IGA Chandler/Phoenix for SKU Distribution

INTERGOVERNMENTAL AGREEMENT 
BETWEEN 
THE CITY OF CHANDLER, ARIZONA 
AND 
THE CITY OF PHOENIX, ARIZONA 
TO ESTABLISH AES DIRECT EXPRESS, LLC D/B/A SKU DISTRIBUTION WITHIN 
A FOREIGN-TRADE ZONE  
 
This Intergovernmental Agreement is entered into this _____ day of __________, 
2024 by and between the City of Chandler, Arizona, a municipal corporation (“Chandler”) and 
the City of Phoenix, Arizona, a municipal corporation (“Phoenix”). 
 
I. 
RECITALS:  
 
 
 
A. 
Pursuant to A.R.S. §11-952, as amended, Chandler is empowered to enter 
into this intergovernmental agreement and has, by resolution, a copy of which is attached hereto 
as Exhibit A and incorporated herein by this reference, authorized the undersigned to execute 
this Agreement on behalf of Chandler.  
 
B. 
Pursuant to A.R.S. §11-952, as amended, Phoenix is empowered to enter 
into this intergovernmental agreement and has, by resolution, a copy of which is attached hereto 
as Exhibit B and incorporated herein by this reference, authorized the undersigned to execute this 
Agreement on behalf of Phoenix. 
 
C. 
Phoenix has received a Grant (Board Order 185, dated March 25, 1982) 
from the Foreign-Trade Zones Board (the “Board”) to establish FTZ No. 75, and the alternative 
site framework format for FTZ No. 75 was approved by the Board in a notice published on 
October 20, 2010 in 75 Fed. Reg. 64708. 
 
D. 
Chandler does not have a grant of authority to establish a Foreign-Trade 
Zone. 
 
E. 
AES Direct Express, LLC d/b/a SKU Distribution (“SKU”) operates a 
facility on certain real property within the City of Chandler located at 2225 E Germann Road, 
Suite 10, Chandler, AZ 85286 (the “Site”) and desires to have the Site designated as a usage-
driven site (the “Zone Site”).  The Site, as shown on Exhibit C attached hereto, is utilized as a 
distribution facility. SKU seeks the import/export duty-related benefits afforded businesses 
located within the FTZ.  SKU agrees not to pursue or claim the beneficial tax treatment for 
existing or new facilities located on the Site as afforded by Arizona law. 
 
F. 
Chandler desires to assist SKU in obtaining approval from the Board to 
establish, operate and maintain a usage-driven site at the Zone Site. 
 
G. 
Phoenix is willing to submit an application to the Board on behalf of SKU 
(the “Application”) for a minor boundary modification to establish, operate and maintain a

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usage-driven site at the Zone Site to demonstrate its interest in a cooperative regional effort to 
encourage the retention and expansion of business in the greater metropolitan area. 
 
 NOW, THEREFORE, in consideration of the promises and mutual agreements 
contained and described herein, the parties agree as follows:   
 
II. 
AGREEMENTS: 
 
1. 
PURPOSE 
 
1.1 
The purpose of this Agreement is to memorialize Chandler’s and Phoenix’s 
agreement to work together to assist SKU in its efforts to obtain usage-driven status for the Zone 
Site and to assure Phoenix that the establishment, operation and maintenance of a usage-driven 
status at the Zone Site, including any unsuccessful efforts made in respect thereto, shall be 
accomplished without any cost or liability whatsoever to Chandler or Phoenix.   
 
2. 
CHANDLER’S RESPONSIBILITIES 
 
2.1 
To facilitate the negotiation and execution of a Foreign-Trade Zone Operations 
Agreement (“Operating Agreement”), if any, between the City of Phoenix and SKU. 
 
2.2 
To support the Application process. 
 
2.3 
To notify Phoenix if Chandler desires that Phoenix enforce its right to terminate 
the Operating Agreement, after notice and a 30-day cure period, if SKU, without prior approval 
of Chandler, in breach of the Operating Agreement, either seeks and/or obtains property tax 
reclassification under Arizona Revised Statutes § 42-12006(2) for real or personal property at the 
Zone Site. 
 
2.4 
To take all action requested by Phoenix related to the enforcement of the 
provisions referred to in Section 2.3, above, and to indemnify, defend and hold Phoenix, its 
departments, agents, officers or employees harmless from and against any loss, expense, damage 
or claim resulting from or arising out of the performance or enforcement of the provision in the 
Operating Agreement required under Section 3.4 below.  
 
3. 
PHOENIX’S RESPONSIBILITIES 
 
3.1 
To conduct its operations in good faith with SKU. 
 
3.2 
To enter into an Operating Agreement with SKU for the operation of the Zone 
Site. 
 
3.3 
To provide in the Operating Agreement that SKU must be responsible for all costs 
related to the Zone Site that are incurred by Phoenix and/or Chandler.

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3.4 
To provide in the Operating Agreement that Phoenix may terminate the Operating 
Agreement if Phoenix is advised by Chandler that SKU has sought and/or obtained property tax 
classification under A.R.S. § 42-12006(A)(2). 
 
4. 
ADDITIONAL AGREEMENTS 
 
4.1 
The Parties acknowledge that 15 C.F.R §400.49 provides for monitoring and 
reviews of foreign-trade zone operations and activity.  Section 400.49(c) provides that the Board 
or the Commerce Department’s Assistant Secretary for Import Administration may restrict or 
prohibit zone activity that it finds is no longer in the public interest and, pursuant to 14 C.F.R. 
§ 400.61, the Board has the authority to revoke a grant of authority to operate a zone, for cause. 
 
4.2  
Chandler and SKU have determined that if SKU seeks and obtains property tax 
classification under the Reclassification Statute in breach of the Operating Agreement, such 
action would be detrimental to the public interest. 
 
5. 
INDEMNIFICATION 
 
5.1 
To the extent permitted by law, each party will indemnify and save the other party 
harmless, including any of the parties’ departments, agencies, officers, employees, elected 
officials or agents, from and against all loss, expense, damage or claim of any nature whatsoever 
which is caused by any activity, condition or event arising out of the performance or non-
performance by the indemnifying party of any of the provisions of this Agreement.   
 
5.2 
Each party, in all instances, shall be indemnified against all liability, losses and 
damages of any nature for or on account of any injuries or death of persons or damages to or 
destruction of property arising out of or in any way connected with the performance or non-
performance of this Agreement by the other party, except such injury or damage as shall have 
been occasioned by the negligence of that other party.  The damages incurred by the other party, 
their department, agencies, officers, employees, elected officers or agents shall include in the 
event of any action, court costs, expenses for litigation and reasonable attorneys’ fees. 
 
6. 
DURATION  
 
6.1 
Term.  The term of this Agreement shall begin on the date executed and approved 
by both parties and shall remain in effect for the same term as the Operating Agreement, unless 
terminated sooner pursuant to the terms of this Agreement.   
 
7. 
GENERAL PROVISIONS 
 
7.1 
Conflict of Interest.  This Agreement is subject to cancellation pursuant to the 
provisions of A.R.S. § 38-511. 
 
7.2 
Immigration Law Compliance Warranty.  As required by A.R.S. § 41-4401, each 
party hereby warrants its compliance with all federal immigration laws and regulations that relate 
to its employees and A.R.S. § 23-214(A).  Each party further warrants that after hiring an

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employee, it verifies the employment eligibility of the employee through the E-Verify program.  
If either party uses any subcontractors in performance of the Agreement, subcontractors shall 
warrant their compliance with all federal immigration laws and regulations that relate to its 
employees and A.R.S. § 23-214(A), and subcontractors shall further warrant that after hiring an 
employee, such subcontractor verifies the employment eligibility of the employee through the E-
Verify program.  A breach of this warranty shall be deemed a material breach of the Agreement 
subject to penalties up to and including termination.  A party shall not be deemed in material 
breach if it and/or its subcontractors establish compliance with the employment verification 
provisions of Sections 274A and 274B of the federal Immigration and Nationality Act and the 
E-Verify requirements contained in A.R.S. § 23-214(A).  Each party retains the legal right to 
inspect the papers of the other party and/or its subcontractor engaged in performance of this 
Agreement to ensure that the other party and/or its subcontractor is complying with the warranty.  
Any inspection will be conducted after reasonable notice and at reasonable times.   If state law is 
amended, the parties may modify this paragraph consistent with state law.   
 
7.3 
Notices.  All notices, demands and communications given or to be given, by 
either party to the other, shall be given in writing, by certified mail, and shall be addressed to the 
parties at the addresses hereinafter set forth, or at such other address as the parties may by 
written notice hereafter designate.  All notices shall be deemed received upon actual receipt or 
three (3) business days after deposit in the United States mail, whichever date is earlier.  Notices 
shall be addressed as follows: 
 
Phoenix: 
 
Director 
 
 
 
Community and Economic Development Department 
 
 
 
200 West Washington Street, 20th Floor 
 
 
 
Phoenix, Arizona 85003-1611 
 
 
 
 
 
 
and 
 
 
 
 
City Clerk 
 
 
 
City of Phoenix 
 
 
 
200 West Washington Street, 15th Floor 
 
 
 
Phoenix, Arizona 85003-1611 
 
Chandler: 
 
City Manager 
 
 
 
 
City of Chandler 
 
 
 
 
P.O. Box 4008, Mail Stop 605 
 
 
 
 
Chandler, Arizona 85244-4008 
 
 
 
 
 
and 
 
 
 
 
 
City Attorney 
 
 
 
 
City of Chandler 
 
 
 
 
P.O. Box 4008, Mail Stop 602 
 
 
 
 
Chandler, Arizona 85244-4008

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7.4 
Construction.  Paragraph headings and captions appearing with this Agreement 
are for convenient reference only and in no respect define, limit or describe the scope or intent of 
this Agreement or the provisions of such sections.  
 
 
7.5 
Binding Effect.  All terms, provisions and conditions hereof shall be binding upon 
and inure to the benefit of all parties hereto and their respective heirs, personal representatives, 
successors and assigns. 
 
 
7.6 
Severability.  In the event any term or provision of this Agreement is held to be 
invalid or unenforceable, the validity of the other provisions shall not be affected, and the 
Agreement shall be construed and enforced as if it did not contain the particular term or 
provision that is deemed to be invalid or unenforceable.   
 
 
7.7 
Governing Law.  This Agreement will be governed by the laws of the State of 
Arizona, both as to interpretation and performance.   
 
 
7.8 
Modification.  This Agreement may be modified only by mutual written 
agreement of the parties. 
 
[signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date 
first written above.   
FOR CHANDLER: 
FOR PHOENIX: 
JEFF BARTON, CITY MANAGER 
By: Kevin Hartke 
By: Christine Mackay 
Its:  Mayor 
Its:  Community and Economic 
Development Director 
Date:  
Date:  
ATTEST: 
ATTEST: 
______________________________ 
      ______________________________ 
Chandler City Clerk 
      Phoenix City Clerk 
ATTORNEY DETERMINATION 
In accordance with the requirements of A.R.S. § 11-952(D), each of the 
undersigned attorneys acknowledge that (1) they have reviewed the above Agreement on behalf 
of their respective client(s) and (2) as to their respective client(s) only, each attorney has 
determined that this Agreement is in proper form and is within the powers and authority granted 
under the laws of the State of Arizona. 
City Attorney, City of Chandler 
City Attorney, City of Phoenix 
Date: 
Date:

Exhibit A 
 
[INSERT CHANDLER RESOLUTION]

Exhibit B 
 
[INSERT PHOENIX RESOLUTION]

Exhibit B

Exhibit C 
 
[INSERT SITE MAP]

Exhibit C 
 
AES Direct Express, LLC d/b/a SKU Distribution 
2225 E Germann Road, Suite 10, Chandler, AZ 85286