada, Contract Number N6247326RP00004 for Parcel 4A03.

e) If, at any time, the GOVERNMENT determines that the insurance maintained by the LESSEE does not in fact adequately protect the GOVERNMENT, LESSEE may be required to carry such other insurance in such form, for such amounts and for such periods of time, and with such insurers as the GOVERNMENT may from time to time require or approve.

7) CONSERVATION AND MAINTENANCE WORK:

a) The LESSEE, shall at its own cost and expense, assume full responsibility for the conservation and maintenance obligations in accordance with the specifications and guidelines set forth in the Soil and Water Conservation Plan of this LEASE, Exhibit “B.”

b) In addition to the conservation and maintenance obligations the LESSEE must perform at its own cost and expense, as described above in paragraph 7.a., the LESSEE agrees to perform reimbursable Conservation and Maintenance related work as approved or directed by the GOVERNMENT. Upon prior approval and subsequent completion of such work and the acceptance of same by the GOVERNMENT, the LESSEE shall receive payment in full for the "Actual Costs" of work performed, or shall receive rent credit in the same amount against rents payable under the terms of this LEASE; provided, however, that in no event shall such rent credit exceed the total amount of cash rent called for in the LEASE.

i) "Actual Costs" as used herein shall mean the sum of:

(1) direct labor costs, and;

(2) direct material costs, when LESSEE has incurred such costs directly in the performance of any Conservation and Maintenance Work approved or directed by the Real Estate Contracting Officer. When LESSEE contracts with third parties for performance of any item of Conservation and Maintenance Work, "Actual Costs" as used herein, shall mean the amount of such contracts that have been approved in advance by the Real Estate Contracting Officer.

c) Prior to commencement of any Conservation and Maintenance Work for which the LESSEE is to receive credit or payment from the GOVERNMENT, the LESSEE must have a Modification to Lease executed by the Real Estate Contracting Officer setting forth the terms, conditions and the amount of compensation to be paid upon completion of the reimbursable work to the satisfaction of the GOVERNMENT. The following procedures apply:

i) GOVERNMENT provides LESSEE with project specifications and written notice to obtain bids.

ii) LESSEE obtains a minimum of two bids from qualified contractors and forwards such bids to the Real Estate Contracting Officer. LESSEE may elect to do the work him/herself, and LESSEE then must submit to the Real Estate Contracting Officer an itemized bid proposal covering all aspects of the project. In the event the LESSEE elects to do the work him/herself, no other bids are necessary, provided that the LESSEE's bid price is validated with the GOVERNMENT'S cost estimate. For each project or service proposed, LESSEE must include with the project or service description an estimated cost to perform the work. The estimated cost shall be broken down by material, subcontract cost, labor, overhead, general expense, and administrative expense.

iii) Nothing in this LEASE shall preclude the LESSEE from contracting with a third-party contractor for the work. LESSEE shall require any contractor to have a Performance

Bond with the penal amount of no less than the estimated cost of the work contracted for.

In compliance with Clause 33(d)(i) of this LEASE, LESSEE shall be solely responsible for obtaining any environmental permits required for the proposed work. Copies of all required environmental and/or construction permits shall be provided to the GOVERNMENT prior to execution of work.

iv) GOVERNMENT shall review the bids (or single bid proposal if LESSEE elects to do the work him/herself), and if acceptable the GOVERNMENT shall enter into a Modification of Contract with LESSEE authorizing the project. The GOVERNMENT will retain the right to perform a technical review of any proposed work to be performed or personal property to be provided. A GOVERNMENT representative may oversee the work solely for the benefit of the GOVERNMENT, and such GOVERNMENT representative shall confirm satisfactory completion of the work to the Real Estate Contracting Officer. IN NO CASE

SHALL LESSEE BEGIN ANY PROJECT WORK PRIOR TO RECEIVING A FULLY

EXECUTED MODIFICATION OF LEASE THEREFORE.

v) A “not to exceed cost ceiling” will be established in the Modification of Contract for the reimbursable project. The Real Estate Contracting Officer may, upon written request, with supporting rational from the LESSEE, increase the “not to exceed cost ceiling.” Such request for an increase in said amount must be submitted, in writing, prior to incurring any cost in excess of the said amount and sufficiently in advance to provide for GOVERNMENT review of the request and, in any event, not less than ten (10) days prior to the date authorization is required. The LESSEE shall not be obligated to incur costs in excess of the “not to exceed cost ceiling.”

vi) Upon receipt of a fully executed Modification of Contract, LESSEE shall begin work coordinating all details of the work including starting dates and times, and the location of the work with the STATION Point of Contact (POC), listed in this LEASE in Clause 35

(a) (xviii) (c).

vii) Upon completion of the work, the LESSEE shall submit to the GOVERNMENT an invoice signed by the LESSEE stating the full amount due for the work performed, together with all supporting documents, all bills of sale; receipts for labor and materials used in connection with the project; and in the event the LESSEE performed the work, an itemized bill for all labor and materials.

viii) The incurred cost of performing such project or service will be subject to GOVERNMENT audit and should such audited allowable cost be less than the “not to exceed cost ceiling” amount authorized, then the amount of reimbursement or credit towards rent reduction to LESSEE shall be the audited, allowable incurred cost.

ix) The GOVERNMENT shall inspect the work for adherence to specifications and quality of workmanship, and will review the receipts and bills of sale for adherence to the previously approved bid estimates. The Real Estate Contracting Officer must provide a written final acceptance of the work performed in order for LESSEE to obtain rent reduction credit for the work performance, or reimbursement for actual costs. If the project is acceptable, the Real Estate Contracting Officer will make arrangements for appropriate rental credit or reimbursement to the LESSEE in accordance with applicable provisions of this LEASE.

x) Any bills of sale, purchase receipts, written warranty agreements and other indicia or documents of ownership shall be provided to the GOVERNMENT upon its acceptance of the improvement or personal property. Written warranties shall include but not be limited to a warranty that work performed conforms to the contract requirements and is free of any defect in equipment, material or design furnished or workmanship performed, and that the LESSEE or LESSEE’s contractor will remedy any failure to conform or any defect. Additionally, any warranty shall provide that LESSEE or LESSEE’s contractor shall remedy any damage to GOVERNMENT owned or controlled real or personal property when that damage results from either contractor failure to conform to contract requirements or any defect of equipment, material, workmanship or design furnished. All warranties shall name the GOVERNMENT as an additional beneficiary. LESSEE shall enforce all warranties for the benefit of the GOVERNMENT, if directed to do so by the GOVERNMENT.

xi) Upon termination of this LEASE pursuant to Clauses 13 and 14, hereof, a final accounting will be performed and the balance of any rent accrued and payable to the GOVERNMENT will be due on demand. Notwithstanding termination, the GOVERNMENT reserves the right to have a final accounting at any time during the course of the LEASE, and to request that the value of any rent accrued up to that date and not already contractually obligated to any specific project or service to be performed, be paid to the GOVERNMENT on demand. Upon termination, at the GOVERNMENT’S option, LESSEE shall complete any work or service already contracted for, or if otherwise directed by GOVERNMENT, cease all project work, terminate any contract(s) for such work, and pay all accrued rent.

xii) All improvements constructed or installed under this clause are the property of the GOVERNMENT and shall remain in place and intact upon the expiration or earlier termination of this LEASE. Should the LESSEE fail to perform such work (either him/herself or via a contract), the GOVERNMENT may arrange for the work to be completed and LESSEE shall be required to reimburse the GOVERNMENT for costs incurred.

8) GENERAL MAINTENANCE OBLIGATION: LESSEE, at its own sole cost and expense, shall so protect, preserve, maintain and repair the LEASED PROPERTY, that the same will be at all times be kept in at least as good condition as when received, less ordinary wear and tear and/or loss or damage for which LESSEE is not specifically liable hereunder.

9) RISK OF LOSS-INSURANCE:

a) LESSEE shall bear all risk of loss of or damage to the LEASED PROPERTY arising from any cause whatsoever, with or without fault by LESSEE; Provided, however, that LESSEE's liability for any loss or damage resulting from risks expressly required to be insured against under the LEASE shall not exceed the amount of insurance so required or the amount actually procured and maintained, whichever shall be the greater; Provided, further, that maintenance of the required insurance shall effect no limitation on LESSEE's liability with respect to any loss or damage resulting from the willful misconduct, lack of good faith, or negligence of LESSEE or any of its officers, agents, servants, employees, subtenants, licensees, and/or invitees.

b) LESSEE shall procure and maintain, at its own expense, insurance on the LEASED PROPERTY in such initial amounts and types as may exceed, but shall not be less than, the minimum amounts and types specified in Clause 6 hereof. However, LESSEE shall provide, maintain, change or discontinue such insurance as the GOVERNMENT may from time to time require and direct; Provided, LESSEE's liability for loss of or damage to the LEASED PROPERTY is modified accordingly; Provided, further, that if any insurance requirement is so changed an equitable adjustment shall be made in the amount of the Rent or Maximum Amount to be Expended specified in Clause 3 or 7 hereof so as to reflect any resultant savings or increased cost to LESSEE.

c) All insurance, which this LEASE requires LESSEE to carry on the LEASED PROPERTY, shall be in such form, for such amounts, for such periods of time and with such insurers as the GOVERNMENT may from time to time require or approve. Each policy of insurance shall contain a provision for thirty (30) days written notice to the Real Estate Contracting Officer prior to the making of any material change in or the cancellation of the policy.

LESSEE shall deliver promptly to the Real Estate Contracting Officer a certificate of insurance or a certified copy of each policy of insurance required by this LEASE, and LESSEE shall also deliver to the Real Estate Contracting Officer, no later than thirty (30) days prior to the expiration of any such policy, a certificate of insurance or a certified copy of each renewal policy covering the same risks. All insurance required or carried by LESSEE on any of the LEASED PROPERTY shall be for the protection of the GOVERNMENT and LESSEE against their respective risks and liabilities in connection with the LEASED PROPERTY. Each policy of insurance shall name both LESSEE and the United States of America (Department of the Navy) as the insured, and each policy of insurance against loss of or damage to the LEASED PROPERTY shall contain a loss payable clause reading as follows:

i) "Loss, if any, under this policy shall be adjusted with (name of LESSEE) and the proceeds, at the election of the GOVERNMENT, shall be payable to (name of LESSEE); any proceeds not paid to (name of LESSEE) shall be payable to the Treasurer of the United States."

ii) In the event that any item or part of the LEASED PROPERTY shall require repair, rebuilding or replacement resulting from loss or damage, the risk of which is assumed by LESSEE under paragraph (a) of this Clause, LESSEE shall promptly give notice thereof to the Real Estate Contracting Officer and, to the extent of its liability as provided in paragraph (a) thereof, shall, upon demand, either compensate the GOVERNMENT for such loss or damage, or rebuild, replace or repair the item or items of the LEASED PROPERTY so lost or damaged, as the GOVERNMENT may elect. In the event that the GOVERNMENT shall direct LESSEE to effect any repair, rebuilding or replacement which the LESSEE is required to effect pursuant to this paragraph, the GOVERNMENT shall direct the payment to LESSEE of so much of the proceeds of any insurance carried by LESSEE and made available to the GOVERNMENT on account of loss of or damage to any item or part of the LEASED PROPERTY as may be necessary to enable LESSEE to effect such repair, rebuilding or replacement. In the event the GOVERNMENT shall elect not to require LESSEE to repair, rebuild or replace any item or part of the LEASED PROPERTY lost or damaged, LESSEE shall promptly pay to the GOVERNMENT out of any insurance proceeds collected by LESSEE such portion thereof as may be allocable to loss of or damage to the LEASED PROPERTY. When compliance with a GOVERNMENT request to effect any repair, rebuilding or replacement of any lost or damaged item or part of the LEASED PROPERTY would involve the incurring of costs in excess of LESSEE's liability for such loss or damage under this Clause, LESSEE shall be under no obligation to effect same until after a satisfactory agreement has been reached between the GOVERNMENT and LESSEE with regard to GOVERNMENT reimbursement of such excess of costs to LESSEE.

10) REPRESENTATIONS: LESSEE has examined, knows and accepts the condition and state of repair of the LEASED PROPERTY and the STATION of which it forms a part, and acknowledges that the GOVERNMENT has made no representation concerning such condition and state of repair, nor has the GOVERNMENT made any agreement or promise to alter, improve, adapt, repair or keep in repair the same, or any item thereof or thereupon, which has not been fully set forth in this LEASE, which contains all the agreements made and entered into between the LESSEE and the GOVERNMENT.

11) SUBJECTION TO EXISTING AND FUTURE EASEMENTS AND RIGHTS OF WAY: This LEASE is subject to all outstanding easements and rights of way over, across, in and upon the LEASED PROPERTY, or any portion thereof, and to the right of the GOVERNMENT to grant such additional easements and/or rights of way over, across, in and upon the LEASED PROPERTY as the GOVERNMENT shall determine to be in the public interest; Provided, that any such additional easement or right of way shall be conditioned on the assumption by the Grantee thereof of liability to LESSEE for such damages as LESSEE shall suffer for property destroyed or property rendered unusable on account of Grantee's exercise of its rights thereunder. There is hereby reserved to the holders of such easements and rights of way as are presently outstanding or which may hereafter be granted, to any workers officially engaged in the construction, installation, maintenance, operation, repair, or replacement of facilities located thereon, and to any Federal, State or local official engaged in the official inspection thereof such reasonable rights of ingress and egress over the LEASED PROPERTY as shall be necessary for the performance of their duties with regard to such facilities.

12) TERMINATION BY GOVERNMENT:

a) The GOVERNMENT shall have the right to terminate this LEASE, in part or whole, at any time, without prior notice, and regardless of any lack of breach by LESSEE of any of the terms and conditions of this LEASE. In the event of termination for any reason not involving a breach by LESSEE of the terms and conditions of the LEASE, the GOVERNMENT shall make an equitable adjustment of any advance rentals paid by the LESSEE hereunder.

b) If the GOVERNMENT's use of the LEASED PROPERTY does not require immediate possession thereof, LESSEE shall be permitted, within such time as the Real Estate Contracting Officer shall prescribe, to harvest, gather and remove from the LEASED PROPERTY such crops as can be so harvested and removed, but if the GOVERNMENT'S requirements necessitate immediate repossession of the LEASED PROPERTY, so as to preclude LESSEE from such harvesting and removal of any growing or matured crops, LESSEE hereby specifically releases, remises, and forever discharges the GOVERNMENT from any and all liability or claims of loss or damage of any nature arising out of such termination and repossession, including, but not limited to destruction of, diminution in value of, or inability to harvest any growing crops.

c) In the event that the GOVERNMENT shall elect to terminate this LEASE on account of the breach by LESSEE of any of the terms and/or conditions of this LEASE, no adjustment in advance rentals paid by LESSEE shall be made, and the GOVERNMENT shall be entitled to recover and LESSEE shall pay to the GOVERNMENT:

i) The costs incurred in resuming possession of the LEASED PROPERTY.

ii) The costs incurred in performing any obligation on the part of LESSEE to be performed hereunder.

iii) An amount equal to the aggregate of all rents, Long Term Maintenance Obligation and charges assumed hereunder and not theretofore paid or satisfied, less the net rentals, if any, collected by the GOVERNMENT on the reletting of the LEASED PROPERTY, which amounts shall be due and payable at the time when such rents, obligations and charges would have accrued or become due and payable under this LEASE.

13) TERMINATION BY LESSEE:

a) LESSEE shall have the right to terminate this LEASE upon ninety (90) days written notice to the Real Estate Contracting Officer in the event of damage to or destruction of all of the improvements on the LEASED PROPERTY or such a substantial portion thereof as to render the LEASED PROPERTY incapable of use for the purposes for which it is leased hereunder; provided:

i) the Real Estate Contracting Officer either has not authorized or directed the repair, rebuilding or replacement of the improvements or has made no provision for payment for such repair, rebuilding or replacement by application of insurance proceeds or otherwise, and

ii) that such damage or destruction was not occasioned by the fault or negligence of LESSEE or any of its officers, agents, servants, employees, subtenants, licensees and/or invitees, or by any failure or refusal on the part of LESSEE to fully perform its obligations under this LEASE.

b) The LESSEE has the right to terminate this LEASE at the end of the first year, or at the end of any succeeding year, by providing the GOVERNMENT at least 180 days advance written notice.

14) SURRENDER: Upon the expiration of this LEASE or its prior termination, LESSEE shall quietly and peacefully remove itself and all of its property from the LEASED PROPERTY and surrender the possession thereof to the GOVERNMENT; Provided, in the event the GOVERNMENT shall terminate this LEASE upon less than thirty (30) days’ notice, LESSEE shall be allowed a reasonable period of time, as determined by the Real Estate Contracting Officer, but in no event to exceed thirty (30) days from receipt of notice of termination, in which to remove all of its property from and terminate its operations on the LEASED PROPERTY.

During such period prior to surrender, all obligations assumed by LESSEE under this LEASE shall remain in full force and effect; Provided, however, that if the Real Estate Contracting Officer shall, in his/her sole discretion, determines that such action is equitable under the circumstances, he/she may suspend, in whole or in part, any further accruals of Rent or Maximum Amount to be Expended between the date of termination of the LEASE and the date of final surrender of the LEASED PROPERTY.

15) RESTORATION OF LEASED PROPERTY: Before the expiration of the LEASE, or prior to surrender of the LEASED PROPERTY if the LEASE has been terminated prior to LEASE expiration (subject to the language below), LESSEE shall restore the LEASED PROPERTY and each item thereof or thereupon to the condition in which it was first received and used by LESSEE, or to such improved condition as may have resulted from any improvement made therein by the GOVERNMENT or by LESSEE, subject however, to ordinary wear and tear and loss or damage for which LESSEE is not expressly liable hereunder; Provided, in the event the GOVERNMENT shall terminate this LEASE upon less than thirty (30) days’ notice LESSEE shall have thirty (30) days from receipt of notice of termination to accomplish such restoration.

16) INSTALLATIONS, ALTERATIONS AND REMOVALS:

a) It is expressly agreed and understood that LESSEE will make no substantial alterations, additions or betterments to or installations upon the LEASED PROPERTY without the prior WRITTEN APPROVAL of the Real Estate Contracting Officer, and then only subject to the terms and conditions of such approval which may include an obligation of removal and restoration upon the expiration or termination of this LEASE. Except insofar as said terms and conditions may expressly provide otherwise, all such alterations, additions, betterments and installations made by LESSEE shall become the property of the GOVERNMENT when annexed or affixed to the LEASED PROPERTY or any part thereof.

b) All improvements constructed or installed by the LESSEE on the LEASED PROPERTY, with the limited exception of pumps, holding tanks, motors, portable offices, and other portable equipment, whether constructed or installed at LESSEE's expense or on a reimbursable basis, become the property of the GOVERNMENT upon expiration or earlier termination of the LEASE, without any payment being made by the GOVERNMENT, unless prior written approval, in accordance with paragraph (a) of this clause, allows for the removal of such improvements. With regard to pumps, holding tanks motors, portable offices, and other portable equipment, such items must be removed from the LEASED PROPERTY prior to the expiration or termination of this LEASE or any extension thereof.

Provided, that in the event of termination by the GOVERNMENT upon less than thirty (30) days’ notice, LESSEE may remove such pumps, holding tanks motors, portable offices, and other portable equipment LESSEE has placed upon the LEASED PROPERTY within thirty (30) days from the receipt of notice of termination. All property not so removed shall be deemed abandoned by LESSEE and may be used or disposed of by the GOVERNMENT in any manner whatsoever without any liability to LESSEE, but such abandonment shall in no way reduce any obligation of LESSEE to the GOVERNMENT pursuant to Clause 15 hereof.

17) INDEMNIFICATION BY LESSEE GOVERNMENT NON-LIABILITY: LESSEE covenants that it will indemnify and save and hold harmless the GOVERNMENT, its officers, agents, assignees, licensees and employees for and from and all liability or claims for loss of or damage to any property owned by or in the custody of LESSEE, its officers, agents, servants, employees, subtenants, licensees, or invitees, or for the death of or injury to any of the same which may arise out of or be attributable to the condition, state of repair or LESSEE's use and occupancy of the LEASED PROPERTY, or the furnishing of any utilities or services, or any interruption therein or failure thereof, whether or not the same shall be occasioned by the negligence or lack of diligence of LESSEE, its officers, agents, servants or employees.

18) UTILITIES AND SERVICES: In the event that the GOVERNMENT shall furnish LESSEE with any utilities and/or services maintained by the GOVERNMENT which LESSEE may require in connection with its use of the LEASED PROPERTY, LESSEE shall pay the GOVERNMENT the charges therefore in addition to the cash rent (and any other charges/payments) required under this LEASE. Notwithstanding the requirements set forth in Clauses 3 (b) and (c), such charges for utilities and services, and the method of payment thereof shall be determined by the appropriate supplier of such service, in accordance with applicable laws and regulations, on such basis as the appropriate supplier of such service may establish which may include a requirement for the installation of adequate connecting and metering equipment at the sole cost and expense of LESSEE. It is expressly agreed and understood that the GOVERNMENT in no way warrants the continued maintenance or adequacy of any utilities and/or services furnished to the LESSEE. It is also expressly agreed and understood that the GOVERNMENT does not hereby guarantee that it will provide any specific utilities and/or services to the

LESSEE.

19) LIENS: LESSEE shall promptly discharge or cause to be discharged any valid lien, right in rem, claim or demand of any kind, except one in favor of the GOVERNMENT, which at any time may arise or exist with respect to the LEASED PROPERTY or materials or equipment furnished therefore, or any part thereof, and if the same shall not be promptly discharged by LESSEE, the GOVERNMENT may discharge, or cause to be discharged, the same at the expense of LESSEE.

20) ACCESS: The GOVERNMENT shall have access to the LEASED PROPERTY at all reasonable times for any purposes not inconsistent with the quiet use and enjoyment thereof by LESSEE, including, but not limited to, the purpose of inspection.

21) STATE AND LOCAL TAXES: In the event that, as a result of any future Act of Congress, subjecting GOVERNMENT-owned property to taxation, any taxes, assessments or similar charges are imposed by State or local authorities upon the LEASED PROPERTY (other than upon LESSEE's possessory interest therein), LESSEE shall pay the same when due and payable and this LEASE shall be renegotiated so as to accomplish an equitable reduction in the amount of the Rent of Maximum Amount to be Expended specified in Clause 3 hereof, which reduction shall in no event exceed the amount of such taxes, assessments, or similar charges; Provided, in event the parties hereto are unable to agree within ninety (90) days from the date of the imposition of such taxes, assessments, or similar charges, upon a rental which in the opinion of the Real Estate Contracting Officer constitutes a reasonable return to the GOVERNMENT on the LEASED PROPERTY, the Real Estate Contracting Officer shall have the right to determine the amount of the rental, which determination shall be unilaterally binding on LESSEE, subject to the LESSEE’s appeal of such determination, which shall be treated as a dispute in accordance with the provisions of Clause 22 hereof.

22) DISPUTES CLAUSE (July 2002):

a) This LEASE is subject to the Contract Disputes Act of 1978, as amended (41 U.S.C. § 7101-7109)

b) Except as provided in the Act, all disputes arising under or relating to this LEASE shall be resolved under this clause.

c) “Claim,” as used in this clause, means a written demand or written assertion by the LESSEE or the GOVERNMENT seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of LEASE terms, or other relief arising under or relating to this LEASE. However, a written demand or written assertion by the LESSEE seeking the payment of money exceeding $100,000 is not a claim under the Act until certified. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim under the Act. The submission may be converted to a claim under the Act, by complying with the submission and certification requirements of this clause, if it is disputed either as to liability or amount or is not acted upon in a reasonable time.

d)

i) A claim by the LESSEE shall be made in writing and, unless otherwise stated in his

LEASE, submitted within 6 years after accrual of the claim to the Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest for a written decision. A claim by the GOVERNMENT against the LESSEE shall be subject to a written decision by the Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest.

ii)

(a) The LESSEE shall provide the certification specified in Clause 22 (d)(ii)(3) of this clause when submitting any claim exceeding $100,000.

(b) The certification requirement does not apply to issues in controversy that have not been submitted as all or part of a claim.

(c) The certification shall state as follows:

“I certify that the claim is made in good faith; that the supporting data is accurate and complete to the best of LESSEE’s knowledge and belief; that the amount requested accurately reflects the LEASE adjustment for which the LESSEE believes the GOVERNMENT is liable; and that I am duly authorized to certify the claim on behalf of the LESSEE.”

iii) The certification may be executed by any person duly authorized to bind the LESSEE with respect to the claim.

e) For LESSEE claims of $100,000 or less, the Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest must, if requested in writing by the LESSEE, render a decision within 60 days of the request. For LESSEE-certified claims over $100,000, the Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest must, within 60 days, decide the claim or notify the LESSEE of the date by which the decision will be made.

f) The Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest decision shall be final unless the LESSEE appeals or files a suit as provided in the Act.

g) If the claim by the LESSEE is submitted to the Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest or a claim by the GOVERNMENT is presented to the LESSEE, the parties, by mutual consent, may agree to use alternative dispute resolution (ADR). If the LESSEE refuses an offer for ADR, the LESSEE shall inform the Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest, in writing, of the LESSEE’s specific reasons for rejecting the offer.

h) The GOVERNMENT shall pay interest on the amount found due and unpaid from

(i) the date that the Real Estate Contracting Officer, Naval Facilities Engineering Systems

Command, Southwest receives the claim (certified, if required); or

(ii) the date that payment otherwise would be due, if that date is later, until the date of payment. With regard to claims having defective certifications, as defined in FAR 33.201, interest shall be paid from the date that the Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest initially receives the claim. Simple interest on claims shall be paid at the rate, fixed by the Secretary of the Treasury as provided in the Act, which is applicable to the period during which the Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest receives the claim and then at the rate applicable for each 6-month period as fixed by the Treasury Secretary during the pendency of the claim.

i) The LESSEE shall proceed diligently with performance of this LEASE, pending final resolution of any request for relief, claim, appeal, or action arising under the LEASE, and comply with any decision of the Real Estate Contracting Officer, Naval Facilities Engineering Systems Command, Southwest. This clause does not apply upon termination of this LEASE, pursuant to Clause 13, TERMINATION BY GOVERNMENT, or Clause 14, TERMINATION BY LESSEE, herein.

23) COVENANT AGAINST CONTINGENT FEES: LESSEE warrants that no person or agency has been employed or retained to solicit or secure this LEASE upon an agreement or understanding for a commission, percentage, brokerage or contingent fee, excepting bona fide employees or bona fide established commercial agencies maintained by LESSEE for the purpose of securing business. For breach or violation of this warranty, the GOVERNMENT shall have the right to annul this LEASE without liability or in its discretion to require LESSEE to pay, in addition to the rental or consideration, the full amount of such commission, percentage, brokerage, or contingent fee.

24) OFFICIALS NOT TO BENEFIT: No Member of or Delegate to Congress, or Resident Commis-sioner, shall be admitted to any share or part of this LEASE, or to any benefit to arise therefore, but this provision shall not be construed to extend to this LEASE if made with a corporation for its general benefit.

25) FAILURE OF GOVERNMENT TO INSIST ON COMPLIANCE: The failure of the GOVERNMENT to insist, in any one or more instances, upon performance of any of the terms, covenants or conditions of this LEASE shall not be construed as a waiver or relinquishment of the GOVERNMENT's right to the future performance of any such terms, covenants or conditions and LESSEE's obligations in respect to such future performance shall continue in full force and effect.

26) ASSIGNMENT OR SUBLETTING:

a) The LESSEE shall neither transfer, assign, nor sublet this LEASE or any interest in it, or any property on the LEASED PROPERTY, or grant any interest, privilege, or license whatsoever in connection with this LEASE without the prior written consent of GOVERNMENT. Consent shall not be unreasonably withheld or delayed. Any costs associated with subletting, transfer, and/or assignment will be at the LESSEE’s expense and no cost to the GOVERNMENT.

b) Any SUBLEASE granted by LESSEE shall contain a copy of this LEASE as an attachment and be consistent with the terms and conditions of this LEASE and shall terminate immediately upon the expiration or any earlier termination of this LEASE, without any liability on the part of GOVERNMENT to LESSEE or any SUBLESSEE, except as specifically stated in this LEASE. No SUBLEASE shall relieve LESSEE of any of its obligations under this LEASE. Under any SUBLEASE made with or without consent of GOVERNMENT, the SUBLESSEE shall be deemed to have assumed all of the obligations of LESSEE under this LEASE. Every SUBLEASE shall be subject to, and shall be deemed to contain, the Environmental Protection provisions set forth in Clause 33 below.

c) LESSEE shall submit to GOVERNMENT for its prior written consent, a copy of each SUBLEASE that LESSEE proposes to execute. Such consent may include a requirement that LESSEE renegotiate the SUBLEASE to conform to the provisions of this LEASE.

Consent to the SUBLEASE shall not be taken or construed to diminish or enlarge any of the rights or obligations of either of the parties of this LEASE. Should a conflict arise between the provisions of this LEASE and a provision of the SUBLEASE, the provisions of this LEASE shall take precedence. Upon its execution, a copy of each SUBLEASE shall be immediately furnished to the GOVERNMENT.

d) All requests for SUBLEASES will require review by the appropriate government agencies.

Any costs associated with the modification of the LEASE, including but not limited to studies and environmental reviews, will be at no cost to the GOVERNMENT. Requests for a SUBLEASE shall include payment of a Real Estate Processing Fee at the discretion of the GOVERMENT. If the request for a SUBLEASE is denied, the Real Estate Processing Fee will be returned, without interest, as soon as practicable.

e) Any SUBLEASE shall be subject to all terms and conditions of the LEASE, including all necessary technical studies and approvals. Any SUBLEASE requested by the LESSEE shall not be considered approved until appropriately reviewed and authorized by modification to the original LEASE. Request for modification shall include a copy of the draft SUBLEASE or contract between the LESSEE and proposed SUBLESSEE. The rent adjustment to be paid to the GOVERNMENT shall be based on 50 percent of the actual LEASE consideration between the LESSEE and the SUBLESSEE, including any applicable utilities between the LESSEE and the SUBLESSEE. The LESSEE shall be obligated to remit to the GOVERNMENT 50 percent of any rent received under any SUBLEASE, including utility expenses paid by the SUBLESSEE to LESSEE. All requests from potential subtenants shall be processed by the LESSEE with due diligence. The LESSEE shall be responsible for notifying the GOVERNMENT of any requests for subleasing on the LEASED PROPERTY.

27) LABOR PROVISION - EQUAL OPPORTUNITY

a) During the term of this LEASE the LESSEE agrees as follows:

i. The LESSEE will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The LESSEE will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to the following: Employment, upgrading, demotion, or transfer, recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; selection for training, including apprenticeship. The LESSEE agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the GOVERNMENT setting forth the provisions of this nondiscrimination clause.

ii. The LESSEE will, in all solicitations or advertisements for employees placed by or on behalf of the LESSEE, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex or national origin.

iii. The LESSEE will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding a notice to be provided by the GOVERNMENT, advising the labor union or worker's representative of the LESSEE's commitments under this Equal Opportunity clause and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

iv. The LESSEE will comply with all provisions of Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, and with the rules, regulations, and orders of the Secretary of Labor.

v. The LESSEE will furnish all information and reports required by Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, and by the rules, regulations, and orders of the Secretary of Labor or pursuant thereto, and will permit access to his books, records, and accounts by the GOVERNMENT (including but not limited to the Secretary of Labor), for purposes of investigating to ascertain compliance with such rules, regulations, and orders.

vi. In the event of the LESSEE's noncompliance with the Equal Opportunity clause of this LEASE or with any of the above-referenced rules, regulations, or orders, this LEASE may be canceled, terminated or suspended in whole or in part and the LESSEE may be declared ineligible for further GOVERNMENT contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.

vii. The LESSEE will include the provisions of Clauses 28 (a) (i) through 28 (a) (vii) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, so that such provisions will be binding upon each SUBLESSEE or vendor.