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FTZ 221 FOREIGN-TRADE ZONE OPERATOR AGREEMENT
This Foreign-Trade Zone (“FTZ” or “Zone”) Operating Agreement (“Agreement”) is made by and entered into,
as of this
day of
, 20__, by and between the City of Mesa, a municipal corporation ("GRANTEE"),
and Apple Inc. (“OPERATOR”), a California corporation.
RECITALS
WHEREAS, the Foreign-Trade Zones Act of 1934, as amended, 19 U.S.C. 81, et seq. (“the Act”), authorized
the Foreign-Trade Zones Board (“FTZB”) to grant to certain corporations the privilege of establishing, operating, and
maintaining an FTZ in or adjacent to ports of entry under the jurisdiction of the United States of America; and
WHEREAS, the City of Mesa is the GRANTEE of Foreign-Trade Zone No. 221 ("FTZ 221”) pursuant to Board
Order # 883 and #1538 of the United States Foreign-Trade Zones Board (the "Board") and dated April 25, 1997;
WHEREAS, GRANTEE deems it practicable to limit its participation in the everyday operations of FTZ 221
and to place the operations of FTZ 221 at the premises described in Exhibit A attached hereto (the "Premises") under
the supervision of OPERATOR;
WHEREAS, the Premises was designated as a general purpose zone on April 25, 1997 (Board Order # 883
and #1538); and
WHEREAS, GRANTEE submitted an application to the Board for authority to reorganize FTZ 221 under the
Alternative Site Framework (“ASF”) with a service area of the City of Mesa, Arizona, adjacent to the Phoenix Customs
and Border Protection port of entry, and FTZ 221's existing Site 1 would be categorized as a magnet site, which was
approved by the Board on July 15, 2022.
WHEREAS, OPERATOR, upon the terms and conditions herein set forth, desires to serve as an authorized
Foreign-Trade Zone Operator of FTZ 221 at the Premises, as designated under the ASF, and to undertake the
development, management, and operation of foreign-trade zone activities at the Premises in accordance with the
standards of operations required by the United States of America, U.S. Customs and Border Protection ("Customs"),
the Board, and all other applicable laws, regulations, executive orders, and proclamations.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings hereunder and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
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ARTICLE 1
AUTHORITY GRANTED/ACCEPTED
Section 1.01 AUTHORITY - GRANTEE grants OPERATOR the authority to develop, manage, and operate within FTZ
221 at the Premises for the sole purpose of those activities described in Exhibit A, attached hereto (the "Permitted FTZ
Activities"), in full compliance with all applicable laws, regulations, executive orders and proclamations, and any other
legal requirement, and in accordance with the terms of this Agreement. OPERATOR accepts and will have full and
sole responsibility for the operation, management and conduct of Permitted FTZ Activities at the Premises.
OPERATOR will comply fully with all applicable laws, regulations executive orders and proclamations, and any other
legal requirement of the United States of America, including the Board, Customs, and other governmental entities and
agencies relating to activities within FTZ 221 at the Premises and the Zone Schedule (as defined below). OPERATOR
has the right to engage the services of a subcontractor(s) to assist in the operation of its Permitted FTZ Activities (as
defined below) at the Premises subject to the approval of GRANTEE, with such approval not to be unreasonably
withheld. If OPERATOR engages the services of a subcontractor(s), OPERATOR agrees to remain primarily liable for
the performance of all obligations under this Agreement.
Section 1.02 GRANTEE LIABILITY - GRANTEE will not be held liable for violations by OPERATOR or OPERATOR’s
subcontractor(s), if any.
ARTICLE 2
RECORDS AND REPORTING
Section 2.01 ANNUAL REPORT/RECORDS - OPERATOR will submit to GRANTEE at the end of each calendar year
and in accordance with the applicable law, regulations, executive orders and proclamations, and any other legal
requirement, a complete and accurate annual report as required by the Board. The report will be submitted by
OPERATOR via the Board’s Online FTZ Information System (OFIS) for review by GRANTEE no later than January
31st following the end of each calendar year. GRANTEE will submit a complete and accurate annual report to the Board
covering all operations of FTZ 221 no later than 90 days following the end of each calendar year. If OPERATOR fails
to submit to GRANTEE the information required for GRANTEE’s timely submission of a complete and accurate annual
report to the Board, each day of failed submission will constitute a separate offense under the FTZ Regulations and
may be subject to a fine of not more than $1,000 by the Board. OPERATOR will keep all financial and accounting
records concerning operations at the Premises for a period of five (5) years following the date the merchandise reflected
in such records is shipped from the Premises, or for the period of time as prescribed by all applicable regulations,
whichever is longer. OPERATOR will keep current layout drawings of the Premises showing activated portions and a
file showing required activation approvals.
Section 2.02 AUDITS/INVESTIGATIONS - OPERATOR will promptly notify GRANTEE in writing of any initiation of
audit or investigation by any government entity or agency related to the FTZ operation. OPERATOR will provide to
GRANTEE upon request any reports and information related to such audit or investigation.
Section 2.03 RECORD DEFICIENCIES - In the event that any audit, inspection, or examination by Customs, the
Board, GRANTEE, or any other government entity discloses that books, records, or operational procedures of
OPERATOR are not in conformance with the requirements of Federal, State, and/or local law, regulations, executive
orders and proclamations, and any other legal requirement and this Agreement, GRANTEE may order the immediate
correction of the documents or procedures. If OPERATOR determines that such correction will take in excess of five
(5) business days, OPERATOR will submit to GRANTEE (and if required, to the Board and Customs), for its approval,
a plan of performance for the correction of such discrepancy and will proceed with all due diligence to correct the
deficiency in the manner described in the approved plan.
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ARTICLE 3
ACTIVATION AND ACTIVITIES
Section 3.01 ACTIVATION/ FOREIGN-TRADE ZONE OPERATIONS MANUAL - Prior to the commencement of
operating within FTZ 221, OPERATOR will establish standards of operation and management, prepare and file with
Customs a Foreign-Trade Zone Operations Manual in compliance with the requirements of the Board and Customs,
and require conformance thereto of all persons, firms and corporations admitted by it to the Premises. OPERATOR
will secure activation of FTZ 221 at the Premises from Customs pursuant to Section 146.6 of the Customs Regulations.
Section 3.02 OPERATOR ACTIVITY - OPERATOR will be solely responsible for the timely, complete, and accurate
preparation, review, and filing of all Customs documents and data, whether prepared by OPERATOR, a broker, or
individual firms using the Premises, and for scheduling on-site inspections by Customs personnel as appropriate.
OPERATOR will prepare, maintain, and retain such zone management records and supporting documentation for all
transactions as may be deemed necessary and appropriate under applicable law, regulations, executive orders and
proclamations, and any other legal requirement and prudent FTZ operating practice. GRANTEE has prepared a zone
schedule (the "Zone Schedule") that sets forth rates, charges, rules and regulations for FTZ 221 operations. As
appropriate, information concerning OPERATOR’s foreign-trade zone operations will be included in the Zone Schedule.
OPERATOR will be responsible for the receipt, verification, and physical count of all merchandise admitted to the
Premises on the proper Customs Reports; the proper admission, status designation, handling, storage, manipulation,
transfer, shipment, exportation, destruction, and other disposition of all merchandise; the preparation and shipment of
all merchandise; and the preparation, filing, and support of all documents and records relating to all merchandise for
import, export, zone to zone transfer, withdrawal, or destruction with prior authorization of Customs and such other
U.S. government agencies as may be appropriate. OPERATOR will also be solely responsible for determining and
complying with all applicable tariff, duty, trade-remedy, and import-related requirements affecting merchandise
admitted to, stored in, transferred through, manipulated in, withdrawn from, or otherwise handled at the Premises.
Section 3.03 PRODUCTION ACTIVITY - Production is any activity involving the substantial transformation of a foreign
article resulting in a new and different article having a different name, character, and use, or activity involving a change
in the condition of the article which results in a change in the customs classification of the article or in its eligibility for
entry for consumption. Production activity under zone procedures at the Premises will not be conducted by
OPERATOR without prior authorization from the Board.
Section 3.04 RETAIL TRADE - Retail trade is prohibited in activated areas of the Premises. Sales or other commercial
activity involving domestic, duty-paid, and duty-free goods may be conducted within an activated area at the Premises
under a permit issued by GRANTEE and approved by the Board.
ARTICLE 4
ACCESS
Section 4.01 ACCESS/NOTICE - OPERATOR will permit representatives of GRANTEE, the Board and Customs to
enter and inspect the Premises, merchandise, and relevant records at all reasonable times upon reasonable notice
(except in the case of emergency) or as otherwise required by law. OPERATOR will, if requested by GRANTEE,
provide GRANTEE copies of all correspondence, notices, reports and other written communications received by
OPERATOR from or given by OPERATOR to the Board or Customs that relates to the operations of the OPERATOR
at FTZ 221.
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ARTICLE 5
COSTS
Section 5.01 OPERATOR COSTS - OPERATOR will pay all costs of activation of FTZ 221 at the Premises, all fees
charged by Customs or the Board attributable to operations at the Premises and the cost of bonds required by Customs
for OPERATOR'S activities at the Premises. OPERATOR will also be solely responsible for all duties, additional duties,
tariffs, fees, penalties, interest, broker charges, and other customs-related or trade-remedy-related costs attributable
to operations at the Premises, including costs arising from incorrect FTZ status designations, admission errors,
inventory control failures, or inaccurate filings. The obligations set forth in this Section are in addition to, and not in
limitation of, OPERATOR’S indemnification obligations under this Agreement.
Section 5.02 FOREIGN-TRADE ZONE OPERATORS BOND - OPERATOR will secure at its own expense and keep
in full force and effect a Foreign-Trade Zone Operators Bond in a sufficient amount as required and directed by
Customs.
Section 5.03 FEES & CHARGES -
OPERATOR will pay to GRANTEE a onetime activation fee of one thousand dollars ($1,000). GRANTEE also charges
an annual administration fee of five thousand dollars ($5,000) to offset its costs to administer the Foreign Trade Zone.
The fee may be adjusted as set forth in the Zone Schedule and at all times shall be fair and reasonable.
Section 5.04 PRIVILEGES - GRANTEE makes no representations or warranties as to the particular privileges and
benefits which may accrue to OPERATOR from foreign-trade zone site operations as those privileges and benefits
may vary as a result of changes in federal law, determinations of the Board and Customs and operational decisions of
OPERATOR. GRANTEE will in no way be liable for any costs or losses sustained by OPERATOR as a result of its
use of the zone. In addition, GRANTEE makes no warranties or representations regarding the benefits that may or
may not be realized through participation by property owners, zone operators or zone users.
Section 5.05 OBLIGATIONS - OPERATOR will notify GRANTEE in writing, within ten (10) days following the
commencement thereof, of any action, suit or proceeding, and of the issuance of any order, writ, injunction, award or
decree of any court, agency or other governmental instrumentality, which may materially adversely affect the
OPERATOR’s financial condition or ability to meet its obligations hereunder. OPERATOR agrees to operate in
conformance with all applicable laws and regulations. GRANTEE will not be liable for any actions of OPERATOR or
violations of any laws by zone participants.
Section 5.06 LEGAL FEES - OPERATOR agrees to reimburse GRANTEE for any legal costs and expenses incurred
by GRANTEE that are directly attributable to the operation and maintenance of the Premises, that are not already
covered by the $5,000 annual fee.
Section 5.07 VENUE - The venue for any dispute, controversy, claim or cause of action arising out of or related to this
Agreement shall be Maricopa County, Arizona. Each Party waives the right to object to venue in Maricopa County.
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ARTICLE 6
INDEMNIFICATION
Section 6.01 INDEMNIFICATION - OPERATOR agrees to protect, indemnify, defend and hold harmless GRANTEE
and its directors, officers, employees, servants, agents, and affiliates from and against all loss, damage, fines, suits,
claims, demands and liability, including reasonable attorneys' fees and costs, whether insured or not, arising out of or
incident to OPERATOR's obligations and operations hereunder. OPERATOR agrees to provide GRANTEE with notice
in writing of any statement of facts or situation arising out of or incident to Operator zone operations that give rise to a
claim by GRANTEE for indemnification. OPERATOR will be responsible for legal fees and other costs incurred in the
defense and settlement of such claim. Operator obligations to indemnify GRANTEE will survive this Agreement.
ARTICLE 7
TERM AND TERMINATION
Section 7.01 TERM and SURVIVAL - This Agreement will commence on the date written in the first sentence of this
Agreement and remain in effect for a term of ten (10) years so long as this Agreement is not terminated under the
provisions of this Agreement. This Agreement will automatically terminate 10 years after the Agreement commences
as set forth in this Section 7.01, unless the OPERATOR sends notice to GRANTEE 6 months prior to the expiration
date requesting an extension of a mutually agreeable timeframe, subject to any applicable fees or fee changes in force
at such time. This extension is important to the OPERATOR, CUSTOMS and the GRANTEE to maintain active zone
operations without subjecting Zone Users to compliance issues. All obligations of OPERATOR under this Agreement
attributable to time periods or events occurring prior to the date of such termination or expiration will survive such
termination or expiration. The parties acknowledge that Foreign Trade Zone regulations require GRANTEES to have
written agreements with OPERATORS at all times, so any renewals must be processed prior to the expiration of any
existing Operator Agreement.
Section 7.02 TERMINATION/SURVIVAL OF OBLIGATIONS – OPERATOR will have the right, at any time, upon sixty
(60) days prior written notice, to terminate this Agreement without cause and all rights and obligations hereunder.
GRANTEE will have the right to terminate this Agreement and all rights and obligations hereunder for cause, including
upon the occurrence of any of the following: (i) the default by OPERATOR of any provisions of the Operator Agreement
beyond all applicable notice and grace periods, (ii) the entry by a court of (A) a decree or order for relief in respect of
OPERATOR in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law; or (B) a decree or order adjudging OPERATOR as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect
of OPERATOR, under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law, or
(C) a decree or order appointing a custodian, receiver, liquidator, assignee, sequestrator or other similar official of
OPERATOR or of any substantial part of the property of the OPERATOR, or ordering the winding up or liquidation of
the affairs of OPERATOR, or (D) the continuance of any decree or order described in the immediately prior subsections
A through C (inclusive) for relief or any such other decree or order unstayed and in effect for a period of sixty (60) days,
or (iii) the breach by OPERATOR of any provision of this Agreement which breach is not cured within thirty (30) days
after GRANTEE gives OPERATOR written notice thereof. Notwithstanding the foregoing, if, during the thirty (30) day
period specified in clause (iii) above, OPERATOR presents to GRANTEE a written plan to cure such breach including
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the time to cure such breach, subject to GRANTEE’s reasonable approval, the time for cure will be extended provided
OPERATOR commences promptly and proceeds diligently to cure such breach. Additionally, in the event GRANTEE
wishes to terminate its participation in FTZ 221 for any reason, GRANTEE will have the right to terminate this
Agreement and any and all rights and obligations hereunder, upon one hundred eighty (180) days prior written notice
to OPERATOR. In the event of such termination, OPERATOR will have the right to apply to transfer its FTZ operations
under a successor organization or another qualified grantee. OPERATOR represents and warrants that upon
termination, deactivation, or expiration of this Agreement for any reason, whatsoever, OPERATOR will completely
perform and fulfill any and all of its obligations and duties which arose or accrued during the term of the Agreement.
OPERATOR’s indemnity obligations, bond obligations, and record and record retention obligations will survive
termination or expiration of the Agreement. In the event of bankruptcy, OPERATOR waives any and all of
OPERATOR’S lien rights, if any, or claims of ownership against the inventory or equipment of any of its zone customers;
provided, however, that the foregoing waiver of lien rights shall not be deemed a waiver of any ownership rights or lien
rights of any third party.
Section 7.03 TRANSFER OR REVOCATION OF GRANT - If the grant for FTZ 221 will be revoked, transferred or
canceled, this Agreement will terminate, and OPERATOR will have no claim against GRANTEE by reason of such
revocations, transfer or cancellation. In the event of such revocation, transfer or cancellation OPERATOR will have
the right to apply to transfer its FTZ operations under a successor organization or another qualified grantee.
Section 7.04 CHANGE OF CONTROL - OPERATOR will promptly notify GRANTEE in writing upon sale or transfer of
ownership or change in voting control of more than fifty percent (50%) of the capital stock or assets of: (i) OPERATOR,
or (ii) a parent organization of OPERATOR that owns a controlling interest in OPERATOR. GRANTEE will have the
right to terminate this Agreement immediately upon such notification or require the execution of a new Agreement of
similar form and substance; such approval of the new Agreement shall not be unreasonably withheld.
ARTICLE 8
ADVERTISING
Section 8.01 ADVERTISING - GRANTEE and OPERATOR may advertise that Operator operations are within FTZ
221. Such advertising will always seek to preserve a favorable image of FTZ 221.
ARTICLE 9
INSURANCE
Section 9.01 INSURANCE - OPERATOR agrees to carry with an insurance company or companies who do business
in Arizona, insurance for the benefit of GRANTEE and with GRANTEE as an additional insured, covering liability for
FTZ 221 in an amount not less than $3,000,000.00 combined single limit for bodily injury and property damage liability
per occurrence. Such insurance policy will contain a provision that for all claims covered under such policy it provides
primary coverage without contribution from any other insurance carried by or for the benefit of GRANTEE or any other
additional insured (provided, contribution is allowable if such additional insured is an affiliate of OPERATOR). Copies
of such coverage will be provided to GRANTEE upon request.
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ARTICLE 10
MISCELLANEOUS
Section 10.1 INDEPENDENT PARTIES - OPERATOR and GRANTEE are not and will not be considered and agree
not to represent to any person that they are, joint venturers, partners, or agents of each other, and neither will have
any authority to act on behalf of the other or the power to bind or obligate the other except as set forth in this Agreement.
Section 10.2 NOTICES AND REQUESTS - Any notice or other communication required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been duly given if (A) delivered to the party at the
address set forth below, (B) deposited in the U.S. Mail, registered or certified, return receipt requested, to the address
set forth below or (C) given to a recognized and reputable overnight delivery service, to the address set forth on the
attached Exhibit "A" or at such other address, and to the attention of such other person or officer, as any party may
designate in writing by notice duly given pursuant to this Section. Notices shall be deemed received (A) when delivered
to the party, (B) three business days after being placed in the U.S. Mail, properly addressed, with sufficient postage or
(C) the following business day after being given to a recognized overnight delivery service, with the person giving the
notice paying all required charges and instructing the delivery service to deliver on the following business day.
Notwithstanding anything to the contrary contained herein, notices to OPERATOR will be effective upon delivery
to the Premises.
Section10.3 FURTHER INSTRUMENTS, REPRESENTATIONS AND ACTIONS - Each party will deliver such further
instruments and take such further action as may be reasonably requested by the other in order to carry out the
provisions and purposes of the Agreement. The parties specifically recognize that GRANTEE is not obligated to, and
does not intend to monitor, the day-to-day activity of the Premises, and the appearance of GRANTEE’s name on the
reports aforementioned will not be construed as a representation that GRANTEE has any knowledge of the quantity,
character, status designation, identification, or time of admission, transfer or release of goods into or from the Premises,
and that any information contained on the aforementioned reports are the representations solely of OPERATOR, and
not of GRANTEE.
Section 10.4 CONSTRUCTION - This Agreement will be governed by and interpreted in accordance with the Foreign-
Trade Zones Act, Regulations adopted by the Board thereunder, and all amendments thereto, and the applicable laws
of the State of Arizona.
Section 10.5 COUNTERPARTS - This Agreement may be executed in any number of counterparts, each of which
when so executed and delivered will be deemed an original, but such counterparts together will constitute but one the
same Agreement.
Section 10.6 HEADINGS - Headings and captions in this Agreement are solely for the convenience of reference and
will not affect its interpretation.
Section 10.7 INTEGRATION - This Agreement contains the entire agreement between the parties regarding foreign-
trade zone operations by OPERATOR at the Premises and no representations, inducements, promises, or agreements,
oral or otherwise, not embodied herein will be of any force or effect. This Agreement, together with the following
Exhibits attached hereto (which is incorporated herein by this reference) constitutes the entire agreement between the
Parties:
Exhibit A:
Pertinent Information and Definitions
Section 10.8 SEVERABILITY - If any provisions of this Agreement is declared void or unenforceable, such provisions
shall be severed from this Agreement, which shall otherwise remain in full force and effect.
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Section 10.9 WAIVER - No delay in exercising any right or remedy shall constitute a waiver thereof, and no waiver of
any breach shall be construed as a waiver of any preceding or succeeding breach of the same or any other covenant,
or condition of this Agreement. No waiver shall be effective unless it is in writing and is signed by the Party asserted
to have granted such waiver.
Section 10.10 GENDER - All terms and words used in this Agreement, regardless of the number and gender in which
they are used, will be deemed and construed to include any other number, singular or plural, any other gender,
masculine, feminine or neuter, as the context or sense of this Agreement or any paragraph or clause herein require.
Section 10.11 AMENDMENT - This Agreement may be amended only by written document executed by both parties.
Section 10.12 - FAIR INTERPRETATION - The parties have been represented by counsel in the negotiation and
drafting of this Agreement and this Agreement shall be construed according to the fair meaning of its language. The
rule of construction that ambiguities shall be resolved against the Party who drafted a provision shall not be employed
in interpreting this Agreement.
Section 10.13 CONFLICT OF INTEREST - Pursuant to A.R.S. § 38-503 and § 38-511, no member, official or employee
of the City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or
employee participate in any decision relating to this Agreement which affects his or her personal interest or the interest
of any corporation, partnership or association in which he or she is, directly or indirectly, interested. This Agreement is
subject to cancellation pursuant to the terms of A.R.S. § 38-511.
Section 10.14 TIME OF THE ESSENCE - Time is of the essence in this Agreement and with respect to the performance
required by each Party hereunder.
Section 10.15 E-Verify - To the extent applicable under A.R.S. § 41-4401 and 23-214, OPERATOR represents and
warrants compliance with all federal immigration laws and regulations that relate to their employees and their
compliance with the E-verify requirements of A.R.S. 23-214(A). Breach of the above-mentioned warranty shall be
deemed a material breach of the Agreement and may result in the termination of the Agreement by City. The City
retains the legal right to randomly inspect the papers and records of any employee who works under this Agreement
to ensure compliance with the above-mentioned laws.
Section 10.16 Computation of Time - In computing any period of time under this Agreement, the date of the act or
event from which the designated period of time begins to run shall not be included. The last date of the period so
completed shall be included unless it is a Saturday, Sunday or legal holiday, in which event the period shall run until
the end of the next day which is not a Saturday, Sunday or legal holiday. The time for performance of any obligation
or taking any action under this Agreement shall be deemed to expire at 5:00 p.m. (Phoenix, Arizona time) on the last
day of the applicable time period provided herein.
Section 10.17 Good Standing; Authority - Each Party represents and warrants that it is a duly formed and legally
valid existing entity under the laws of the State of Arizona with respect to OPERATOR, or a municipal corporation
within Arizona with respect to the GRANTEE and that the individuals executing this Agreement on behalf of their
respective Party are authorized and empowered to bind the Party on whose behalf each such individual is signing.
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GRANTEE:
OPERATOR:
City of Mesa, Arizona
Apple Inc.
By:
By:
Printed Name:
Printed Name:
Title:
Title:
Attested by:
Attested by:
Date:
Date:
Ashley Lochner
FTZ Operator
Stephen Leone
4/21/26
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EXHIBIT “A”
Pertinent Information and Definitions
GRANTEE:
City of Mesa, Arizona
ADDRESS:
City of Mesa – Foreign Trade Zone
20 East Main Street, Suite 750
Mesa, Arizona 85211
Facsimile: 480-644-2175
Attn: City Manager
OPERATOR:
Apple Inc.
PREMISES:
3740 S Signal Butte Rd
Mesa, AZ 85212
PERMITTED ACTIVITIES:
Operations center will function to both command and control data
services operations, assemble data center equipment for the region and
conduct data center operations locally; high-tech manufacturing and/or
storage of FTZ goods.