Lease of Milford Facility

LEASE - BUSINESS PROPERTY


THIS AGREEMENT, made and entered into this November ________, 2007, by and between Danbom Properties, LLC, or their assigns ("Landlord"), whose address, for the purpose of this lease, is 1806 Jeppeson Road, Milford IA 51351-7039, and Cycle Country Accessories Corporation ("Tenant"), whose address for the purpose of this lease is P.O. Box 257, Spencer, Iowa 51301.


The parties agree as follows:


1. PREMISES AND TERM. The Landlord, in consideration of the rents, agreements and conditions herein contained, leases to the Tenant and Tenant leases from Landlord, according to the terms of this lease, the following described "premises", situated in Dickinson County, Iowa: approximately 92,552 square feet of the building located on the following real estate:


A tract of land in the Northeast Quarter of the Northeast Quarter (NE1/4NE1/4) of Section 1, Township 98 North, Range 37 West of the 5th P.M., in the City of Milford, Dickinson County, Iowa, described as follows: - Commencing at the Northwest corner of the Northeast Quarter of the Northeast Quarter (NE1/4NE1/4) of said Section 1; thence South 0 10' West along the Westerly line of said NE1/4NE1/4 of Section 1 a distance of 50.00 feet to the point of beginning; thence North 90 00' East parallel to the North line of said NE1/4NE1/4 of Section 1, a distance of 935.92 feet; thence Southeasterly along a 332.00 foot radius curve, concave Southwesterly and tangent to the proceeding course, a distance of 391.61 feet to the Westerly right-of-way line of U.S. Highway No. 71; thence South 0 02'30" East along the Westerly right-of-way line of said U.S. Highway No. 71, a distance of 370.03 feet to the Northerly right-of-way line of Primary Road No. 32; thence North 67 19' West along the Northerly right-of-way line of said Primary Road No. 32, a distance of 669.57 feet; thence North 89 07' West along the Northerly line of said Primary Road No. 32, a distance of 215.41 feet; thence North 67 19' West along the Northerly right-of-way line of said Primary Road No. 32, a distance of 444.75 feet to the Westerly line of said NE1/4NE1/4 of Section 1; thence North 0 10' East along the Westerly line of said NE1/4NE1/4 of Section 1, a distance of 142.41 feet to the point of beginning; EXCEPT a part of the Northeast Quarter of the Northeast Quarter (NE1/4NE1/4) of said Section 1, Township 98 North, Range 37 West of the 5th P.M., described as follows:- Commencing at the Northeast Corner of said Section 1; thence North 89 53.1' West, 75.0 feet along the north line of the Northeast Quarter of the Northeast Quarter of said Section 1 to the Point of Beginning; thence continuing North 89 53.1' West, 35.0 feet along the north line of the Northeast Quarter of the Northeast Quarter of said Section 1; thence South 0 03.9' West, 610.0 feet; thence South 67 12.6' East, 37.9 feet; thence North 0 03.9' East, 625.4 feet to the Point of Beginning, containing 0.50 acre, including 0.18 acre of the present established roadway; AND A parcel of land located in a part of the NE1/4NE1/4 of Section 1, Township 98 North, Range 37 West of the 5th P.M., more particularly described as follows: Commencing at the NE 1/4 of said Section 1; thence North 88 47'27" West, 110.00 feet along the north line of said NE 1/4 to a point on the existing west right-of- way line of Primary Road US No. 71; thence South 1 09'52" West, 35.01 feet along said west right-of-way line to the Point of Beginning; thence continuing South 1 09'52" West, 156.42 feet along said existing right-of-way line; thence northwesterly 318.51 feet along the arc of a 332.00 foot radius curve, concave southwesterly and having a cord bearing, North 61 18'25", 306.43 feet; thence North 88 47'27" West, 935.52 feet to a point on the west line of the NE 1/4 of the NE 1/4 of said Section 1; thence North 0 56'22" E, 15.00 feet along said west line; thence South 88 47'27" East, 1207.31 to the Point of Beginning, containing 29,578 square feet;


together with the improvements thereon, and all rights, easements and appurtenances, which, more particularly, includes the space and premises as may be approximately shown on "Exhibit A," if attached, for an initial term of 3 years, commencing immediately following the closing on Landlord's purchase of the aforementioned building and property and ending at midnight on the last day of the lease term, which shall be 3 years from the date of the commencement of this Lease, unless extended as provided herein, upon the condition that the Tenant pays rent therefor, and otherwise performs as provided in this lease. Total building square footage is approximately 103,056 square feet of which Tenant is leasing approximately 92,552 square feet. Tenant is only leasing from Landlord a portion of the building (approximately 92,552 square feet) with access thereto. Tenant is not leasing from Landlord the remaining portion of the building (approximately 10,504 square feet) or land surrounding the building.


Cycle Country will have normal access, necessary parking rights, and necessary use of the land for loading and unloading purposes and other reasonable use of the real estate surrounding the building.


2. RENT. Tenant agrees to pay Landlord as rent $2.00 per square foot for a total of $185,104.00 payable in monthly installments of $15,425.34 per month, in advance commencing on the first day of the beginning of this Lease, and on the 1st day of each month thereafter, during the term of this lease. Rent for any partial month shall be prorated as additional rent. This Lease is a triple net lease. In addition to the above monthly rental Tenant shall also pay: for all maintenance of the leased premises; and a prorata share of the insurance, taxes, and other common charges of the building and premises based upon the total square footage of the building. All sums shall be paid at the address of Landlord, as above designated, or at such other place in Iowa, or elsewhere, as the Landlord may, from time to time, designate in writing. Delinquent payments shall draw interest at 10% per annum from the due date, until paid.


Tenant may not reduce the square footage Tenant is leasing from Landlord during the initial 3-year term of this Lease. If, and only if, Tenant gives Landlord written notice, at least 90 days prior to the expiration of the initial 3-year term, Tenant may reduce the square footage Tenant is leasing from Landlord during the first renewal, if Tenant properly exercises a renewal.


Tenant may not reduce the square footage Tenant is leasing from Landlord during the second renewal term of this Lease unless Tenant gives Landlord written notice, at least 90 days prior to the expiration of the first renewal term of this Lease, that Tenant intends to reduce the square footage Tenant is leasing from Landlord during the second renewal term, if Tenant properly exercises a renewal.


2 (1). MULTIPLE TENANTS. If any other Tenants in adjoining premises share responsibility with Landlord and Tenant in any expenses, the percentages allocated to Landlord and Tenant in this lease shall represent only their respective portions of the total shared expenses. Therefore, their percentages may total less than 100%. Nothing shall prevent the Landlord from paying a Tenant's share of an expense, and billing the Tenant for the amount so paid.


2 (2). "TRIPLE NET"PROVISION. Tenant agrees that all duties and obligations to repair, maintain and provide utilities and services (paragraphs 6 and 7), to pay taxes and special assessments (paragraph 10) and to pay for casualty and liability insurance (paragraph 11) shall be borne solely by Tenant during the term of this lease. (If the parties select this provision, all duties and obligations set forth in paragraphs 6, 7, and 10 shall be performed by the Tenant).


3. POSSESSION. Tenant shall be entitled to possession on the first day of the term of this lease, and shall yield possession to the Landlord at the end of the lease term, except as herein otherwise expressly provided. Should Landlord be unable to give possession on said date, Tenant's only damages shall be a rebating of the pro rata rental.


4. USE OF PREMISES. Tenant covenants and agrees during the term of this lease to use and to occupy the leased premises only for purposes approved by Landlord. Tenant may utilize its rented portion of the building in the same manner as it now does as well as for any other general manufacturing not involving any hazardous wastes, except for chemicals provided for below, such as paints, etc. For restrictions on such use, see paragraphs 6(c), 6(d) and 11(b) below. Other business activities are subject to Landlord's approval. Tenant may, at its expense, alter or modify the leased premises to suit its needs, with prior approval of the Landlord.


5. QUIET ENJOYMENT. Landlord covenants that its estate in said premises is in fee simple and that the Tenant, if not in default, shall peaceably have, hold and enjoy the premises for the term of this lease. Landlord shall have the right to mortgage all of its right, title, interest in said premises at any time without notice, subject to this lease.


6. EQUIPMENT, DECORATING, REPLACEMENT, REPAIR AND MAINTENANCE. DEFINITIONS


"Maintain" means to clean and keep in good condition. "Repair" means to fix and restore to good condition after damage, deterioration or partial destruction.


CONDITIONS OF PREMISES


A. Tenant takes the premises in its present condition, except for such repairs and alterations as may be expressly otherwise provided in this lease.


REPAIRS AND MAINTENANCE


B. Unless damaged by Tenant, Landlord shall replace and repair the structural parts of the building. For purposes of this lease, the structural parts of the building shall mean the foundation, exterior walls, load bearing components of interior floors and walls, the roof and all sewers, pipes, wiring and electrical fixtures outside of the structure.


C. Repair shall be performed and paid for by the parties as follows:


PERFORMANCE PAYMENT


L=LANDLORD T=TENANT


% Landlord


% Tenant Interior walls, floors and ceilings T 0 100 Sewer, plumbing fixtures, pipes, wiring, electrical fixtures within the structure T 0 100 Heating equipment T 0 100 Air conditioning T 0 100 Plate glass (replacement) T 0 100 Sidewalks L 100 0 Parking areas L 100 0 Other common areas (strike if inapplicable) L 100 0


D. Landlord shall be responsible for maintenance of all common area entirely under Landlord's control. Tenant shall be responsible for all other maintenance. If Landlord has shared maintenance responsibilities with other Tenants, this Tenant's share of maintenance is a percentage based upon the square footage leased to Tenant as it relates to the total square footage of the building.


E. Any repair or maintenance not specifically provided for above shall be performed and paid for by Tenant (subject to LIMITATION, if any, regarding repairs in Paragraph C, above).


F. Each party shall perform their responsibilities of repair and maintenance to the end that the premises will be kept in a safe and serviceable condition. Neither party will permit nor allow the premises to be damaged or depreciated in value by any act, omission to act, or negligence of itself, its agents or employees.


EQUIPMENT, DECORATING AND ALTERATIONS


G. The following items of equipment, furnishings and fixtures shall be supplied and replaced by the parties as follows:


SUPPLIED L=Landlord T=Tenant REPLACED L=Landlord T=Tenant Carpeting/floor covering T T Drapes, shades, blinds T T


Heating and air conditioning equipment shall be serviced by Tenant, at Tenant's expense and replacement, if necessary, will be Landlord's responsibility and expense.


Any similar equipment, furnishings, and fixtures for the leased premises not specifically provided for above shall be provided and paid for by Tenant. Any equipment, furnishings or fixtures to be supplied by Tenant shall be subject to the Landlord's prior written approval as to quality and method of installation. Tenant shall provide all trade equipment, furnishings and fixtures used in connection with the operation of its business, such as telephones, computers, desks, chairs, shelving and similar items.


H. Tenant shall be responsible for all interior decorating. Tenant shall make no structural alterations or improvements without the prior written consent of the Landlord.


AMERICANS WITH DISABILITIES ACT


I. Tenant will make no unlawful use of said premises and agrees to comply with all valid regulations of the Board of Health, City Ordinances or applicable municipality, the laws of the State of Iowa and the Federal government, but this provision shall not be construed as creating any duty by Tenant to members of the general public, provided, however, responsibility for compliance with the Americans with Disabilities Act shall be performed and paid for by the parties as follows: Landlord and Tenant shall each be responsible for compliance with the American with Disabilities Act as to their respective areas.


7. UTILITIES AND SERVICES. Utilities and services shall be furnished and paid for by the parties as follows: Tenant shall pay a prorata share of the cost of all utilities and services to the building based upon the square footage leased to Tenant, with the only exception being the electricity for the building, which is to be paid by Tenant. Tenant will pay the cost of electricity for the entire building, however, Landlord shall give Tenant credit of $300.00 per month, which credit is to be applied towards Tenant's rent. Tenant will have one of their workers do the snow removal for the building and will send a bill therefor to Landlord. Landlord will pay Tenant for this snow removal bill.


8. TERMINATION, SURRENDER OF PREMISES AT END OF TERM -- REMOVAL OF FIXTURES.


(a) TERMINATION. This lease shall terminate upon expiration of the original term; or if this lease expressly provides for any option to renew, and if any such option is exercised by the Tenant, then this lease will terminate at the expiration of the option term or terms.


(b) OPTION TO RENEW. Tenant may renew this lease, on the same terms and conditions as set forth in paragraph 2, including rent at $2.00 per square foot, for two (2) additional terms of one (1) year each by giving Landlord a written notice of intent to renew at least 90 days prior to the expiration of the term that precedes each such renewal term. (c) SURRENDER. Tenant agrees that upon termination of this lease it will surrender and deliver the premises in good and clean condition, except the effects of ordinary wear and tear and depreciation arising from lapse of time, or damage without fault or liability of Tenant.


(d) HOLDING OVER. Continued possession by Tenant, beyond the expiration of its tenancy, coupled with the receipt of the specified rental by the Landlord (and absent a written agreement by both parties for an ...