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lease, Whittaker Jojoba agreed to lease to HJI certain property9
near Hyder, Arizona, for a period of 5 years commencing on
January 1, 1982, at a rental of $12,000 per year. In addition,
if HJI and JDP agreed to form the Turtleback Jojoba Venture, HJI
was given the option under the farm lease to extend the lease
term until December 31, 2011, for a yearly rental of $12,000 plus
10 percent of gross income exceeding $12,000. Gross income was
defined as all income of any kind derived by the lessee from
business conducted on or from the property.
e. The Option and Farm Lease Agreement
On December 31, 1981, JDP and Whittaker Jojoba entered into
an option and farm lease agreement. That agreement provided in
pertinent part that, if HJI decided not to enter into the
Turtleback Jojoba Venture, then, effective January 1, 1987, JDP
was given an option to lease the property described in the farm
lease on substantially the same terms and conditions as set forth
in the farm lease. The option and farm lease agreement did not
transfer to JDP any ownership rights to land, plants, equipment,
or any real or personal property.
8(...continued)
During 1981, shareholders of Whittaker Jojoba included, among
others, Whittaker and Berberich. As a result of the merger of
Whittaker Jojoba into HJI during 1982 or 1983, Berberich became a
shareholder of HJI.
9 The legal description attached to the lease describes the
property as: "The westerly 1,980 feet of the north half of the
northwest quarter of Section 22, Township 4 South, Range 11 West,
Gila and Salt River Base and Meridian."
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