Nc State University



STATE OF NORTH CAROLINA

COUNTY OF

EQUIPMENT LEASE

This LEASE is entered into this _____ day of , 20___ between [EQUIPMENT OWNER] (Lessor), and [EQUIPMENT USER], a North Carolina Limited Liability Company (Lessee).

1. Purpose of Lease. The Lessor leases to the Lessee, for its use during agricultural and related activities, certain machinery, equipment, and movable structures and infrastructure to accomplish crop production, harvesting and marketing on land being farmed by the Lessee. The parties to this lease specifically agree that the items listed on Exhibit A are personal property of Lessor.

2. General Terms of Lease

2.1. Time period covered. This lease shall be in effect for the crop year of 20___, commencing on the 1st day of January, 20___ and continuing through the 31st day of December, 20___. This lease shall continue year to year beyond the initial period unless terminated by either party giving ninety (90) days notice.

2.2. Amendments and alterations. Amendments and alterations to this lease shall be in writing and shall be signed by both the Lessor and Lessee.

2.3. Right of inspection. The Lessor maintains the right to enter onto the Lessee's property and inspect the equipment from time to time with reasonable notice to the Lessee. Such inspections are not to interfere with the regular farm operations of the Lessee.

2.4. No right to sublease. Lessee shall not have the right to lease or sublease any of the identified equipment or to assign this lease to any other person or persons.

2.5. Binding on heirs. The provisions of this lease shall be binding upon the members of Lessor, the partners of Lessee, and the heirs, executors, administrators, and successors of both Lessor and Lessee in like manner as upon the original parties except as provided by mutual written agreement.

2.6 Organic Production Only. While under this lease, no machinery or equipment may be used in a manner that may jeopardize the USDA Organic Certification of products produced by Lessee.

3. Amount and Payment of Lease

3.1. Lease Payment. The annual total Lease payment shall be calculated as the sum of ten percent (10%) of the fair market value (FMV) of each item of equipment identified on Schedule A attached.

3.2. Rent Adjustments. The annual lease payment for each succeeding year may be adjusted by adding or subtracting items of equipment.

3.3. Payment Date. Payment shall be due by December 31.

3.4. Equipment Valuation. The Parties to this agreement agree to the fair market values of the equipment subject to this lease as well as equipment subject to debt payments as evidenced by the list attached as Schedule A.

3.5. Title. Lessor shall secure title certificates, register and license each machinery item leased hereunder as may be necessary or required by law.

3.6. Taxes. Lessee shall pay all sales, use, property or other taxes, charges or assessments applicable to the leased equipment.

4. Operation and Maintenance of Machinery. To perform the activities set forth above and to complete them in a high state of productivity the parties agree as follows:

4.1. Lessee's Duties.

4.1.1. General Maintenance. Lessee agrees to exercise prudent care in the use of the leased machinery, and will bear the costs or repair, normal wear, depreciation and damages to leased equipment.

4.1.2. Cost of Operation. Lessee shall pay all costs and expenses of using and operating each item of leased machinery included in this Agreement during the term hereof, including, without limitation, gasoline, oil, grease, anti-freeze, diesel fuel, adjustment, repairs, tires, tubes, storage, parking, tolls, fines, towing, servicing and insurance.

4.1.3. Insurance. Insurance on the machinery shall be carried by the Lessee except as otherwise required by state law.

4.1.4. Risk of Loss and Maintenance. Lessee shall, however be liable for the cargo or contents of items being transported which are titled in Lessee's name during the term. Lessee shall inform Lessor promptly at any time an item of leased machinery included in this Agreement is damaged, lost, stolen, destroyed or is involved in an accident.

4.1.5. Usage. In no event shall any such item of machinery be used or operated for an illegal purpose, or by a person under the influence of alcohol or narcotics, or for the transportation of goods or persons for hire, or in any manner or for any purpose that would cause any insurance policy of Lessor to be cancelled or suspended, or outside the continental limits of the United States of America. Lessee bears all responsibility for supervision of all operators and compliance with applicable laws.

4.1.6. Alterations. Lessee shall not paint, decorate or otherwise alter any leased machinery without Lessor's consent. Lessee shall have the right, in its discretion to repair equipment pursuant to 4.1.1 above.

4.1.7. Indemnity. As to third-party claims, Lessee shall indemnify and hold harmless the Lessor and Lessor's agents and employees from and against any and all losses, damages, injuries, claims, demands, costs and expenses (including legal expenses) of every kind and nature, arising out of or connected with the use, condition (including, without limitation, all defects whether or not discoverable by Lessor or Lessee) or operation of each item of leased machinery included in this Agreement during the term hereof with respect to such machinery.

4.1.8. Procedure on Accidents. If any claim is made or action commenced for death, personal injury or property damage resulting from the use or operation of any leased equipment included in this Lease Agreement, Lessee shall promptly notify Lessor thereof and forward to Lessor a copy of every demand, notice, summons or other process received in connection therewith. Lessee shall be responsible for maintaining on file any report of any accident involving leased equipment included in this Lease Agreement.

4.2. Lessor's Duties.

4.2.1. Availability of Leased Machinery. Lessor agrees to relinquish control of equipment to Lessee.

4.2.2. Transfers of Leased Items. During the annual lease term the Lessor agrees not to transfer any of the leased items unless there is a substitution with like equipment. The Lessee may exchange, trade, or substitute any machinery subject to this lease without the permission of the Lessee. Lessee shall keep all records relating to any such transaction. Lessor may sell leased equipment to Lessee at Lessor’s discretion.

4.3. Lessor's and Lessee's Duties.

4.3.1. Not to obligate other party. Neither party to this Lease shall pledge the credit of the other party for any purpose whatsoever without the consent of the other party. Neither party shall be responsible for any debts or liabilities that might be incurred or for damage caused by the other party.

4.3.2 Option to Purchase Equipment. Tenant in Tenant’s discretion, or if Tenant is dissolved then it’s Members, have the option to purchase equipment subject to this lease during any term of this lease.

5. Miscellaneous Provisions

5.1. Applicable Law. This lease shall be governed by and construed under the laws of the State of North Carolina.

5.2. Lease as Entire Agreement; Severability. This Lease embodies the entire agreement between the parties. It may not be modified or terminated except as provided herein or by other written agreement between the parties. If any provision herein is invalid, it shall be considered deleted from this lease, and shall not invalidate the remaining provisions of this lease.

5.3. Manner of Giving Notice. Any notice to be given under this lease shall be mailed to the party to be notified at the address set forth herein, by registered or certified mail with postage prepaid, and shall be deemed given when so mailed.

5.4. Entire Agreement. This Lease Agreement constitutes the entire agreement between the parties and may not be changed except by an instrument in writing signed by the party to be charged. This Lease Agreement may not be assigned nor any leased equipment included herein be subleased by Lessee without Lessor's prior written consent. Lessor may assign this Lease Agreement at any time but shall not thereby be relieved from any liability hereunder.

5.5. Binding Effect. This Agreement shall be binding upon the parties hereto, their representative, heirs, successors and assigns.

6. Mediation of Differences

Any differences between the parties as to their several rights or obligations under this Agreement not settled by mutual agreement after thorough discussion shall be submitted for mediation. The mediator shall be knowledgeable of the subject matter of the dispute and shall be agreed upon by the parties. The disputing parties shall share equally the costs of the mediator. If the parties cannot agree upon a mediator or if the dispute cannot be resolved by mediation, the parties may then pursue remedy with a court of competent jurisdiction in the State of North Carolina.

Executed this day of , 20___.

[SIGNATURES NEXT PAGE]

LESSOR:

[EQUIPMENT OWNER]

___________________________

LESSEE:

[EQUIPMENT USER]

A North Carolina General Limited Liability Company

By:____________________________

[EQUIPMENT OWNER]

SCHEDULE A: LIST OF EQUIPMENT and Fair Market Value

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