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Lease Agreement

Lease Agreement

Lease Agreement | Document Parties: FLIGHT SAFETY TECHNOLOGIES INC | Cummins Family Holdings, LLC | Cummins Family Produce, Inc | Key Equipment Finance Inc You are currently viewing:
This Lease Agreement involves

FLIGHT SAFETY TECHNOLOGIES INC | Cummins Family Holdings, LLC | Cummins Family Produce, Inc | Key Equipment Finance Inc

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Title: Lease Agreement
Governing Law: Idaho     Date: 1/16/2009
Industry: Aerospace and Defense     Sector: Capital Goods

Lease Agreement, Parties: flight safety technologies inc , cummins family holdings  llc , cummins family produce  inc , key equipment finance inc
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Exhibit 10.5

Lease Agreement

This Lease Agreement (the "Lease") is dated as of January 13, 2009 by and among Cummins Family Holdings, LLC, an Idaho limited liability company whose address is 2570 Eldridge Ave., Twin Falls, Idaho 83301 ("Lessor") and Cummins Family Produce, Inc., an Idaho corporation whose address is 2570 Eldridge Ave., Twin Falls, Idaho 83301 ("Lessee").

WHEREAS, the Lessor is the owner of (a) real property located in Twin Falls County, Idaho legally described on Exhibit A hereto, together with all improvements thereon and appurtenances thereto (the "Real Property"), (b) the personal property described on Exhibit B hereto together with all replacements, repairs and additions incorporated therein or affixed thereto (collectively, the "Packing Equipment") and (c) the personal property described on Exhibit C hereto together with all replacements, repairs and additions incorporated therein or affixed thereto (collectively, the "Miscellaneous Property," and together with the Packing Equipment, the "Personal Property"). For purposes of this Lease, the "Property" shall mean the Real Property and the Personal Property;

WHEREAS, in connection with the purchase of the Packing Equipment by Wesley Cummins ("Wesley"), Wesley executed a Promissory Note in favor of Key Equipment Finance Inc. (the "Lender") in the amount of Three Hundred Eighty-Seven Thousand and No/100ths Dollars ($387,000.00) (the "Note") and a Master Security Agreement with the Lender whereby Wesley granted a security interest in the Packing Equipment to the Lender (the "Security Agreement," and together with the Note and the ancillary documents thereto and amendments thereof, the "Loan Documents"); and

WHEREAS, Wesley transferred the Packing Equipment to the Lessor effective as of May 29, 2008 in exchange for the Lessor's assumption of Wesley's obligations under the Loan Documents, which Loan Documents shall continue to encumber the Packing Equipment until the obligations arising under such Loan Documents are paid in full; and

WHEREAS, the parties hereto desire that the Lessor lease the Property to the Lessee on and subject to the terms hereof;

NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:

1.      Lease . Lessor hereby agrees to lease the Property to the Lessee, and Lessee hereby agrees to lease the Property from Lessor, on the terms and conditions set forth herein.

         Term . This Lease shall commence on the date hereof (the "Effective Date"). The initial term of this Lease shall run until December 31, 2013. Thereafter, this Lease shall automatically renew for additional one (1) year periods unless either party provides written notice to the other party of its intent not to renew at least sixty (60) days prior to the expiration of the then-current term.

2.      Rent .

     2.1       General . Rent shall be payable in the amount of Twenty Thousand and No/100ths Dollars ($20,000.00) per month on or before the tenth (10 th ) day of each month without prior demand and without offset. Rent for the initial partial month of January 2009 shall be payable on the date hereof and pro rated based on the actual days in such month. In addition to other rights provided herein and by law, if rent or any other amount required to be paid by Lessee hereunder is not received by the tenth (10 th ) day after the date when due, such rent or other amount shall bear interest at the rate of Twelve Percent (12.00%) per annum (the "Default Rate") from the date due.

     2.2      Taxes . Lessee shall pay any applicable sales tax, use tax or property tax on the Property in accordance with Section 12.

3.      Disclaimer of Warranties . Lessee agrees that it has selected the Property based upon its own judgment and disclaims any reliance upon any statements or representations made by Lessor. LESSOR MAKES NO WARRANTY WITH RESPECT TO THE PROPERTY, EXPRESSED OR IMPLIED, AND LESSOR SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE AND ANY LIABILITY FOR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OF OR THE INABILITY TO USE THE PROPERTY. Lessee agrees to make the rental and other payments required hereunder without regard to the condition of the Property. Lessor assumes no responsibility for the installation, adjusting or servicing of the Property.

4.      Title . Title to the Property shall at all times remain with Lessor, and Lessee at its expense shall protect and defend the title of Lessor and keep the Property free of all claims and liens other than the rights of Lessee hereunder and claims and liens created by or arising through Lessor (such as liens arising pursuant to the Loan Documents). While Lessee may possess the Property in accordance with the terms of this Lease, the Lessee expressly acknowledges the existence of the Lender's security interest in the Packing Equipment.

5.      Location; Inspection . The Packing Equipment shall be located on the Real Property and shall not be removed therefrom (other than temporary removal in the ordinary course of business) without the prior written consent of the Lessor. The Lessor shall have the right to enter upon the Real Property and inspect the Property at any reasonable time. The Lender shall have the right to enter upon the Real Property and inspect the Packing Equipment at any reasonable time. At the Lessor's request, the Lessee shall (a) affix permanent labels in a prominent place on the Packing Equipment stating the Lessor's interest therein (and the Lender's interest therein, as applicable), (b) keep such labels in good repair and condition and (c) provide Lessor with an inventory listing all labeled Packing Equipment within twenty (20) days of such request.

6.      Use; Alterations . Lessee shall use the Property lawfully and only in the manner for which it was designed and intended and so as to subject it only to ordinary wear and tear. Lessee shall comply with all applicable laws, and will not permit any person to dispose of any hazardous materials into or onto the Real Property. Lessee shall immediately notify the Lessor, in writing, upon becoming aware of any existing threatened investigation, claim or action by any governmental authority that could adversely affect the Property, the Lessor, the Lender or this Lease. Lessee, at its own expense, shall make such alterations, additions or modifications to the Property as may be required from time to time to meet the requirements of applicable law or governmental body (each, a "Required Alteration"). All such Required Alterations shall immediately, and without further act, be deemed to constitute "Property" and be fully subject to this Lease as if originally leased hereunder. Lessee shall not make any other alterations to the Property without Lessor's prior written consent.

7.      Repairs and Maintenance .

     7.1      Lessee Repairs and Maintenance . Other than as explicitly made the Lessor's responsibility under Section 8.2, Lessee, at Lessee's sole cost and expense, shall (a) keep the Property in good repair, operating condition, appearance and working order in compliance with the manufacturer's recommendations and Lessee's standard practices (but in no event less than industry practices), (b) properly service all components of the Property following the manufacturer's written operating and servicing procedures, (c) upon Lessor's request, enter into and keep in full force and effect during the term hereof a maintenance agreement covering the Packing Equipment with the manufacturer, or a manufacturer-approved maintenance organization, to maintain, service and repair such Property, as otherwise required herein, (d) upon Lessor's request, furnish Lessor with an executed copy of any such maintenance agreement, and (e) replace any part of the Property that becomes unfit or unavailable for use from any cause (whether or not such replacement is covered by a maintenance agreement) with a replacement part that, in Lessor's sole opinion, is of the same manufacture, value, remaining useful life and utility as the replaced part immediately preceding the replacement, assuming that such replaced part was in the condition required by this Lease. Replacement parts shall be free and clear of all liens, constitute Property and be fully subject to this Lease as if originally leased hereunder.

     7.2      Lessor Repairs and Maintenance . Lessor, at Lessor's sole cost and expense, shall be responsible for any repairs or replacements that are required to the structural or mechanical systems of the Real Property (specifically excluding the Packing Equipment, whether or not attached to the Real Property) which (a) would be classified as capital expenditures under generally accepted accounting principals and (b) are not otherwise covered by insurance under Section 11; provided, however , that the Lessor shall only be responsible under this Section 8.2 (i) for any such repair or replacement costing in excess of $10,000 each, in which event the Lessor shall be responsible for the entire cost of such repair or replacement or (ii) if the Lessee has been responsible for repairs or replacements costing less than $10,000 each, but which in the aggregate exceed $75,000 in any year, in which event the Lessor shall be responsible for any such excess.

8.      Transfers and Assignment .

     8.1      Lessee Transfer . Without Lessor's prior written consent, Lessee will not (a) sell, assign, sublet, pledge, or otherwise encumber or permit a lien to exist on or against any interest in this Lease or the Property, (b) rent or lend the Property to anyone or (c) permit the Property to be used by anyone other than the Lessee or its respective qualified employees. Lessee acknowledges that it remains primarily liable for all obligations hereunder notwithstanding use of the Property by any other party.

     8.2      Lessor Transfer . Lessor, at any time with or without notice to Lessee, may sell, transfer, assign and/or grant a security interest in all or any part of Lessor's interest in this Lease or all or any part of the Property (each, a "Lessor Transfer"). Any purchaser, transferee, assignee or secured party of Lessor (each a "Lessor Assignee") shall have and may exercise all of Lessor's rights hereunder with respect to the Property to which any such Lessor Transfer relates. Upon receipt of written notice of a Lessor Transfer, Lessee shall promptly acknowledge in writing its obligations hereunder, shall comply with the written directions or demands of any Lessor Assignee and shall make all payments due hereunder as directed in writing by the Lessor Assignee. Following such Lessor Transfer, the term "Lessor" shall be deemed to include or refer to each Lessor Assignee; provided, however , that the indemnification obligations of the Lessee shall apply to both the Lessor and each Lessor Assignee, as well as their respective members, shareholders, directors, officers and agents.

9.      Risk of Loss . Lessee shall bear the entire risk of loss (including without limitation, theft, destruction, disappearance of or damage to the Property from any cause whatsoever), whether or not insured against, during the term of this Lease. No such loss shall relieve Lessee of the obligation to pay rent or of any other obligation hereunder.

10.      Insurance .

     10.1     Lessee shall, at all times during the term hereof and at Lessee's own cost and expense, maintain (a) insurance against all risks of physical loss or damage to Property for the full replacement value thereof, and (b) commercial general liability insurance (including blanket contractual liability coverage and products liability coverage) for personal and bodily injury and property damage in an amount not less than $1,000,000 per occurrence.

     10.2     All insurance policies required hereunder shall include terms, and be with insurance carriers, reasonably satisfactory to Lessor and the Lender. Without limiting the generality of the foregoing, each policy shall include the following terms: (i) all physical damage insurance shall name Lessor (and with respect to the Packing Equipment, the Lender) and its/their assigns as loss payees, (ii) all liability insurance shall name Lessor (and with respect to the Packing Equipment, the Lender) and its/their assigns as additional insureds, (iii) the policy shall not be canceled or altered without at least thirty days


 
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