Upon notice of termination, Tenant shall surrender possession of the premises in thirty (30)days or as otherwise allowed by Landlord in writing.(g) Basic Rent. The Basic Rent shall be computed at a rate of **$2.86**per square foot per yearfor the initial Lease Term of this lease. Annual rental shall be **$300,000.00**per year. Rent shallbe paid in the amount of Twenty-Five Thousand and 00/100 Dollars **($25,000.00**) per month.Said rent is due in equal monthly installments on the first day of each month beginning on theCommencement Date. If the Commencement Date is not the first day of a calendar month, rent shallbe prorated based on the number of days in such month. Said payments shall continue from month tomonth (prorated on a daily basis, if necessary due to the termination of this Lease on a day otherthan the last day of any month), unless canceled by either party as provided herein.(h) Leased Premises: The real estate located in Seymour, Jackson County, Indiana, the legaldescription of which is described in Exhibit A annexed hereto; and the building and improvementsthereon, which are described in architectural renderings in Exhibit B, annexed hereto.Landlord discloses and Tenant understands that Landlord has granted an emergency accesseasement to Golden Endeavors, LLC over and along a gravel lane running from North to South alongthe West side of demised real estate. Landlord represents and warranties that this easement is foremergency use only and not for commercial ingress and egress. Landlord will provide a copy of theaccess agreement and legal description to Tenant.(i) Purpose of Lease: The purpose of this Lease is for the use of the Leased Premises for acommercial warehouse, manufacturing, storage, and shipping facility with related office uses.Section 1.2. Significance of Basic Lease Provisions. Each reference to any Basic LeaseProvision shall be deemed to incorporate all of the items provided under that Basic LeaseProvision.Section 1.3. Option to Purchase. Tenant shall have the option to purchase the demised realestate and improvements thereon at any time during the Initial Term of this lease. In the eventthat Tenant exercises this option to purchase, the purchase price shall be $3,900,000.00.(a) Period of Option and Exercise. This Option may be exercised by Tenant giving notice ofexercise to Landlord during the Initial Term. If Tenant exercised this Option, its obligation tocomplete and close the purchase of the Leased Premises is subject to Landlord being able to conveymarketable title to the Leased Premises to Tenant subject only to:(1) taxes and assessments which Tenant has agreed to pay;(2) covenants, conditions, restrictions, agreements and easements, if any, of record, towhich Tenant has no obligation; and(3) public streets, rights of ways and highways.(b) Title Insurance. Within ten (10) days of notification by Tenant to Landlord that it isexercising this Option, Landlord, at its sole cost and expense, shall furnish Tenant with acommitment for an Owner’s Policy of title insurance, in an amount equal to the Purchase Price froma title Company acceptable to Purchaser (“the title Company”) insuring Tenant as owner and insuringmarketable title in the name of Landlord, without exception as to mechanic’s or similar liens, andfree and clear of any and all secured debts, liens, judgments, encumbrances, leases, parties inpossession, licenses, covenants,restrictions, easements, encroachments, and any other matters of any nature effecting title, exceptas otherwise permitted herein.
 
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(c) Exceptions to Title. Tenant shall advise Landlord after receipt of the title InsuranceCommitment of Tenant’s objection to title, if any, specifying each objection in writing. Ifwritten objections are received by Landlord, Landlord shall have thirty (30) days within which toremove the objections, and if necessary, the Closing Date shall be extended accordingly. If theobjections cannot be cleared within this period of time, Tenant may waive the objections, inwriting, and close this transaction or may elect not to close.(d) Closing Location. If Tenant exercises this Option, then the transaction shall be closedat the offices of the Title Company within ten (10) days of Tenant notifying Landlord that allconditions precedent have been satisfied and that it is satisfied as to the title to the RealEstate.(e) Deed. At closing, Landlord shall execute and deliver to Tenant a Warranty Deed in a formacceptable to Tenant. A proposed form of the Deed shall be furnished to Tenant with theCommitment. Tenant shall advise Landlord after receipt of the proposed form Deed of any objectionsthereto. If Landlord does not agree to cure these objections, then Tenant may waive the objectionsand close this transaction or may cancel this Option.(f) Insured Closing. The closing shall be conducted as an insured closing. The Title Companyshall mark-up the Commitment to delete the Requirements Section and shall date the marked-upCommitment as of the date of closing. The Title Company shall mark-up the Commitment to showTenant as the insured.(g) Closing Costs.(1) at closing, Landlord shall be charged with the following:(i) the fees for preparation of the Deed;(ii) the cost of title report, title search and of a title insurance policy in the amountof the purchase price;(iii) one-half (1/2) of the Sales Disclosure fee.(2) At closing, Tenant shall be charged with the following:(i) the cost of recording the Deed;(ii) the closing fee;(iii) one-half (1/2) of the Sales Disclosure fee.Section 1.4 Right of First Refusal. During any renewal term of this Lease, Tenant shall havethe right of first refusal to purchase the Leased Premises. Upon the receipt of a bona fide offerfrom a third party, Landlord shall provide Tenant with thirty (30) days notice within which toexercise its right of first refusal to purchase the Leased Premises for the price and on the termsof the intended sale.
 
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Section 1.5. Conditions Precedent. Tenant’s obligations under the Lease are subject to thesatisfaction of the following conditions prior to January 1, 2008, unless satisfaction of theseconditions are waived in writing by Tenant:(a) Tenant having received an updated Phase I environmental site assessment showing theenvironmental condition of the Leased Premises to be acceptable to Tenant. The environmental siteassessment shall be performed by an environmental engineering firm acceptable to Tenant at the solecost and expense of Landlord.(b) Tenant having received a commitment for a leasehold policy of title insurance in theamount of Three Million Dollars ($3,000,000.00) from a title insurance company acceptable to Tenantinsuring Tenant’s leasehold interest and which shows title to the Leased Premises in a conditionacceptable to Tenant. Seller shall bear the cost and expense of the commitment(c) Tenant having received a survey conforming to a minimum standard for Indiana Land TitleSurvey certified by a land surveyor or engineer registered in the State of Indiana and certified toTenant showing the location of all improvements and easements located on or about the LeasedPremises and the location of all encroachments on adjacent real estate or from adjacent real estateonto the Leased Premises. Landlord shall bear the cost of the survey.(d) Tenant having received a letter from the company that installed a fire suppression systemthat the system is in good working order and complies with all applicable codes as of the date ofthe letter, which letter shall be dated no earlier than November 29, 2007.(e) Tenant having received a survey depicting the emergency access easement described inSection 1.1(h) an the agreement creating the easement which show that the emergency access easementis not situated so as to interfere with Tenant’s rail expansion plans.Article II. The DemiseSection 2.1. Demise. Landlord hereby leases and demises the Leased Premises to Tenant to haveand to hold the Leased Premises for the Lease Term to be used by Tenant for only the purposesstated in Section 1.1(g) above, and for such other lawful purposes as to which Landlord has givenits prior written consent, which consent shall not be unreasonably withheld or delayed.Section 2.2. Use and Compliance with Laws. Tenant shall keep the Leased Premises in a cleanand orderly condition and shall operate in a safe and careful manner and shall not maintain,permit, or suffer any nuisance or waste to occur or exist on the Leased Premises. Tenant shallcomply with all federal, state, and local laws, rules, regulations, and ordinances applicable toits business and the use and operation of the Leased Premises.Article III. Rent, Taxes, and Other ChargesSection 3.1. Basic Rent. The Basic Rent, should any be due, shall be paid to Landlord atthe address set forth in Section 1.1(b) or to such other payee or at such other address as Landlordmay hereafter designate in writing to Tenant.Section 3.2. Impositions. Landlord covenants and agrees to pay all real estate taxes andassessments, including assessments for public improvements, utilities or benefits, which may belaid, levied, assessed, or imposed, upon or become due and payable and a lien upon the LeasedPremises or any part thereof during the Lease Term (“Impositions”). Tenant shall forward or causeto be forwarded toLandlord a copy of all statements for real estate and other taxes as received. In the alternative,Tenant may pay such taxes and Landlord shall reimburse Tenant for such payments within twenty (20)days after receipt of written notice to do so, accompanied by a copy of the tax bill.
 
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Section 3.3. Contest of Impositions. Landlord shall have the right to contest the amount orvalidity of any Imposition by appropriate legal proceedings, but this shall not be deemed orconstrued in any way as relieving Landlord of its covenant to pay any such Imposition. Tenantshall join in any such proceeding to the extent necessary to permit Landlord to properly prosecutethe same; provided, however, that Tenant shall not be subjected to any liability for payment of anycosts or expenses in connection with any such proceeding brought by Landlord, and Landlord herebycovenants to indemnify and hold Tenant harmless from any such costs or expenses.Section 3.4. Utility Charges. Tenant shall pay for all sewer charges, electricity, gas,heat, cable, internet, television, telephone, and water used by it upon the Leased Premises. It isspecifically understood and intended that the Basic Rent does not include utilities. Landlordwarrants to Tenant that the Leased Premises are now connected to sewer, electric, water, gas, andtelephone utilities and the Tenant will not be required to install infrastructure to obtain servicefrom the utility providers; however, Tenant will be responsible for installation of its owntelephone system, if the wiring, control panels, etc. are not compatible with the system now onsite. The facility is not wired for cable or satellite television access and such connectioncharges will be the responsibility of the Tenant.Section 3.5. Public Liability and Property Damage Insurance. Tenant shall carry publicliability and property damage insurance against claims for bodily injury or death, in limits of notless than One Million Dollars ($1,000,000.00) for any one occurrence upon request. Tenant shallfurnish Landlord with a certificate evidencing such coverage.Section 3.6. Property Insurance and Re-Construction. Landlord shall maintain insurance onthe full, fair, insurable value of the Leased Premises so as to insure the improvements located onthe real estate described in Exhibit A to their full replacement cost without depreciation againstfire and other casualties normally covered by an “all risk” endorsement and in an amount sufficientto prevent Landlord from becoming a co-insurer within the terms of the applicable policies. In theevent of any injury or damage to the improvements, Landlord shall promptly undertake therestoration thereof to the condition that existed prior to injury or damage and rent shall abate inproportion to Tenant’s inability to efficiently use the Leased Premises prior to completion of suchrestoration work by Landlord. In the event the injury or damage in not capable of being, or is notactually, restored by Landlord within ninety (90) days’ of the occurrence thereof, Tenant may, uponwritten notice to Landlord, terminate this Lease.Article IV. Quiet EnjoymentSection 4.1. Quiet Enjoyment. Landlord, for itself, and its successors and assigns,covenants that Tenant, its successors and assigns, shall have continuous, peaceful, uninterrupted,and exclusive possession and quiet enjoyment of the entire premises during the term of this Lease.Article V. ImprovementsSection 5.1. Inspection. Landlord may, during the Lease Term at reasonable times and duringusual business hours, enter to view the Leased Premises and may show the Leased Premises to othersand may at any time within thirty (30) days next preceding the expiration of the Lease Term, affixto any suitable part of the Leased Premises a notice for letting the Premises, and keep the sameaffixed without hindrance or molestation. Landlord shall provide Tenant with 24 hours prior verbalnotice before inspection of the Leased Premises.
 
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Section 5.2. Alterations and Improvements. Tenant shall obtain the Landlord’s approval ofall plans and contracts for the construction of any alterations and improvements prior to thecommencement of construction, which approval shall not be unreasonably withheld, conditioned ordelayed. Tenant shall deliver to Landlord written notice describing the proposed alteration orimprovement and provide Landlord with copies of all plans and specifications therefor. Landlordshall have thirty (30) days from the date of delivery of the notice and plans and specifications tomake objection thereto. If no objection is received by Tenant to Landlord within thirty (30) daysof delivery of the notice and of plans and specifications, Landlord shall be deemed to haveconsented to the proposed alterations or improvements. Tenant shall insure that all contractors,sub-contractors, laborers and suppliers performing work or supplying materials for the alterationsor improvements are paid in full. Tenant shall obtain lien waivers in a form acceptable toLandlord from such contractors, sub-contractors, suppliers, and material men performing work orsupplying or leasing materials for the alterations or improvements. All alterations andimprovements constructed on the Leased Premises by Tenant shall be constructed in a good andworkmanlike manner; and in compliance with all applicable laws, ordinances, rules, regulations, ororders of any State or other public authority and, when made, shall be deemed the property ofLandlord.Section 5.3. Surrender Upon Termination. At the expiration of the Lease Term, Tenant shallsurrender the Leased Premises to Landlord in good condition and repair, ordinary wear and tearexcepted. Upon such expiration, Tenant shall be permitted to remove its trade fixtures, as well asany personal property, machines, and equipment placed on the Leased Premises by Tenant. Tenantshall surrender the premises broom clean. If Tenant has not removed such property within thirty(30) days after the expiration of the Lease Term, the property not so removed shall be deemedabandoned and shall become the property of the Landlord.Section 5.4. Mechanics’ Liens. Tenant shall not suffer or permit any mechanics’ liens to befiled against the fee of the Leased Premises nor against Tenant’s leasehold interest in the LeasedPremises by reason of work, labor, services, or materials supplied or claimed to have been suppliedto Tenant, its contractors, sub-lessees, licensees, or assigns, either prior or subsequent to thecommencement of the term hereof. If any such mechanics’ lien shall at any time be filed, Tenantshall, within thirty (30) days after the filing thereof, initiate such action as it deemsappropriate, as provided by applicable Indiana law, to (a) post bond, or other surety, whileappealing or contesting such lien claim; or (b) give notice to the lien holder to file suit toforeclose the lien; or (c) bring whatever other action against the lien holder Tenant deemsappropriate to cause the lien to be discharged of record.Section 5.5. Maintenance. The Landlord agrees that it shall keep the structure, includingthe roof, gutters, exterior walls, windows/ window frames, footings, foundations, and slab in goodrepair, at Landlord’s sole cost and expense. The Landlord shall not be required to make anyrepairs which may be occasioned by the act or negligence of the Tenant, except to the extent suchrepair is covered by Landlord’s insurance.The non-structural exterior of the building and the grounds shall also be kept in a clean andsafe condition at the sole expense of Tenant. By way of example, the parties intend this provisionto apply to outside storage, debris, snow removal, loading dock facilities, lawn mowing, parkinglot maintenance, etc.Landlord represents and warrants to Tenant, its successors and assigns, that the plumbing,heating, sprinkler and other mechanical appurtenances on or to the Leased Premises are in goodworking order and comply with all applicable building laws, rules, regulations and codes as ofJanuary 1, 2008.
 
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Article VI. CondemnationSection 6.1. Apportionment. If at any time during the Lease Term the whole or any part ofthe Leased Premises shall be taken for any public or quasi-public use, under any statute, or byright of eminent domain, then, in such event, the award, obtained by settlement or trial, shall bepaid to Landlord and Tenant in proportionate shares depending upon the assessment of damages andtheir apportionment between the Landlord’s real estate and the Tenant’s improvementsSection 6.2. Reduction in Rent. Amounts received by Landlord upon such a taking shall reducethe Basic Rent in proportion to the area taken. Such reduction shall take effect as of the dateupon which condemnation proceeds are paid to Landlord.Section 6.3. Temporary Taking. If all or any portion of the Leased Premises is taken by theexercise of the right of eminent domain for governmental occupancy for a limited period, this Leaseshall not terminate and Tenant shall continue to perform its obligations hereunder as though suchtaking had not occurred except to the extent that it may be prevented from so doing pursuant to theterms of the order of the authority which made the taking, but rent and other charges shall abateto the extent and in proportion to Tenant’s loss of use of the Leased Premises during suchtemporary taking.Section 6.4. Control of Proceeding. In the event of any such proceedings, Tenant shall bemade a party to such proceedings. Landlord shall give Tenant written notice within five (5) daysof the receipt by Landlord of any official notice (written or otherwise) of any contemplatedcondemnation or taking by eminent domain of any such land. Landlord and Tenant may negotiatejointly or separately with respect to any such contemplated condemnation as each deems to be in itsbest interest.Section 6.5 Termination by Tenant. If the whole of the Leased Premises shall be taken orcondemned, or if such a portion of the Leased Premises shall be so taken that as a result thereofthe balance cannot be used for the same purpose and with substantially the same utility to Tenantas immediately prior to such taking (for purposes of this paragraph, the parties agree that atTenant’s election, a taking or partial taking of any portion of Tenant’s parking or truckturnaround area shall be deemed to prohibit Tenant’s use of the Leased Premises for the samepurpose and with substantially the same utility to Tenant as immediately prior to such taking),Tenant may terminate this Lease by giving written notice thereof of to Landlord and the Lease termshall terminate upon delivery of possession to the condemning authority.Article VII. DefaultSection 7.1. Default by Tenant. The occurrence of any of the following shall constitute anevent of default by Tenant:(a) In the event that the monthly installment of basic rent is more than five (5) days late,Tenant shall incur a ten (10%) percent penalty of the basic monthly installment, but the Tenantshall not be deemed in default unless it exceeds a fifteen (15) day grace period after the due dateof the rent.(b) Failure by Tenant to perform or comply with any of the conditions or covenants containedin this Lease, other than those referred to in the foregoing subsection (a), for a period of thirty(30) days after written notice of such failure is delivered to Tenant, except for any default notsusceptible of being cured within such thirty (30) day period, in which event the time permittedTenant to cure such default shall be extended for as long as shall be necessary to cure suchdefault, provided Tenant commences promptly and proceeds diligently to cure such default, andprovided further that such periodof time shall not be so extended as to jeopardize the interest of Landlord in this Lease or so asto subject Landlord or Tenant to any civil or criminal liabilities.
 
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(c) Filing by Tenant in any court pursuant to any statute, either of the United States or anystate, of a petition in bankruptcy or insolvency, or for reorganization, or for an arrangement, orfor the appointment of a receiver or trustee of all or a portion of Tenant’s property, or anassignment by Tenant for the benefit of creditors.(d) Filing against Tenant in any court, pursuant to any statute, either of the United Statesor of any state, of a petition in bankruptcy or insolvency, or for reorganization, or forappointment of a receiver or trustee of all or a portion of Tenant’s property, if within sixty (60)days after the commencement of any such proceeding against Tenant, such petition shall not havebeen dismissed or stayed.(e) The taking by any party of the Tenant’s interest in the Leased Premises, or any partthereof, upon foreclosure, levy, execution, attachment, or other process of law or equity.(f) Any warranty, representation, or statement made or furnished to the Landlord by or onbehalf of the Tenant which proves to have been false in any material respect when made orfurnished.Section 7.2. Notice of Termination. Upon the occurrence of an event of default, Landlord,within one hundred eighty (180) days of the occurrence, may give written notice to Tenantspecifying such event of default and stating that this Lease shall expire on the date specified insuch notice and upon the date specified in such notice, this Lease and all rights of Tenanthereunder shall terminate if the default is not cured with the time provided by this lease.Section 7.3. Surrender Upon Default. Tenant shall peacefully surrender the Leased Premisesto Landlord within one hundred eighty days of the occurrence of an event of default by Tenant.Tenant shall be obligated to pay rent so long as it is possession of the leased premises.Landlord, upon or at any time after such expiration, may without further notice re-enter the LeasedPremises and repossess it by force, summary proceedings, ejectment, or otherwise, and maydispossess Tenant and remove Tenant and all other persons and property from the Leased Premises andmay have, hold, and enjoy the Leased Premises and the right to receive all rental income therefrom.Section 7.4. Tenant’s Liability.(a) In the event of surrender upon default Tenant shall be obligated to pay rent so long as itin possession of the leased premises(b) The prevailing party in any action to enforce the terms of this Lease Agreement shall beliable to the other party for the prevailing party’s reasonable attorneys’ fees and expensesnecessary to enforce any term, condition, or covenant of this Lease.Section 7.5. Advances and Interest. Upon the occurrence of any Event of Default, Landlordmay, if such default has not been cured, cure that default at the expense of Tenant. If Landlordin curing such default is compelled to pay or elects to pay any sum of money or do any acts whichwill require the payment of any sum of money, the sum so paid or incurred shall be reimbursed byTenant upon demand by Landlord. All sums as to which Tenant is in default of payment, includingrental payments, shall bear interest at the rate of ten percent (10%) per annum until paid.
 
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Section 7.6. Default by Landlord. Landlord’s failure or refusal to perform any provision ofthis Lease which it is obligated to perform or the breach of any covenant made by Landlord hereinshall be a default by Landlord. In the event of a default by Landlord, and without waiving anyother remedy or claim for damages or breach of this Lease, Tenant may:(a) Emergency Situation. In an Emergency Situation, as hereinafter defined, if the default isnot cured after reasonable notice to (or attempts to notify) Tenant may cure the default atLandlord’s expense, provided that such cure is not more extensive than is reasonably necessaryunder the circumstances; and(b) Non-Emergency Situation. In a Non-Emergency Situation, if the default is not curedwithout thirty (30) days of written notice from Tenant to Landlord (or, if such default is of sucha nature as to not be reasonably susceptible to cure within said thirty (30) day period, then theperiod for cure shall be extended so long as Lessor commences its efforts to cure within saidthirty (30) day period and thereafter diligently pursues the same to completion), Tenant may curethe default at Landlord’s reasonable expense.If Tenant incurs any sum because of Landlord’s default, the reasonable sums paid by Tenant inconnection therewith shall be due from Landlord to Tenant upon demand, shall bear interest from thedate such expenses are incurred until repaid by Landlord at the rate of twelve percent (12%) perannum, and may be offset against Tenant’s Rent obligations hereunder. “Emergency Situation” asused in this Section means a situation that threatens the physical wellbeing of persons in or onthe Leased Premises, or that disrupts Tenant’s use and/or occupancy of he Leased Premises or anyportion thereof so as to materially interfere with the ordinary conduct of Tenant’s business.Article VIII. Restrictions on UseSection 8.1. Amendments or Revisions. It is further understood and agreed that in the eventany part, provision, or condition of this Lease Agreement be determined illegal orunconstitutional, that the Landlord and Tenant shall make such amendment, revision, addition ordeletion of such condition or provision as shall be required, provided, however, that no suchamendment or revision shall affect the rights or agreement of the parties hereto or legal rightsand possession in the leasehold, its term or lease rental.Section 8.2. Non-Discrimination and Equal Opportunity Federal and State Law and Regulations.It is understood and agreed by the Tenant, its agents, or employees that, in the use of thesepremises herein demised, either for the erection of any structure or building, or in the conductand operation of its business thereof, the Tenant, its agents, or employees shall comply andconform with all Federal, State, or local law, statutes, regulations, or requirements pertaining tonon-discrimination against any person or persons by reason of race, color, creed, sex or nationalorigin, and further as such may relate to employment and equal opportunity of persons under anysuch legal requirements of Federal, State or local statutes or regulations.Article IX. MiscellaneousSection 9.1. Assignment. Tenant shall not assign, mortgage, encumber, or transfer thisLease, its interest in this Lease, or any improvements permitted to be constructed by it on theLeased Premises, in whole or in part, or sublet the leased premises, or any part thereof, nor granta license or concession in connection therewith without Landlord’s prior written consent, whichconsent may not be unreasonably withheld. This prohibition shall include any act which has theeffect of an assignment or transfer and which occurs by operation of law. It is specificallyunderstood and agreed, however, that no suchassignment or subletting shall excuse or relieve the Tenant of responsibility for the full andfaithful performance of this Lease by any such assignee or subtenant.
 
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Notwithstanding the foregoing, Tenant shall have the unrestricted right, without obtainingLandlord’s consent, to assign this Lease and/or to sublet all or a portion of the Leased Premisesto (i) any parent, subsidiary or affiliated company of Tenant, (ii) any corporation into whichTenant may merge or be consolidated or to which Tenant may sell all or substantially all of itsassets, or to (iii) any contractor engaged by Tenant for the purpose of managing the LeasedPremises and/or Tenant’s inventory therein; provided, however, that no such assignment orsubletting shall release Tenant from any obligation or liability under this Lease.Section 9.2. No Brokers. Landlord and Tenant each represent and warrant to the other thatthere are no brokerage fees or real estate commissions due and payable as a result of this Lease.In the event one of the parties breaches this warranty, the breaching party covenants to defend,and indemnify and hold harmless, the other from and against all costs, claims, damages, expenses,and disbursements of any kind whatsoever (including reasonable attorneys’ fees) for anycompensation, commission, or charge by, or due to, any broker or real estate agent who alleges tohave been employed by the breaching party in connection with this Lease or the negotiation thereof.Section 9.3 Estoppel Certificates. At any time and from time to time, each party agrees,upon request in writing from the other, to execute, acknowledge, and deliver to the other party astatement in writing certifying that this Lease is unmodified in full force and effect (or if therehave been modifications, that the same is in full force and effect as modified and stating themodifications), stating the dates to which the Basic Rent and other charges have been paid, andmaking such other accurate certifications as the party or its mortgages may reasonably require.Section 9.4. Right to Mortgage. Landlord shall have the right to mortgage the LeasedPremises at any time and without Tenant’s consent. Accordingly, Landlord shall have the right tosubordinate this Lease to any mortgage presently existing or hereafter placed upon the LeasedPremises by so declaring in such mortgage; and the recording of any such mortgage shall make itprior and superior to this Lease regardless of the date of execution or recording of eitherdocument. Tenant shall, at Landlord’s request, execute and deliver to Landlord, without cost, anytrue and accurate instrument which may be deemed necessary or desirable by Landlord to confirm thesubordination of this Lease.Any subordination of this lease to a mortgage pursuant to the terms of this paragraph, whetherby a mortgage placed upon the Leased Premises by Landlord or by the written subordination agreementof Tenant, shall be on the express provision that so long as Tenant shall not be in default of thisLease beyond any applicable notice and/or cure period, the mortgagee, in the exercise of any rightsby such mortgagee due to a default of Landlord under the mortgage, shall not disturb the Tenant inits use or enjoyment of the Leased Premises in accordance with the terms of this Lease nor shallTenant be joined as a party in any such proceeding.Section 9.5. Fees and Expenses. Each party shall pay the other party’s reasonable expenses,legal costs, and attorneys’ fees incurred in successfully enforcing against the other party anycovenant, term, or condition of this Lease.Section 9.6. Specific Performance. It is expressly provided that the rights and obligationsof the parties under this Lease shall be specifically enforceable.
 
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Section 9.7. Indemnification and Release. Regardless of whether or not separate, several,joint, or concurrent liability may be imposed upon Landlord, Tenant shall indemnify and holdharmless Landlord from and against all reasonable expenses, legal costs, and attorneys’ fees, damages,claims, and liability arising from or connected with Tenant’s control or use of Leased Premises,including without limitation, any damage or injury to person or property. This indemnificationshall not include any matter for which the Landlord is effectively protected against by insurance;nor shall it include any liability which is attributable to the Landlord’s conduct or negligence.If Landlord shall, without fault, become a party to litigation commenced by or against Tenant, thenTenant shall indemnify and hold Landlord harmless. The indemnification provided by this Sectionshall include Landlord’s legal costs and fees in connection with any such claim, action, orproceeding. Tenant does hereby release Landlord from all liability for any accident, damage, orinjury caused to person or property on or about the Leased Premises, except that due to negligenceon the part of Landlord, and notwithstanding whether such acts or omissions be active or passive.Landlord shall indemnify and hold harmless Tenant from and against all reasonable expenses,legal costs, and attorneys’ fees, damages, claims, and liability arising from or connected with anyact or omission of Landlord in or about the Leased Premises, including without limitation, anydamage or injury to person or property. This indemnification shall not include any matter forwhich the Tenant is effectively protected against by insurance; nor shall it include any liabilitythat is attributable to the Tenant’s conduct or negligence. If Tenant shall, without fault, becomea party to litigation commenced by or against Landlord, then Landlord shall indemnify and holdTenant harmless. The indemnification provided by this Section shall include Tenant’s legal costsand fees in connection with any such claim, action, or proceeding.Section 9.8. Additional Improvements by Landlord.(a) Paving Improvements. Landlord shall make the following improvements to the leased premiseson or before June 30, 2008: increase the number of parking spaces from 18 to to a minimum of 75, tobe agreed upon at the time of construction. In addition, Landlord shall within six (6) months ofnotice by Tenant pave the exit/rail access area which is currently packed gravel.(b) Expansion Facility. Upon request of the Tenant made during the Initial Term (years onethrough 10) the Landlord will obtain design and construction bids for a building (“ExpansionFacility”) substantially similar to the demised premises to be located adjoining or adjacentthereto. The expansion facility will include same core building infrastructure such as loadinggates, sprinkler systems, parking spaces, office area, washrooms and the like.Upon instructions to proceed by the Tenant to the Landlord, the Landlord shall proceed toconstruct the Expansion Facility at Landlord’s sole cost and expanse. The terms of this Leaseshall apply to the Expansion Facility except the following cost structure shall apply to the rentfor the Expansion Facility: (1) In the event that the cost of construction is $3,000,000 or less,the rental rate for the Expansion Facility shall be $3.00 per square foot per year; (2) In theevent that the cost of construction is $3,000,000 to $4,000,000, the rental rate for the ExpansionFacility shall be no more than a twelve percent (12%) yield on the actual cost of construction.For example if the cost of construction is $4,000,000, annual rent shall be no more than $480,000.Tenant shall have the right to consult with Landlord and Architect, review and approve thedesign of the Expansion Facility.If Landlord cannot afford to make the expansion improvements, then Tenant shall have the rightto construct the expansion facility at its own cost and expense.
 
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In the event an Expansion Facility is constructed, whether by Landlord or Tenant after thefirst three (3) years of the Initial Term, the Initial Term shall not expire earlier than sevenyears from the date of completion. For example, if the Expansion Facility is completed during thethird year of this lease, the Initial Term shall still terminate on December 31, 2018; if theExpansion Facility is completed during the fourth year of this lease, the Initial Term shall stillterminate on December 31, 2019; if the Expansion Facility is completed during the tenth year ofthis lease, the initial term shall still terminate on December 31, 2025; Tenant shall retain itsright to exercise its renewal options referenced in 1.1 (e), with appropriate adjustments totermination dates.Section 9.9. No Waiver. No waiver by Landlord of any default by Tenant shall be effectiveunless in writing, nor operate as a waiver of any default or of the same default on a futureoccasion. Landlord’s acceptance of Basic Rent shall not be deemed a waiver of any precedingdefault.Section 9.10. Applicable Law and Constitution. This Lease shall be deemed an Indianacontract, and the laws of the State of Indiana shall govern the validity, performance, andenforcement of this Lease. The invalidity or unenforceability of any provision of this Lease shallnot affect or impair any other provision. The headings of the several articles and sectionscontained herein are for convenience only and do not define, limit, or construe the contents ofsuch articles or sections.Section 9.11. Notice. All notices hereunder shall be given in writing and shall be deemed tohave been duly given on the date delivered or refused, if delivered personally, or, if mailed byregistered or certified mail, postage prepaid, to the respective addresses specified in paragraphs(b) and (c) of Section 1.1.Section 9.12. Construction of Terms. Whenever the singular or plural number, or masculine,feminine, or neuter gender is used herein, it shall equally include the other, and the terms andprovisions of this instrument shall be construed accordingly.Section 9.13. Agreement Binding Upon Successors. The covenants, agreements, and obligationsherein contained shall extend to, bind, and inure to the benefit not only of the parties hereto,but to their respective successors and assigns. This provision does not modify the provisionsgoverning assignment found elsewhere in this Lease.Section 9.14. Venue. In the event of any litigation between the Landlord and the Tenant, theTenant hereby waives a trial by jury, and further agrees that the venue of any such action shall bein the County of Jackson, State of Indiana.Section 9.15. Severance Provision. Any provision thereof which may prove unenforceable shallnot affect the validity of any other provision of any other contract.Section 9.16. Complete Agreement. All negotiations, considerations, representations, andunderstandings, between the parties are incorporated herein, and may be modified or altered only byagreement in writing signed by the party to be bound.Section 9.17. Storage of Supplies Equipment and Materials. The Tenants shall not bepermitted to stack or store items outside of the structure which the subject of this LeaseAgreement. All storage of supplies, equipment and material shall be, as much as practicable,inside the building itself.
 
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Section 9.18. Environmental Compliance. The Tenant shall not discharge, emit, cause, allow,or threaten to discharge, emit, cause, or allow any contaminant or waste including any noxiousodor, either alone or in combination with contaminants from other sources, into the environment orinto any publiclyowned treatment works in any form which causes or would cause pollution which violates or wouldviolate rules, standards, or discharge or emission requirements adopted by any agency, federal orstate. In addition, the Tenant warrants that it shall comply with all federal and state statutes,administrative regulations, and local ordinances with regard to environmental compliance including,but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, asamended (“CERCLA”), the Resource Conservation and Recovery Act, as amended (“RCRA”), the ToxicSubstance Control Act (“TSCA”), any of the regulations thereunder, and the Indiana EnvironmentalCode, Title 13 of the Indiana Code. From and after the date of this Lease Agreement, the Tenantshall indemnify and hold the Landlord harmless from and against all claims, damages, losses,costs, expenses (including, without limitation, reasonable attorneys’ fees), actions andliabilities arising out of or as a proximate result of the treatment, storage, disposal or thearranging therefor, or the existence on the Real Estate, of any hazardous or toxic substance(including any constituent thereof) due to the act or negligence of the Tenant or the dischargeinto the environment by the Tenant of any hazardous or toxic substance (including any constituentthereof), including, without limitation, claims or natural resource damage, personal injury,property damage or response or remedial costs, whether at common law or under any domestic orforeign law, including, without limitation, the Comprehensive Environmental Response, Compensationand Liability Act (“CERCLA”), the Resource Conservation and Recovery Act (“RCRA”), the ToxicSubstance Control Act, and any state or federal statute or municipal ordinance creating liabilityfor the treatment, storage or disposal, or the arranging therefore, or the existence on property,of hazardous or toxic substances.To the knowledge of Landlord, no pollutants or contaminants or other toxic or hazardoussubstances, or petroleum products, including crude oil or any fraction thereof, including anysolid, liquid, gaseous or thermal irritant or contaminant such as smoke, vapor, soot, fumes, acids,alkalis, chemicals or waste regulated by any local, state or federal agency, authority orgovernmental unit, statute, law, ordinance or regulation (including materials to be recycled,reconditioned or reclaimed) collectively the “Substances”) have been discharged, dispersed,released, stored, treated, generated, disposed of or allowed to escape on or about the building orthe Leased Premises, or in or about the property of which the building is a part. Further,Landlord represents and warrants to Tenant that (I) no asbestos or asbestos-containing materialshave been installed, used incorporated into or disposed of on the Leased Premises; (ii) nopolychlorinated biphenyls (“PCBs”) are located on or in the building in the form of electricaltransformers, fluorescent light fixtures with ballasts, cooling oils or any other device or form;and (iii) no investigation, administrative order, consent order or agreement, litigation orsettlement with respect to Substances is proposed, threatened, anticipated or in existence withrespect to the building, or in or about the property of which the building is a part.Landlord agrees to defend, indemnify and hold harmless Tenant, its directors, officers,employees, agents, contractors, subcontractors, licensees, invitees, successors and assigns fromand against any and all claims, demands, judgments, damages, actions, causes of action, injuries,administrative orders, consent agreements and orders, liabilities, penalties, costs and expenses fany kind whatsoever, including claims arising out of loss of life, injury to persons, property orbusiness or damages to natural resources in connection with the activities of Landlord or partiesin a contractual relationship with Landlord, and which (I) arises out of the actual, alleged orthreatened discharge, dispersal, release, storage, treatment, generation, disposal or escape ofSubstances in the building or in or about the property of which the building is a part; (ii)actually or allegedly arises out of the use, specification or inclusion of any product, material orprocess containing chemicals, the failure to detect the existence or proportion of chemicals in thesoil, air, surface water or ground water or the performance or failure to perform the abatement ofany pollution source or the replacement or removal of any soil, water, surface water or groundwater containing chemicals; or (iii) arises out of any duty to pay for the cleanup or removal ofany Substance or material from the building or the property upon which the same is located, underany federal, state or local laws.
 
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Section 9.19. Subrogation. Anything to the contrary in this Lease notwithstanding, neitherparty, nor its officers, directors, employees, agents or invitees, shall be liable to the otherparty or to any insurance company (by way of subrogation or otherwise) insuring the other party forany loss or damage to any building, structure or other tangible property, when such loss is causedby any of the perils which are or could be insured against under a standard policy of fullreplacement cost insurance providing coverage at lease as broad as the Insurance Offices Causes ofLoss, “Special Form”, even though such loss or damage might have been occasioned by the negligenceof such party, its agents or employees (this clause shall not apply, however, to any damage causedby intentionally wrongful actions or omissions).9.20 Dispute Resolution. In the event of a dispute between the Landlord and Tenant regardingany provision of this lease, the parties agree to the following dispute resolution procedure: (a)the parties will first try to resolve their dispute by mediation pursuant to Indiana rules of courtgoverning alternative dispute resolution; (b) in the event mediation fails, the parties shallsubmit their dispute to arbitration pursuant to the Indiana Arbitration Act as amended from time totime. Each party shall bear their own costs of mediation or arbitration.IN WITNESS WHEREOF, Whittymore, LLC, Landlord, and Cereplast, Inc., Tenant, each in thepresence of the undersigned witnesses, have executed this Lease Agreement on the dates belowindicated, but effective as of the date of execution of the last party to sign this document.
 
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   **LANDLORD**     Whittymore, LLC     /s/ Dillard Whittymore III     Dillard Whittymore III, Managing Member  Dated: 11/29, 2007     **TENANT**       Cereplast, Inc       By: /s/ Frederic Scheer         Frederic Scheer, CEO       By:            (Printed) Dated: November 29, 2007This instrument prepared by     Jeffrey J. Lorenzo, Esq. and David W. Paugh, Esq.Attorney at Law   Attorney at Law208 West Second Street   308 West Second StreetSeymour, IN 47274   Seymour, IN 47274(812) 524-9000   (812) 522-4109
 
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**Exhibit A**Legal description.
 
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**DESCRIPTION OF PARCEL FROM SEYMOUR INDUSTRIAL CORPORATION TO FOURTH STREET LEASING****APART OF THE SOUTH HALF OF SECTION 9, TOWNSHIP 6 NORTH, RANGE 6 EAST,JACKSON COUNTY,INDIANA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:****COMMENCING AT THE SOUTHWEST CORNER OF SECTION 9, TOWNSHIP 6 NORTH, RANGE 6 EAST;THENCE NORTH ALONG THE WEST LINE, 1,034.00 FEET TO THE INDIAN BOUNDARY LINE; THENCEALONG THE INDIAN BOUNDARY LINE, NORTH 56 DEGREES 10 MINUTES 00 SECONDSEAST, 1,184.14 FEET TO THE CENTERLINE OF OLD VERNON TO BEDFORD ROAD, (THE ABOVE PORTION OF THISDESCRIPTION BEGINNING WITH THE WORDS “COMMENCING AT...” IS QUOTED FROM DEED RECORD 235,PAGE 501, AS FOUND RECORDED IN THE OFFICE OF THE RECORDER OF JACKSON COUNTY, INDIANA;THENCE SOUTH 67 DEGREES 06 MINUTES 01 SECONDS EAST ALONG THE APPROXIMATE CENTER LINE OF COUNTYROAD 650 NORTH, A DISTANCE OF 85.00 FEET TO A P.K. NAIL, FOUND IN PLACE: THENCE CONTINUING SOUTH67 DEGREES 06 MINUTES 01 SECONDS EAST ALONG THE APPROXIMATE CENTERLINE OF COUNTY ROAD 650 NORTH,A DISTANCE OF 342.59 FEET TO A P.K. NAIL, FOUND IN PLACE: THENCE SOUTH 68 DEGREES 55 MINUTES 20SECONDS EAST ALONG THE APPROXIMATE CENTER LINE OF COUNTY ROAD 650 NORTH. A DISTANCE OF 504.40FEET TO A P.K. NAIL, PLACED THIS SURVEY (THE AFORMENTIONED WORDSBEGINNING WITH **“**COMMENCING AT...”ARE COPIED DIRECTLY FROM DEED RECORD 246, PAGES 938-940) AT THE SOUTHWEST CORNER OF THE PARCELDESCRIBED IN DEED RECORD 246, PAGES 938-940; THENCE ALONG THE SOUTH LINE OF SAID PARCEL THEFOLLOWING THREE COURSES, SOUTH 68 DEGREES 19 MINUTES 08 SECONDS EAST 440.73 FEET TO A FOUND P.K.NAIL; THENCE SOUTH 69 DEGREES 39 MINUTES 11 SECONDS EAST 214.53 FEET TO A SET P.K. NAIL; THENCESOUTH 68 DEGREES 26 MINUTES 56 SECONDS EAST 212.78 FEET TO A SET P.K. NAIL; THENCE NORTH 00 DEGREES22 MINUTES 09 SECONDS EAST 32.17 FEET TO A SET 5/8” CAPPED IRON PIN AT THE POINT OF BEGINNING;THENCE CONTINUING NORTH 00 DEGREES 22 MINUTES 09 SECONDS EAST 786.03 FEET TO A SET 5/8” CAPPEDIRON PIN ON THE NORTH LINE OF THE PARCEL DESCRIBED IN DEED RECORD 246, PAGES 938-940; THENCE ALONG THENORTH AND EAST LINES OF SAID PARCEL THE FOLLOWING THREE COURSES, SOUTH 81 DEGREES 42 MINUTES 42 SECONDSEAST 416.89 FEET TO A FOUND 5/8” IRON PIN; THENCE SOUTH 68 DEGREES 48 MINUTES 19 SECONDS EAST 184.58 FEETTO A FOUND 5/8” IRON PIN; THENCE SOUTH 00 DEGREES 22 MINUTES 09SECONDS WEST 917.04 FEET TO A SET 5/8”CAPPED IRON PIN; THENCE NORTH 61 DEGREES 23 MINUTES 04 SECONDS WEST 94.52 FEET TO A SET 5/8” CAPPEDIRON PIN; THENCE NORTH 67 DEGREES 53 MINUTES 19 SECONDS WEST 350.42 FEET TO A SET 5/8” CAPPED IRON PIN;THENCE NORTH 68 DEGREES 26 MINUTES 56 SECONDS WEST 237.28 FEET TO THE POINT OF BEGINNING, CONTAINING 12.450ACRES, MORE OR LESS, SUBJECT TO THE RIGHT-OF-WAY FOR AN ELECTRIC TRANSMISSION LINE, AND ALL OTHER LEGALLYESTABLISHED RIGHTS-OF-WAY AND EASEMENTS.**
 
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Exhibit BArchitectural drawings provided by Landlord.
 
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