COMMERCIAL LEASE

RECITALS

    A. Landlord and Tenant have previously entered into that certain Commercial Lease dated December 11, 1997 (the "Prior Lease"), under which Tenant leased from Landlord the real property described on Exhibit A hereto (which by this reference is made a part hereof), together with all improvements now and hereafter situated on said land (said land, together with such improvements, being hereinafter referred to as the "Premises"). The Premises are located at 3199 E. Onstott Road, Yuba City, California.

    B. Landlord and Tenant have mutually agreed to terminate the Prior Lease as of the date of this Lease.

    C. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises all under the terms and conditions of this Lease.

AGREEMENT

    Section 1.  Occupancy  

    1.1  Termination.  The Prior Lease is terminated in its entirety as of the date hereof and neither party shall have any continuing obligations under the Prior Lease as of the date hereof.

    1.1  Term.  The term of this Lease (hereinafter referred to as the "Term") shall commence on the date (the "Commencement Date") on which Landlord acquires fee title to the Premises, and continue through, and expire on, September 30, 2007 (the "Expiration Date"), unless sooner terminated as hereinafter provided.

    1.2  Possession.  Tenant's right to possession of the Premises, and its obligations under this Lease, shall commence on the Commencement Date. If the Commencement Date does not fall on the first day of the month, Rent (as hereinafter defined) for the first month under this Lease shall be prorated accordingly, and shall be due on the Commencement Date.

    Section 2.  Rent  

    2.1  Base Rent.  Tenant covenants and agrees to pay to Landlord an annual base rent of $66,000.00 (the "Base Rent"), in equal monthly installments of $5,500.00, in advance, without demand, deduction or set off, at such place as may be designated by Landlord, on the first day of each month throughout the Term of this Lease.

1

    2.2  Additional Rent.  All taxes, insurance costs, utility charges, maintenance costs, repair charges and other sums that Tenant is required to pay pursuant to this Lease to Landlord or third parties, shall be "additional rent." For the purposes of this Lease, Base Rent and additional rent are sometimes collectively referred to as "Rent."

    Section 3.  Use of the Premises  

    3.1  Permitted Use.  The Premises shall be used for retail sales, service, storage and repair of agricultural, utility or industrial equipment, machinery and parts, and incidental office use, and for any other lawful purpose, subject to the applicable provisions of this Lease.

    3.2  Restrictions on Use.  In connection with the use of the Premises, Tenant shall:

    (a) Comply with all applicable laws and regulations of any public authority having jurisdiction over the Premises and the use thereof, and correct, at Tenant's own expense, any failure of compliance created through Tenant's fault or by reason of Tenant's use;

    (b) Refrain from any activity that would make it impossible to insure the Premises against casualty, would permanently increase the insurance rate, or would prevent Landlord from taking advantage of any ruling allowing Landlord to obtain reduced premium rates for long-term fire insurance policies, unless Tenant pays the additional cost of the insurance;

    (c) Refrain from any use that would be reasonably offensive to other tenants or owners or users of neighboring premises or that would tend to create a nuisance or damage the reputation of the Premises;

    (d) Refrain from loading the electrical system or floors beyond the point considered safe by a competent engineer or architect reasonably selected by Landlord; and


 

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