ncoatsb2a1ex10-14.htm


    
      

      

    

    
      Exhibit
        10.14



    LEASE
      AGREEMENT

     

    THIS
      LEASE AGREEMENT (this "Lease") entered into this 21st day of February, 2006,
      by
      and between MEBANE WAREHOUSE, LLC, a North Carolina limited liability company,
      herein called "Mebane", and HIGH PERFORMANCE COATINGS, INC., a corporation
      organized and existing under the laws of the State of Oklahoma, herein called
      "HPC".

    


    RECITALS:

    


    Mebane
      is
      the owner of a certain tract of real estate (which is more particularly
      described below) which Mebane desires to lease to HPC and HPC desires to lease
      from Mebane.

    


    NOW,
      THEREFORE, in consideration of the rental to be paid and the mutual covenants
      contained herein, the parties agree as follows:

    


    


    ARTICLE
      I

    DEFINITIONS
      AND ATTACHMENTS

    


    
      	
              Section
                1.1

            	
              Definitions.

            


    

    


    As
      used
      herein, the term:

    


    
      	
               

            	
              A.

            	
              "Premises"
                means that certain lot or parcel of land located at 7237 Pace Drive,
                Burlington, Guilford County, North Carolina and being more particularly
                described on Exhibit A attached hereto and incorporated herein by
                reference.

            


    

    


    
      	
               

            	
              B.

            	
              "Term"
                means the period of time beginning on the Commencement Date and ending
                on
                the Termination Date.

            


    

    


    
      	
            	
              C.

            	
              "Commencement
                Date" means April 1, 2006.

            


    

    


    
      	
               

            	
              D.

            	
              "Initial
                Term" means the period of time commencing on the Commencement Date
                and
                Terminating on March 31, 2011.

            


    

    


    
      	
            	
              E.

            	
               "Extended
                Term" means one period of five (5) consecutive Lease Years commencing
                on
                April 1, 2011 and terminating on March 31,
                2016,

            


    

    


    
      	
               

            	
              F.

            	
              "Termination
                Date" means March 31, 2011 unless sooner terminated in accordance
                with
                this Lease or unless extended in accordance with Section 5.1.2 of
                this
                Lease.

            


    

    


     

    


    
      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

    

    


    
      	
            	
              G.

            	
              "Lease
                Year" means a period of twelve (12) consecutive full calendar months.
                The
                first Lease Year shall begin on April 1, 2006. Each succeeding Lease
                Year
                shall commence upon the annual anniversary date of the first day
                of the
                first Lease Year.

            


    

    


    
      	
            	
              H.

            	
              "Base
                Monthly Rental-Initial Term" shall mean (1) for the first Lease Year
                of
                the Initial Term, that sum determined by multiplying Three Dollars
                and
                60/100 ($3.60) times the Rentable Square Feet-Building and dividing
                the
                result thus obtained by twelve (12) and (2) for the second through
                fifth
                Lease Years of the Initial Term, that sum determined by multiplying
                Three
                Dollars and 75/100 ($3.75) times the Rentable Square Feet-Building
                and
                dividing the result thus obtained by twelve
                (12).

            


    

    


    
      	
            	
              I.

            	
              "Base
                Monthly Rental-Extended Term" shall mean that sum determined by
                multiplying Four Dollars and 12.5/100 ($4.125) times the Rentable
                Square
                Feet-Building and dividing the result thus obtained by twelve
                (12).

            


    

    


    
      	
            	
              J.

            	
              "Rentable
                Square Feet-Building" shall mean the square feet comprising the building
                on the Premises which is estimated at fifty-four thousand, four hundred
                ninety (54,490) square feet involving office space and manufacturing
                space
                excluding the covered shed on the Premises. On or before May 1, 2006,
                Mebane and HPC shall jointly participate in the measurement of the
                building to determine the Rentable Square Feet-Building comprising
                the
                building. All measurements shall be made from the outside walls of
                the
                building, without deduction for any interior columns, stairs, equipment
                or
                any other interior construction. In the event of a dispute as to
                the
                determination of such square footage, such dispute shall be submitted
                to
                arbitration pursuant to Section 16.9 of this Lease. Pending the final
                determination of the square footage, the rental shall be based and
                payable
                on the estimated square footage set forth herein. The final determination
                of the square feet shall be retroactive to the Commencement Date
                in
                computing rental payable hereunder and adjustment between Mebane
                and HPC
                shall be due with the next regularly scheduled payment of monthly
                rental
                hereunder.

            


    

    


    
      	
            	
              K.

            	
              "Rentable
                Square Feet-Shed" shall mean the square feet comprising the shed
                on the
                Premises which is estimated at eight thousand four hundred (8,400)
                square
                feet. On or before May 1, 2006, Mebane and HPC shall jointly participate
                in the measurement of the Shed to determine the Rentable Square Feet-Shed
                comprising the Shed. All measurements shall be made from the outside
                walls
                of the Shed, without deduction for any interior columns, stairs,
                equipment
                or any other interior construction. In the event of a dispute as
                to the
                determination of such square footage, such dispute shall be submitted
                to
                arbitration pursuant to Section 16.9 of this Lease. Pending the final
                determination of the square footage, the rental shall be based and
                payable
                on the estimated square footage set forth herein. The final determination
                of the square feet shall be retroactive to the Commencement Date
                in
                computing rental payable hereunder and adjustment between Mebane
                and HPC
                shall be due with the next regularly scheduled payment of monthly
                rental
                hereunder.

            


    

    


     

    


    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              L.

            	
              "Shed"
                means the covered shed on the Premises consisting of an estimated
                eight
                thousand four hundred (8,400) square
                feet.

            


    

    


    
      	
               

            	
              M.

            	
              "Billboard"
                shall mean the two sided billboard located upon the
                Premises.

            


    

    


    
      	
               

            	
              N.

            	
              "Guaranty"
                shall mean a Guaranty of Lease in the form of Exhibit B attached
                hereto to
                be executed by NanoCoat, Inc. a Delaware corporation and the parent
                of
                HPC.

            


    

    


    
      	
               

            	
              O.

            	
              "Guarantor"
                shall mean NanoCoat, Inc, a Delaware
                corporation.

            


    

    


    


    ARTICLE
      II 

    PREMISES

    


    Mebane
      hereby leases to HPC and HPC hereby rents from Mebane the Premises including
      the
      building, the Shed and the Billboard..

    


    


    ARTICLE
      III

    TENANT
      PLANT BUILD-OUT ALLOWANCE AND IMPROVEMENTS

    


    


    Section
      3.1       Tenant's Build-Out.
      Mebane and HPC acknowledge that HPC will need to have improvements ("Tenant's
      Build-Out") made to the Premises such as (a) build out of plant/industrial
      production space including electrical service and HVAC at a cost projected
      by
      HPC of Two Hundred Thousand Dollars ($200,000) and (b) office space
      refurbishment at a cost projected by HPC of Thirty Thousand Dollars ($30,000)
      and HPC may need improvements (the "Additional Improvements") such as sprinklers
      and additional parking spaces, paving and other improvements. The Additional
      Improvements are also included within the term "Tenant's Build-Out". HPC shall
      be responsible for the cost of the Tenant's Build-Out as set forth in Section
      3.4 hereof.

    


    
      
        
          
          

        

        
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    Section
      3.2       Plans and
      Specifications. The Tenant's Build-Out shall be performed in accordance with
      plans (the "Tenant's Plans") prepared by an independent architectural firm
      engaged by HPC and reasonably satisfactory to Mebane. The cost of the
      preparation of the Tenant's Plans shall be paid by Mebane and included in the
      Build-Out Cost to be reimbursed by HPC to Mebane as set forth in Section 3.4
      hereof.

    


    Section
      3.3       Construction. Mebane
      shall cause the Tenant's Build-Out to be constructed in accordance with the
      Tenant's Plans and in a commercially reasonable manner and a commercially
      reasonable time period. Every commercially reasonable effort will be made to
      accommodate HPC's time schedule.

    


    Section
      3.4       Reimbursement by HPC to Mebane of
      Build-Out Costs-Amortization. The costs and expenses (the "Build-Out Costs)
      incurred by Mebane for the Tenant's Build-Out shall be repaid by HPC to Mebane
      upon the terms set forth herein. The parties may agree to terms that are more
      administratively convenient for the parties, but are of economic equivalence
      to
      both parties.

    


    For
      the
      purpose of calculating the amount payable each month and the residual payment
      at
      any particular time, the Build-Out Costs incurred by Mebane during any
      particular month shall be treated as being a sum of money loaned (a "Loan")
      to
      HPC as of the first day of the following month (a "Loan Date") and each such
      Loan shall be treated as a separate loan amortizable in equal monthly
      installments on the first day of each month commencing with the Loan Date over
      the remainder of the Initial Term (or if incurred during the Extended Term,
      over
      the remainder of the Extended Term). Notwithstanding the foregoing, the first
      Loan Date may not be earlier than April 1, 2006.

    


    Each
      Loan
      shall bear interest at the Interest Accrual Rate on and after the Loan Date.
      The
      "Interest Accrual Rate" shall be equal to the Wall Street Prime plus one hundred
      basis points with changes in the Interest Accrual Rate to occur on the same
      date
      that the Wall Street Prime changes.

    


    "Wall
      Street Prime" shall mean, as of a particular date, the prime rate of interest
      as
      published on that date in The Wall Street Journal, and generally defined
      therein as "the base rate on corporate loans posted by at least 75% of the
      nation's largest banks". If The Wall Street Journal is not published on a
      date for which the Prime Rate must be determined, the Prime Rate shall be the
      Prime Rate published in The Wall Street Journal on the nearest-preceding
      date on which The Wall Street Journal, was published or if the Prime Rate
      is not determinable in accordance with the foregoing provisions, the Prime
      Rate
      shall be the prime commercial lending rate of any federally chartered bank
      as
      selected by Mebane.

    


    The
      monthly amortization and payment amount shall be computed based on the Interest
      Accrual Rate in effect as of the Loan Date, but the unpaid portion from time
      to
      time shall be computed based upon any changes in the Interest Accrual Rate.
      Additional monthly payments may be demanded by Mebane to prevent negative
      amortization. At the earlier of (i) the expiration of the Initial Term,
      if such Loan Date occurs during the Initial Term or the expiration of the
      Extended Term, if such Loan Date occurs during the Extended Term; (ii) the
      termination of this Lease or (iii) the Closing of a purchase and sale
      transaction between Mebane and HPC pursuant to Section 4.9 hereof, the unpaid
      balance of each Loan together with accrued interest thereon shall be immediately
      due and payable.

    


    
      
        
          
          

        

        
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    ARTICLE
      IV

    ADDITIONAL
      TERMS

    


    


    Section
      4.1       Storage of Inventory.
      Upon both the execution of this Lease and the Guaranty, HPC may ship inventory
      to be stored in the building on the Premises; provided, that HPC shall bear
      all
      risk of loss with respect thereto and HPC shall name Mebane as a co-insured
      on
      its fire and casualty insurance policy with respect to such inventory or cause
      an endorsement to be issued by its insurer in favor of Mebane waiving all rights
      of subrogation against Mebane.

    


    Section
      4.2       Preparation for
      Occupancy. Within thirty (30) days after the both the execution of this
      Lease and the Guaranty, Mebane shall remove from the building any inventory,
      equipment and vehicles that would be unrelated to HPC's operations and the
      building shall be cleaned to facilitate the start of office space and plant
      operations build­out as described in Article III hereof.

    


    Section
      4.3       Outside Storage. While
      HPC does not presently contemplate the need for outside storage, such outside
      storage will not be prohibited by Mebane if allowed by applicable
      law.

    


    Section
      4.4       No Security Deposit. No
      security deposit is being required of HPC by Mebane. HPC shall pay the first
      month's rental with the execution of this Lease.

    


    Section
      4.5       Site Plan. Mebane
      represents to HPC that the building and Shed on the Premises is currently in
      compliance with code based upon its historical usage. In the event that, due
      to
      HPC's usage, the building and the Shed are brought into non­compliance with
      the code, then, as part of Tenant's Build-Out and in accordance with Tenant's
      Plans, the building and Shed shall be brought into compliance by Mebane in
      accordance with the procedures set forth in Article III hereof and subject
      to
      the reimbursement of Mebane by HPC as set forth in said Article
      III..

    


    Section
      4.6       Purchase of Premises-Equipment,
      Cranes, etc. If the Premises are purchased pursuant to Section 4.9 hereof,
      all electrical equipment, cranes, compressed air lines and all mounted equipment
      shall be included in the assets sold and in the purchase price for the Premises
      as set forth in said Section 4.9.

    


    Section
      4.7       Billboard
      Rental.
      Mebane
      hereby leases the Billboard (both sides) to HPC and HPC hereby leases the
      Billboard (both sides) from Mebane. The Billboard shall be treated as a
      part of the Premises and subject to all of the other terms and provisions of
      this Lease. HPC shall pay to Mebane rental for the Billboard at the same time
      that rental is payable for the Premises pursuant to Article VI hereof and in
      the
      following monthly amounts: (1) Two Thousand Five Hundred Dollars ($2,500) per
      month for the first Lease Year; (2) Three Thousand Dollars ($3,000) per month
      for Lease Years two through five of the Initial Term and (3) Three Thousand
      Three Hundred Dollars ($3,300) per month for each Lease Year during the Extended
      Term.

    


    


    
      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

    

    


    Section
      4.8       Cap on Expenses for First
      Lease Year. HPC desires a cap with respect to certain expenses for the first
      Lease Year; specifically the following: Article VIII, the first sentence thereof
      (relating to property taxes on the Premises), costs and expenses for lawn care
      (which shall be performed by Mebane at prices which are competitve in the
      locality of the Premises and billed to HPC monthly) and Section 10.2 (d)
      (relating to fire and casualty insurance, but only that portion of such premiums
      attributable to Mebane's improvements on the Premises) (collectively, the
      "Capped Expenses"). In the event that the Capped Expenses for the first Lease
      Year exceed the sum of Fifty Thousand Dollars ($50,000) (the "Cap"), Mebane,
      and
      not HPC, shall be responsible for that portion of such Capped Expenses in excess
      of the Cap. In addition to the cap on expenses set forth in this Section 4.8,
      in
      the event that, during the Term of this Lease and pursuant to the terms hereof,
      Mebane performs any services or furnishes any goods to HPC, including, without
      limitation, the Tenant's Build-Out described in Section 3.1 hereof, such
      services and/or goods shall be furnished or performed, as the case may be,
      at
      rates and/or prices which are competitive in the locality of the
      Premises.

    


    
      	
              Section
                4.9

            	
              Option
                to Purchase Premises With or Without the
                Billboard.

            


    

    


    Section
      4.9.1    Option to Purchase. Provided that HPC shall
      not then be in default under this Lease, HPC shall have two options to purchase
      the Premises (the "Purchase Options"). The first Purchase Option shall be
      exercisable by HPC sending a notice of exercise (the "Option Exercise Notice")
      to Mebane on or before August 1, 2006 specifying the exercise of the Option
      and
      the Closing Date, which date must occur on or before October 1, 2006. The second
      Purchase Option shall be exercisable by HPC sending a notice of exercise (the
      "Option Exercise Notice") to Mebane on or before February 1, 2007 specifying
      the
      exercise of the Option and the Closing Date, which date must occur on or before
      April 1, 2007.

    


    The
      Option Exercise Notice must state whether or not it is exercised as to the
      Billboard. An exercise of the first Purchase Option as to the Premises exclusive
      of the Billboard shall preclude an exercise as to the Billboard by the exercise
      of the second Purchase Option.

    


    The
      exercise of the Purchase Option shall result in a binding contract of purchase
      and sale between the parties upon the terms and conditions set forth
      herein.

    


    Section
      4.9.2.  
Purchase
      Price. If the Closing
      occurs on or before October 1, 2006, the purchase price for the Premises
      exclusive of the Billboard shall be Two Million Seven Hundred Fifty Thousand
      Dollars ($2,750,000) and in the event that the Closing occurs after October
      1,
      2006, but on or before April 1, 2007, the purchase price for
      the Premises
      exclusive of the Billboard shall be Two Million Eight Hundred Thousand Dollars
      ($2,800,000). In the event that the Purchase Option is exercised as to the
      Billboard, the purchase price shall be increased by Three Hundred Thousand
      Dollars ($300,000).

    


    


    
      
        
          
          

        

        
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    Section
      4.9.3    Billboard Lease. In the event that the
      Purchase Option is not exercised as to the Billboard, as a condition precedent
      to the effectiveness of the exercise of such Purchase Option, HPC and Mebane
      shall agree upon the terms and conditions pursuant to which Mebane shall lease
      back the portion of the Premises upon which the Billboard is located together
      with such other rights including, without limitation, ingress and egress, for
      a
      period of ninety-nine (99) years for the total sum of $1.00 payable at Closing
      such that Mebane, in its reasonable judgment, shall have and may enjoy, all
      economic benefits derived or derivable from said Billboard (including, without
      limitation, the right to sell such rights and Billboard Lease) and such lease
      (the "Billboard Lease") must be executed and delivered at the Closing in
      recordable form and shall be so recorded and superior to any liens of any lender
      to HPC.

    


    Section
      4.9.4    Closing.

    


    (a)        At
      the Closing, HPC shall pay to the Mebane by certified check or an official
      bank
      check the purchase price and the amount of the unamortized Loans pursuant to
      Section 3.4 hereof The Closing shall occur on the date specified in the Option
      Exercise Notice at a place designated by HPC in writing to Mebane not less
      than
      two (2) business days prior to the Closing, which place shall be within fifty
      (50) miles of the Premises

    


    (b)        At
      the Closing, Mebane shall convey to HPC good, marketable and insurable fee
      simple title to the Premises by a general warranty deed in form and content
      reasonably satisfactory to HPC's counsel conveying to HPC a good, indefeasible
      fee simple, marketable and insurable title to the Premises, free and clear
      of
      all liens, encumbrances, claims, rights of way, easements, leases, restrictions
      and restrictive covenants (i) except rights of way of streets; public utility
      easements and rights of way in customary form; zoning and building laws or
      ordinances and other restrictions imposed by governmental authorities and
      matters of survey and (ii) except, and without limiting the generality of clause
      (i) above, those matters set forth on Exhibit A attached hereto and on that
      Deed
      of Easement attached hereto immediately following Exhibit A.

    


    (c)        Mebane
      and HPC shall execute any and all documents which may be necessary to effectuate
      such Closing and the transfer of title contemplated hereunder.

    (d)        Mebane
      and HPC shall execute and deliver the Billboard Lease,
      if
      applicable.

    


    (e)        Mebane
      and HPC shall agree upon, and
      execute and deliver, an asset allocation agreement allocating the purchase
      price
      pursuant to Section 1060 of the Internal Revenue Code of 1986, as amended,
      among
      the building, or components thereof, equipment (described in Section 4.6 hereof)
      and the land and each party agrees
      not to take
      any position inconsistent with such allocation on their respective tax
      returns.

    


    


    
      
        
          
          

        

        
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    ARTICLE
      V

    TERM

    


    Section
      5.1       Term.

    


    5.1.1 
         Initial Term. The Initial Term of this Lease is as set
      forth in Section 1.1 of this Lease.

    


    5.1.2   
      Extended Term. Unless the Term of this Lease has been previously
      terminated as set forth herein, HPC shall have an option to extend the Term
      of
      this Lease for the Extended Term by giving written notice of the exercise of
      its
      option to extend the Term (the "Extension Exercise Notice") to Mebane on or
      before October 1, 2010.

    


    Section
      5.2       Termination. Subject to prior
      termination or extension as provided in this Lease Agreement, this Lease shall
      end on the Termination Date without the necessity of any notice from either
      party to the other.

    


    Section
      5.3       Display of Signs. For a
      period of six (6) months prior to the expiration of the Term, Mebane shall
      have
      the right to display on the exterior of the Premises customary "For Rent" or
      "For Sale" signs, and during such period Mebane shall have the right to show
      the
      Premises to prospective tenants or purchasers during normal business
      hours.

    


    Section
      5.4       Holding Over. If HPC
      shall be in possession of the Premises after the Termination Date, in the
      absence of any agreement extending the Term of this Lease, the tenancy under
      this Lease shall become one from month to month, terminable by either party
      upon
      thirty (30) days written notice, at a monthly rental equal to one hundred and
      thirty percent (13 0%) of the amount of the monthly rental which is payable
      during the last month of the Term. In addition, HPC shall also pay all other
      charges payable under the terms of this Lease, on a pro rata basis, for each
      month during which HPC remains in possession of the Premises. Such
      month-to-month tenancy shall be further subject to all other terms and
      conditions of this Lease Agreement.

    


    


    ARTICLE
      VI 

    RENTALS

    


    H
      PC
      agrees to pay to Mebane as rental ("Rental") for the Premises (other than the
      Billboard), without the necessity for previous demand and without offset or
      deduction, the following:

    


    (a)       
      Initial Term. The monthly rental for the Initial Term shall be equal to
      the Base Monthly Rental-Initial Term; provided, that (i) for the first month
      of
      the Initial Term, the monthly rental shall be fifty percent (50%) of the Base
      Monthly Rental-Initial Term specified for the first Lease Year thereof; (ii)
      for
      the second month of the Initial Term, the monthly rental shall be sixty percent
      (60%) of the Base Monthly Rental-Initial Term specified for the first Lease
      Year
      thereof; (iii) for the third month of the Initial Term, the monthly rental
      shall
      be seventy percent (70%) of the Base Monthly Rental-Initial Term specified
      for
      the first Lease Year thereof; (iv) for the fourth month of the Initial Term,
      the
      monthly rental shall be eighty percent (80%) of the Base Monthly Rental-Initial
      Term specified for the first Lease Year thereof and (v) for the fifth month
      of
      the Initial Term, the monthly rental shall be ninety percent (90%) of the Base
      Monthly Rental-Initial Term specified for the first Lease Year
      thereof.

    


    


    
      
        
          
          

        

        
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    (b)      
       Extended Term. The monthly rental for the Extended Term shall be
      equal to the Base Monthly Rental-Extended Term.

    


    (c)      
       Rental for Shed. There shall be no rental charged for the Shed for
      the first Lease Year. For the second through the fifth Lease Years, the Base
      Monthly Rental-Initial Term shall be increased by that sum determined by (a)
      multiplying the Rentable Square Feet-Shed by One Dollar ($1.00) and then
      dividing the resulting sum by (b) twelve (12). For each Lease Year during the
      Extended Term, the Base Monthly Rental-Extended Term shall be increased by
      that
      sum determined by (a) multiplying the Rentable Square Feet-Shed by Two Dollars
      ($2.00) and then dividing the resulting sum by (b) twelve (12).

    


    (d)       
      The monthly rental provided for herein shall be payable, in advance, on the
      first day of each calendar month during the Term.

    


    (e)      
       All additional sums, charges, or amounts to be paid by HPC to Mebane in
      accordance with the terms of this Lease are herein collectively referred to
      as
      "Additional Rental".

    


    


    ARTICLE
      VII

    USE
      OF
      PREMISES

    


    HPC
      shall
      make no use of the Premises which will interfere with or unreasonably disturb
      adjacent tenants or adjacent property owners. HPC shall not keep, use, nor
      sell
      anything prohibited by any policy of fire insurance covering the Premises,
      and
      shall comply with all requirements of the insurers applicable to the Premises
      necessary to keep in force the fire and liability insurance. HPC shall not
      use
      the Premises in any way so as to violate any governmental ordinance, law or
      regulation. HPC has advised Mebane that, in connection with the conduct of
      HPC's
      business, in the ordinary course thereof, HPC utilizes materials and chemicals
      that are Hazardous Substances (as defined in Article XIV hereof). HPC has
      furnished a list of these chemicals and materials to Mebane prior to the
      execution of this Lease and will furnish to Mebane a description of any new
      chemicals or materials prior to any usage thereof on the Premise. HPC shall,
      at
      all times purchase, ship, use, handle, dispose, store and otherwise deal with
      said materials and chemicals in compliance with all applicable federal, state
      and local laws, rules and regulations and any non-compliance by HPC shall be
      a
      material breach of the terms of this Lease.

    


     

    


    
      
        
          
          

        

        
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    ARTICLE
      VIII

    TAXES

    


    Mebane
      will pay and discharge during the period in which the same shall be payable
      without penalty, (i) all real estate taxes and personal property taxes assessed
      against the Premises (collectively, the "Taxes"); provided, that HPC, and not
      Mebane, shall pay all property taxes which are assessed against HPC with respect
      to, or allocable to, HPC's personal property, including trade fixtures, situate
      upon the Premises; (ii) water charges, sewer charges, assessments (collectively,
      the "Assessments") including, but not limited to, Assessments for public
      improvements or benefits, and all other governmental Taxes or Assessments of
      every kind and nature whatsoever which arise after the Commencement Date,
      whether or not now customary or within the contemplation of the parties hereto
      and regardless of whether the same shall be extraordinary or ordinary, general
      or special, unforeseen or foreseen (each such Tax and Assessment which Mebane
      is
      obligated to pay hereunder being herein sometimes termed "Additional
      Charges").

    


    HPC
      shall
      reimburse Mebane for Taxes and Assessments paid by Mebane within ten (10)
      business days after demand therefor. Taxes and Assessments shall be prorated
      between the parties for the Lease Year in which the Commencement Date occurs
      and
      for the Lease Year in which the Termination Date occurs.

    


    Nothing
      herein contained shall require HPC to pay any municipal, state or federal income
      taxes assessed against Mebane, or any municipal, state or federal income taxes
      owed by Mebane, whether or not such taxes may be measured by, levied upon,
      arise
      out of or be a lien upon the Premises.

     

    ARTICLE
      IX

    REPAIRS.
      IMPROVEMENTS AND FIXTURES

     

    Section
      9.1       Mebane's Repair and
      Maintenance Obligation. Mebane shall maintain the superstructure, roof,
      exterior walls of and underground utilities serving the Premises in good
      working order, repair and condition, ordinary wear and tear
      excepted.

     

    Section
      9.2       HPC's Repair and Maintenance
      Obligation HPC shall keep the Premises in good working order, repair and
      condition, ordinary wear and tear excepted. HPC's obligations
      hereunder shall include, but not be limited to, trade fixtures and equipment,
      ceilings, heating and air conditioning systems, internal walls, store front,
      paving, entrances, signs,
      interior decorations, floor coverings, wall coverings, entry and interior doors,
      exterior and interior glass, and plumbing and light fixtures. To the extent
      that
      any expenses described
      in this Section 9.2 are for items included within the Tenant's Plans (described
      in Section 3.2 hereof), which plans are reasonably satisfactory to Mebane,
      the
      performance, payment
      and reimbursement obligations with respect thereto shall be as set forth in
      Article III hereof.

    


     

    


    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

    


    Section
      9.3       HPC's Improvements. HPC may
      make improvements to the Premises with the prior written consent of Mebane,
      which consent shall not be unreasonably withheld; provided, that Mebane causes
      such improvements to be made or such improvements are made by a contractor
      approved by Mebane

    


    Section
      9.4       Destruction of Premises.
      In the event of a partial damage to, or destruction of, the Premises during
      the
      Term of this Lease due to fire or any other casualty which is covered by any
      insurance policies maintained by or for Mebane, then upon receipt by Mebane
      of a
      commitment from Mebane's insurance company to tender to Mebane the insurance
      proceeds for such damage, Mebane shall forthwith repair the same, provided
      the
      repairs can be made within one hundred twenty (120) days. Any partial damage
      or
      destruction shall neither annul nor void this Lease. If the repairs cannot
      be
      made within the specified time, either party may terminate this Lease. Should
      the Premises be destroyed to the extent of fifty percent (50%) or more of the
      replacement cost thereof, this Lease may be terminated at the option of either
      Mebane or HPC. The determination as to percentage of replacement cost and time
      required for improvements shall be made by an independent firm of engineers
      and
      architects acceptable to Mebane and HPC, and shall be binding on both
      parties.

    


    Section
      9.5       Mechanic's Liens. In the
      event that any mechanic's or materialmen's liens shall at any time be filed
      against the Premises by reason of work, labor, services, or materials performed
      or furnished to HPC, HPC shall cause any such lien to be immediately discharged
      of record or bonded to the satisfaction of Mebane. Failure to do so within
      thirty (30) days of written notice from Mebane shall constitute an Event of
      Default.

    


    Section
      9.6       Trade Fixtures. Any and
      all trade fixtures hereafter placed on the Premises by HPC are and shall remain
      the property of HPC and may be removed from the Premises by HPC:, provided,
      that
      HPC shall repair any damage to the Premises caused by such removal.

     

    ARTICLE
      X

    INDEMNITY
      AND INSURANCE

    


    Section
      10.1     Indemnity.

    


    Section
      10.1.1  Indemnity by HPC,. HPC shall indemnify, hold harmless
      and defend Mebane from and against any and all claims, actions, damages,
      liability and expense, including, but not limited to, attorneys and other
      professional fees, in connection with loss of life, personal injury and/or
      damage to property arising from or out of the occupancy or use by HPC of the
      Premises or any part thereof occasioned wholly or in part by any act or omission
      of HPC, its officers, agents, contractors, employees, or invitees.

    


     

    


    
      
        
          
          

        

        
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    Section
      10.1.2. Indemnity by Mebane. Mebane shall indemnify, hold
      harmless and defend HPC from and against any and all claims, actions, damages,
      liability and expense, including, but not limited to, attorneys and other
      professional fees, in connection with loss of life, personal injury and/or
      damage to property (a "Loss") arising from or out of Mebane's performance of
      services or the provisions of goods to or for the Premises or its presence
      upon
      the Premises or any part thereof, which Loss is occasioned wholly or in part
      by
      any act or omission of Mebane, its officers, agents, contractors, employees,
      or
      invitees.

    


    Section
      10.2     HPC's Insurance. At all times during the
      Term of this Lease, HPC shall maintain in full force and effect:

    


    (a)       
      General comprehensive public liability insurance, including property damage,
      with respect to the Premises, with combined single limits liability coverage
      of
      at least One Million Dollars ($1,000,000);

    


    (b)      
      All-risks property and casualty insurance covering all of HPC's personal
      property located on the Premises and all leasehold improvements installed in
      the
      Premises by or on behalf of HPC;

    


    (c)       
      Worker's compensation insurance in such amounts as may be re
      wired
      bylaw; and

     

    (d)      
       fire and extended coverage insurance on the Premises with coverage equal
      to replacement cost of all improvements thereon, but subject to a deductible
      reasonably satisfactory to Mebane.

    


    Section
      10.3     Policy Requirements. All companies
      writing any insurance which HPC is required to carry and maintain or cause
      to be
      carried or maintained pursuant to Section 10.2, as well as the form of such
      insurance, shall at all times be subject to Mebane's approval, which approval
      shall not be unreasonably withheld, and any such company shall be licensed
      and
      authorized to do business in the State of North Carolina. The policy(s) required
      to be maintained hereunder by HPC shall name Mebane and Mebane's lender(s)
      as an
      additional insured with loss payable thereunder in accordance with Mebane's
      (or
      its lender(s) through a long form loss payee endorsement or other endorsement
      satisfactory to such lender(s)) and HPC's respective interests. The policy(s)
      shall also contain a valid provision or endorsement that any such policy may
      not
      be canceled, terminated, changed, or modified except after thirty (30) days
      written notice is given to Mebane (and/or Mebane's designee). HPC shall provide
      Mebane with a certificate evidencing such property and liability insurance
      promptly upon commencement of HPC's obligation to procure such policy(s). If
      HPC
      shall fail to perform any of its obligations under this Section 10.3 or under
      Section 10.2 above, Mebane may perform such obligations by procuring such
      policies and the costs of such procurement shall be deemed Additional Rental
      and
      shall be payable by HPC to Mebane upon Mebane's demand.

    


     

    


    
      
        
          
          

        

        
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    ARTICLE
      XI

    CONDEMNATION

    


    If
      all of
      the Premises, or such part thereof as will make the Premises unusable for HPC's
      business operations, should be taken under the power of eminent domain (or
      a
      conveyance in lieu thereof), then this Lease shall terminate as of the date
      possession is taken by the condemnor, and Rental shall be adjusted between
      Mebane and HPC as of such date. If only a portion of the Premises shall be
      taken
      and HPC can continue use of the remainder, then the Lease will not terminate,
      but Rental shall abate in a just and proportionate amount to the loss of use
      resulting from such taking. HPC shall have no right or claim to any part of
      any
      award made to or received by Mebane for any taking and no right or claim for
      any
      alleged value of the unexpired portion of this Lease; provided, however, that
      HPC shall not be prevented from making a claim against the condemning party
      (but
      not against Mebane) for any moving expenses, loss of profits, or taking of
      HPC's
      personal property (other than its leasehold interest) to which HPC may be
      entitled. Any such claim by HPC shall not diminish any award granted to
      Mebane.

    


    ARTICLE
      XII

    SUBORDINATION,
      ATTORNMENT AND NON-DISTURBANCE

    


    Section
      12.1     Subordination and Estoppel Certificates.
      HPC agrees that this Lease will be subordinate to any deed of trust now existing
      or hereafter executed by Mebane covering the Premises.

    


    Within
      ten (10) business days after the date of the execution of this Lease and upon
      any refinancing of the Premises, Mebane, HPC and Mebane's lender shall execute
      a
      Subordination, Non-Disturbance and Attornment Agreement (an "SD&A") pursuant
      to which this Lease will be subordinate to the lien of such lender's deed of
      trust and pursuant to which HPC shall agree to attorn to such lender as set
      forth in Section 12.3 hereof; provided, that such SD&A shall also contain a
      provision that, notwithstanding such foreclosure or deed in lieu of foreclosure,
      so long as no Event of Default has occurred by HPC under this Lease and has
      not
      been cured within the time periods set forth in Section 15.1 hereof, this Lease
      shall continue and HPC's possession of the Premise shall not be
      disturbed.

    


    HPC
      agrees to execute within fifteen (15) days of request therefor, and as often
      as
      requested, estoppel certificates setting forth the facts with respect to the
      date of occupancy, the Commencement and Termination Dates of this Lease, the
      amount of Rental due and the date to which Rental is paid, whether or not HPC
      has any defense or offsets to the enforcement of this Lease or knowledge of
      any
      default or breach by Mebane, and that this Lease is in full force and effect
      inclusive of all modifications and/or amendments, copies of which HPC shall
      attach to such estoppel certificate.

    


     

    


    
      
        
          
          

        

        
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    Section
      12.2     Modification For Mortgagee. If in
      connection with financing or refinancing of the Premises by Mebane, Mebane's
      lender shall request HPC to execute reasonable lease modifications as a
      condition to such financing or refinancing, HPC will not unreasonably withhold,
      delay or defer its consent thereto, provided that such modifications do not
      increase the obligations of HPC hereunder, extend or decrease the Term, or
      adversely affect to any substantial extent the leasehold interest created by
      this Lease Agreement.

    


    Section
      12.3     Attornment. If any person shall succeed
      to all or part of Mebane's interest in the Premises, whether by purchase,
      foreclosure, deed in lieu of foreclosure, power of sale, termination of lease,
      or otherwise, and HPC shall attorn to such successor-in-interest and shall
      execute an agreement in confirmation of such attornment as such successor in
      interest shall reasonably request.

     

    ARTICLE
      XIII

    ASSIGNMENT
      AND SUBLETTING

    


    Section
      13.1     Assignment or Subletting to Affiliates.
      HPC may assign this Lease or sublet the Premises, in whole or in part, to any
      Affiliate of HPC; provided, that, (i) in the case of an assignment, the assignee
      shall agree to be bound by all of the terms and provisions of this Lease; (ii)
      such assignment or subletting shall not release HPC or the Guarantor from their
      respective obligations under this Lease and the Guaranty and (iii) Mebane shall
      be notified of the assignment or subletting. For the purposes hereof, the term
      "Affiliate" has the meaning set forth in Rule 12b-2 under the Securities
      Exchange Act of 1934, as amended.

    


    Section
      13.2     Assignment or Subletting to Acquiring
      Party. HPC may assign this Lease or
      sublet
      the Premises, in whole or in part, to any person who acquires all of the assets
      and business of HPC as a going concern, as such business has historically been
      conducted by HPC at the Premises; provided, that, (i) in the case of an
      assignment, the assignee shall agree to be bound by all of the terms and
      provisions of this Lease; (ii) any such assignment or subletting shall not
      release HPC or the Guarantor from their respective obligations under this Lease
      and the Guaranty and (iii) Mebane shall be notified of the assignment or
      subletting.

    


    Section
      13.3     Assignment or Subletting With Consent.
      Any assignment or subletting which is not permitted under Section 13.1 or 13.2
      hereof shall only be made with the prior written consent of Mebane, which
      consent shall not be unreasonably withheld. An assignment prohibited hereunder
      shall include, without limitation, an assignment occurring by operation of
      law
      upon a merger, share exchange or business combination (unless permitted under
      Section 13.1 hereof).

    


     

    


    
      
        
          
          

        

        
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    Section
      13.4     Allocation of "Excess" Subletting
      Proceeds. In the event that a sublease of the Premises, or any portion
      thereof, which is permitted hereby, results in HPC receiving "Excess Rental",
      HPC shall pay one-half of such Excess Rental to Mebane as and when received.
      "Excess Rental" shall mean that sum paid by the subtenant which is in excess
      of
      the sum of (a) the rental paid by HPC to Mebane hereunder for such Premises,
      or
      portion thereof, plus (b) all fees and expenses incurred by HPC in connection
      with securing such subtenant including, without limitation, brokerage fees,
      legal expenses, marketing and advertising expenses and costs relating to
      renovating or constructing the Premises. The provisions of this Section 13.4
      shall not apply to a sublease permitted under Section 13.1 or Section 13.2
      hereof.

    


    Section
      13.5     Transfer in Bankruptcy. Mebane and HPC
      understand that, notwithstanding other provisions contained in this Lease,
      a
      trustee or debtor-in-possession under the Bankruptcy Code of the United States
      may have certain rights to assume or assign this Lease. Mebane and HPC further
      understand that in any event Mebane is entitled under the Bankruptcy Code to
      adequate assurances of future performance of the terms and provisions of this
      Lease. At a minimum, any proposed assignee must have demonstrated to Mebane's
      satisfaction a net worth (as defined in accordance with generally accepted
      accounting principles consistently applied) at least as great as the net worth
      of HPC on the date this Lease became effective. The financial condition and
      resources of HPC were a material inducement to Mebane in entering into this
      Lease.

    


    


    ARTICLE
      XIV

    ENVIRONMENTAL
      COMPLIANCE AND INDEMNITY

    


    HPC
      shall
      maintain and use the Premises in compliance with all Environmental Laws and
      shall indemnify and hold Mebane harmless from and against any and all
      Environmental Loss arising from or as a consequence of any requirement under any
      Environmental Law which requires the elimination, treatment or removal of any
      Hazardous Materials. The indemnification provisions set forth herein shall
      survive the expiration of the Term of this Lease and shall apply to events
      or
      occurrences during or after the Term due to acts or failures to act by HPC,
      its
      employees, agents and contractors prior to the expiration of the Term (including
      "releases" or "discharges" of Hazardous Substances prior to the expiration
      of
      the Term).

    


    For
      the
      purposes of this Article XIV, the following capitalized words shall have the
      meanings set forth below:

    


    
      	
               

            	
              (a)

            	
              "Environmental
                Laws" shall mean all federal, state and local environmental laws,
                standards, ordinances and regulations, including, but not limited
                to, the
                Comprehensive Environmental Response, Compensation and Liability
                Act, 42
                USC §9601 et. seq., the Emergency Planning and Community Right-to Know
                Act, 42 USC §11001 et. seq., the Resource Conservation and Recovery Act,
                42 USC §6901 et. seq., the Clean Air Act, 42 USC §7401 et. seq., the Toxic
                Substances Control Act, 15 USC §2601 et. seq., and the Federal Water
                Pollution Control Act, 33 USC §1251 et.
                seq.

            


    

    


    


    
      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

    

    


    
      	
               

            	
              (b)

            	
              "Hazardous
                Substances" shall mean oil, petroleum products, hazardous substances,
                hazardous waste, regulated substances, toxic substances, or hazardous
                air
                pollutants as defined or described by the Environmental
                Laws.

            


    

    


    
      	
               

            	
              (c)

            	
              "Environmental
                Loss" shall mean any and all damages, penalties, fines, claims, liens,
                suits, liabilities, costs (including clean up costs), judgments and
                expenses (including any attorneys', consultants' or experts' fees
                and
                expenses) of every kind and nature suffered by or asserted against
                Mebane
                as a result of HPC's failure to maintain the property in compliance
                with
                any Environmental Law or as a result of any requirement under any
                Environmental Law which requires the elimination, treatment or removal
                of
                any Hazardous Substances.

            


    

    


    


    ARTICLE
      XV

    DEFAULT

    


    Section
      15.1     "Event of Default" Defined. The
      happening of one or more of the following listed events (herein called "Events
      of Default") shall, in addition to other Events of Default set forth herein,
      constitute a default and a breach of this Lease Agreement:

    


    (a)      
       The failure of HPC to pay any rental within ten (10) days after the due
      date thereof and such failure is not cured within five (5) days after written
      notice is sent by Mebane to HPC; provided, that HPC shall not be entitled to
      such notice and may not avail itself of said five (5) day cure period on more
      than two (2) occasions during any period of twelve (12) consecutive months
      or
      the failure of HPC to pay any other sum due under this Lease Agreement within
      ten (10) days after written notice from Mebane.

    


    (b)       
      The failure of HPC to keep, perform or abide by any other term, condition,
      or
      covenant of this Lease for a period of thirty (30) days after written notice
      given by Mebane to HPC notifying HPC of such default.

    


    Section
      15.2     Remedies. Upon the happening of one or
      more of the Events of Default, Mebane may elect any of the following
      remedies:

    


    (a)      
       Mebane, with or without terminating this Lease, may reenter the Premises
      and correct or repair any condition which shall constitute a failure on HPC's
      part to keep or perform or abide by any term, condition, or covenant of this
      Lease. HPC shall reimburse and compensate Mebane as Additional Rental, within
      fifteen (15) days after delivery of any statement to HPC by Mebane, for any
      expenditures made by Mebane in making such corrections or repairs.

    


    


    
      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

    

    


    (b)       
      Mebane, with or without terminating this Lease, may demand in writing that
      HPC
      vacate the Premises. HPC shall vacate the Premises and remove all property
      on
      the Premises which belongs to HPC within thirty (30) days of receipt of such
      notice, and Mebane shall have the right to reenter and take possession of the
      Premises at any time following such thirty (30) day period.

    


    (c)       
      Mebane, with or without terminating this Lease, may relet the Premises or any
      part thereof for such time or times and at such rent or rents and upon such
      other terms and conditions as Mebane in its sole discretion may deem advisable.
      If this Lease shall have not been terminated, HPC shall continue to pay all
      rental and other sums due under this Lease up to and including the date of
      the
      beginning of payment of rent by any subsequent tenant of part or all of the
      Premises, and thereafter HPC shall pay monthly during the remainder of the
      Term
      the difference, if any, between the rent and other sums collected from any
      such
      subsequent tenant or tenants or and the rental and other sums specified in
      this
      Lease to be paid by HPC, but HPC shall not be entitled to receive any excess
      of
      any such rents and other sums collected over the rental and other sums specified
      herein.

     

    (d)      
       Mebane may terminate this Lease by giving written notice of termination to
      HPC and upon such termination, Mebane shall have and recover from HPC all
      damages Mebane may suffer by reason of such Event of Default.

    


    In
      the
      event of any reentry of the Premises by Mebane pursuant to any of the provisions
      of this Lease, HPC hereby waives all claims for damages which may be caused
      by
      such reentry by Mebane except such claims as arise from the negligence of
      Mebane; and HPC shall save Mebane harmless from any loss, costs (including
      reasonable attorneys fees) or damages suffered by Mebane by reason of such
      reentry. No such reentry shall be considered or construed to be a forcible
      entry.

    


    No
      course
      of dealing between Mebane and HPC, or any delay on the part of Mebane in
      exercising any rights Mebane may have under this Lease, shall operate as a
      waiver of any of the rights of Mebane hereunder. Nor shall any waiver of a
      prior
      default operate as a waiver of any subsequent default or defaults; and no
      express waiver shall affect any condition, covenant, rule or regulation other
      than the one specified in such waiver and that one only for the time and in
      the
      manner specifically stated.

    


    The
      exercise by Mebane of any one or more of the remedies provided in this Lease
      shall not prevent the subsequent exercise by Mebane of any one or more of the
      other remedies herein provided. All remedies provided for in this Lease are
      cumulative and may, at the election of Mebane, be exercised alternatively,
      successively or in any other manner and are in addition to any other rights
      provided by law.

    


    


    
      
        
          
          

        

        
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    In
      the
      event that any rental or Additional Rental is not paid as and when due, the
      unpaid portion shall bear interest at the Wall Street Prime until paid in full.
      In addition, in the event that Mebane engages the services of an attorney to
      collect any rent, Additional Rental or interest thereon, HPC agrees to pay
      to
      Mebane its reasonable attorneys' fees, costs and disbursements in connection
      with such collection.

    


    


    ARTICLE
      XVII

    MISCELLANEOUS

    


    Section
      16.1     Identity of Interests. Neither the
      execution of this Lease nor the performance of any act pursuant to the
      provisions hereof shall be deemed or construed to have the effect of creating
      between Mebane and HPC the relationship of principal and agent or of partnership
      or joint venture, and the relationship between them shall be that only of lessor
      and lessee or landlord and tenant.

    


    Section
      16.2     Notices. All notices, requests, demands,
      approvals, or consents required to be given hereunder shall be in writing and
      sent by registered or certified mail, return receipt requested, postage prepaid,
      and shall be addressed as follows:

    


    
      	
              If
                to Mebane:

            	
              If
                to HPC:

            
	 	 
	
              Mebane
                Warehouse, LLC

            	
              High
                Performance Coatings, Inc.

            
	
              Post
                Office Box 10

            	
              14788
                Heritagecrest Way

            
	
              Whitsett,
                North Carolina 27377

            	
              Bluffdale,
                Utah 84065

            
	
              Attention:
                Mr. Kevin Sasser

            	
              Attention:
                Mr Bert Wonnacott

            


    

    


    or
      to
      such other address as either party may specify by giving written notice to
      the
      other party in the manner hereinabove prescribed.

    


    Section
      16.3     Applicable Law. The parties intend that
      this Lease and the performance hereunder and all suits and special proceedings
      hereunder shall be governed by and construed in accordance with and under and
      pursuant to the laws of the State of North Carolina without regard to conflicts
      of law principles thereof and that in any action, special proceeding or other
      proceeding that may be brought arising out of, in connection with, or by reason
      of this Agreement, the laws of the State of North Carolina shall be applicable
      and shall govern to the exclusion of the law of any other forum. Any action,
      special proceeding or other proceeding with respect to this Agreement shall
      be
      brought exclusively in the federal or state courts of the State of North
      Carolina, and by execution and delivery of this Lease, HPC and Mebane
      irrevocably consent to the exclusive jurisdiction of those courts and HPC hereby
      submits to personal jurisdiction in the State of North Carolina. HPC and Mebane
      irrevocably waive any objection, including any objection based on lack of
      jurisdiction, improper venue or forum non conveniens, which either may now
      or
      hereafter have to the bringing of any action or proceeding in such jurisdiction
      in respect to this Lease or any matter related hereto. Mebane and HPC
      acknowledge and agree that any service of legal process by mail in the manner
      provided for notices under this Lease constitutes proper legal service of
      process under applicable law in any action or proceeding under or in respect
      to
      this Lease. HPC submits to the jurisdiction of the State of North Carolina
      for
      the resolution of any legal action arising out of this Lease and agrees that
      the
      venue for such legal action shall lie in Guilford County, North
      Carolina.

    


    


    
      
        
          
          

        

        
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    Section
      16.4     Lease Binding upon Heirs. Etc. The
      terms, covenants, conditions, provisions and undertakings in this Lease shall
      extend to and be binding upon successors and assigns of the parties
      hereto.

    


    Section
      16.5     Headings. The Article and Section
      headings hereof are provided for the convenience of reference only and are
      not
      intended to define the substantive rights contained in any Article or
      Section.

    


    Section
      16.6     Singular/Plural. Throughout this Lease,
      wherever the context requires or permits the neuter, masculine and feminine
      gender shall be interchangeable and the singular number shall be deemed to
      include the plural, and vice versa.

    


    Section
      16.7     Memorandum of Lease. Mebane and HPC
      agree, upon the demand of the other, to execute a declaration in recordable
      form
      expressing the Commencement and Termination dates of this Lease (including
      extensions thereof) and the provisions of hereof relating to HPC's option to
      purchase.

    


    Section
      16.8     Corporate Tenant. The person or persons
      executing this Lease on behalf of HPC hereby covenant and warrant that: (i)
      HPC
      is a corporation organized, existing, and in good standing under the laws of
      the
      State of Oklahoma, (ii) all HPC's franchise and other taxes which are due and
      payable have been paid; (iii) all future forms, reports, fees and other
      documents necessary for HPC to comply with applicable laws will be filed when
      due; and (iv) such persons are duly authorized by HPC's Board of Directors
      to
      execute and deliver this Lease on behalf of the corporation.

    


    Section
      16.9     Arbitration. Any Arbitral Dispute (as
      hereafter defined) shall be settled by binding arbitration in accordance with
      the Commercial Arbitration Rules of the American Arbitration Association ("AAA")
      before a panel of three arbitrators appointed in accordance with such Rules,
      and
      the determination of the arbitrators shall be enforceable in accordance with
      the
      statutes of the State of North Carolina governing arbitration. Such arbitration
      proceedings shall be conducted at the office of the AAA located nearest to
      Burlington, North Carolina or such other locations as the AAA and the parties
      hereto may mutually agree upon. The pendency of a demand for arbitration or
      arbitration proceedings hereunder shall not, in and of itself, discharge or
      excuse continuing performance by the parties of their obligations and duties
      under this Lease. The term "Arbitral Dispute" shall mean any of the following:
      (i) any dispute as to the square footage of the building or the Shed pursuant
      to
      Section 1.1 hereof; (ii) whether or not the Tenant's Plans are reasonably
      satisfactory to Mebane pursuant to Section 3.2 hereof, (iii) whether or not
      the
      Tenant's Build-Out is in compliance with Section 3.3 hereof; (iv) whether or
      not
      the prices are "competitive" pursuant to Section 4.8 hereof, (v) any disputes
      relating to the interpretation of the last sentence of Section 9.2 hereof,
      (vi)
      the provisions of Section 9.4 hereof (relating to, among other matters set
      forth
      therein, destruction of the Premises); (vii) whether or not any withholding
      of
      consent by Mebane under Section 13.3 hereof is a reasonable or unreasonable
      withholding; and (viii) the computation of any Excess Rental pursuant to Section
      13.4 hereof (relating to a sublease of the Premises under Section 13.3
      hereof).

    


    


    
      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

    

    


    Nothing
      in this Section shall prevent a party from seeking injunctive
      relief.

    


    Section
      16.10   Severability. In the event any term or
      provision of this Lease shall be adjudged to be partially or completely invalid
      or unenforceable, then such term or provision shall be severed from this Lease,
      and the remainder of this Lease shall be valid and enforceable to the fullest
      extent permitted by law.

    


    Section
      16.11   Entire Agreement. This Lease and the exhibit(s)
      attached hereto set forth the entire agreement between the parties with respect
      to the subject matter hereof. This Lease shall not be modified orally, and
      may
      be modified only by a writing signed by the parties.

    


    Section
      16.12   Net Lease. Except as otherwise expressly provided
      herein, it is intended that the Rental provided for in this Lease shall be
      net
      to Mebane throughout the Term of this Lease, free of any taxes, costs, expenses,
      liabilities, assessments, charges or other deductions whatsoever with respect
      to
      the Premises or the improvements thereon and/or the ownership, leasing,
      operation, maintenance, repair, rebuilding, use or occupation thereof. However,
      HPC shall not be responsible for any of the obligations described above which
      arise in whole or in part as a result of any acts or negligence of Mebane or
      its
      agents, employees, or invitees.

    


    Section
      16.13   Time of Essence., Time is of the essence for the
      purpose of all provisions of this Lease.

    


    Section
      16.14   Entry of Premises. Mebane shall have reasonable
      access to the Premises at all reasonable times for the purpose of examining
      or
      inspecting conditions thereof in order to exercise any right or power reserved
      to Mebane under the terms and provisions of this Lease Agreement, subject to
      applicable insurance laws and regulations.

    


     

    


    
      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

    

    


    IN
      WITNESS WHEREOF, Mebane and HPC each have caused this instrument to be executed
      as of the day and year first above written.

    


    
      	 	
              MEBANE
                WAREHOUSE, LLC

            
	 	 	 
	 	
              By:

            	
              /s/
                Kevin D.
                Sasser              
                

            
	 	 	
              Kevin
                D. Sasser, Manager

            
	 	 	 
	 	
              HIGH
                PERFORMANCE COATINGS, INC.

            
	 	 	 
	 	
              By:

            	
              /s/Terry
                R
                Holmes               
                

            
	 	 	
              President
                and COO

            


    

    


     

    


     

    


     

    


     

    


     

    


    
      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      A

    Legal
      Description of Premises

    


    


    That
      certain tract or parcel of land in Rock Creek Township, Guilford County, North
      Carolina, being more particularly described as follows:

    


    BEGINNING
      at a new iron stake in the northern margin of the right of way of Interstate
      85,
      a corner with Pace Oil Company, Inc. and running thence from said point of
      beginning with Pace Oil Company, Inc., North 17° 48'29" East 1021.71 feet to an
      existing iron stake in the southern margin of the 60 foot right of way of
      Greeson Road (SR 3065), a corner with Pace Oil Company, Inc.; thence along
      the
      southern margin of the 60 foot right of way of Greeson Road, South 84° 36' 26"
      East 383.39 feet to an existing iron stake in the southern margin of Greeson
      Road; thence continuing along the southern margin of Greeson Road, South 83'
      40'
      30" East 175.56 feet to an existing iron stake in the southern margin of Greeson
      Road, a corner with Radcliffe, Rudd and Lanier, Jr.; thence with Radcliffe,
      Rudd
      and Lanier, Jr., South 1 ° 53' 16" West 241.74 feet to an existing stone corner
      with Radcliffe et al and Pace Oil Company, Inc.; thence with Pace Oil Company,
      Inc., South 29° 52'50" West 828.41 feet to a new iron stake in the northern
      margin of the right of way of Interstate 85, a corner with Pace Oil Company,
      Inc.; thence along the northern margin of the right of way of Interstate 85,
      North 84° 34'47 West 450 feet to the point and place of BEGINNING, containing
      12.642 acres, more or less.

    


    The
      foregoing description was taken from surveys of William L. Knight, Jr., dated
      December 28, 1988 and January 12, 1989.

    


    The
      above
      described property is the also depicted on that certain plat entitled "Final
      Map
      No. 1 Corporate Limits Extension Town of Gibsonville," prepared by Alley,
      Williams Carmen & King, Inc. Wayne B. Perry, Registered Land Surveyor, dated
      August 30, 1994, which plat is duly recorded in Plat Book 113, at Page 108
      of
      the Guilford County Registry.

    


    


    FURTHER
      LEASED HEREBY is all of Mebane's right, title and interest in and to that
      certain perpetual right of way and easement, 60 feet in width and running along
      the southern boundary of Tract A, containing 11.770 acres, more or less, now
      or
      formerly owned by Pace Oil Company, Inc., said easement being adjacent to the
      northern margin of the right of way of Interstate 85. Tract A and said 60 foot
      easement is more particularly described on that certain survey of Pace Oil
      Company, Inc., dated January 12, 1989, a copy of which is attached to that
      certain deed from Pace Oil Company, Inc. to Scholl America, Inc., dated January
      13, 1989, which deed is recorded in Deed Book 3713, at Page 1759 of the Guilford
      County Registry.

    


     

    


    
      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

    

    


    The
      demised premises are subject to that certain 60 foot perpetual right of way
      and
      easement appurtenant running along the southern boundary of the above-described
      12.642 acre tract, said easement being adjacent to the northern margin of the
      right of way of Interstate 85, said easement having been reserved by Pace Oil
      Company, Inc. and said easement being more particularly described in that
      certain deed recorded in Deed Book 3713, at Page 1759 of the Guilford County
      Registry.

    


    The
      demised premises are further subject to that certain Deed of Easement dated
      January 5, 2006 from Mebane to the Town of Gibsonville, a copy of which is
      attached hereto.

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


    
      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

    

    


    Prepared
      by and return to: Douglas R. Hoy, PA

    2006
      S.
      Church Street, Suite A Burlington, NC 27215

    


    NORTH
      CAROLINA

    


    GUILFORD
      COUNTY

     

     

    THIS
      DEED OF EASEMENT, made this they 5th day
      of January, 2006by
      and between MEBANE
      WAREHOUSE, LLC, a North Carolina Limited Liability
      Company, party of the first part, and the TOWN OF GIBSONVILLE,
      NORTH CAROLINA, a municipal corporation of the State of North Carolina,
      party of the second part.

    


    WITNESSETH:

    


    WHEREAS,
      parties of the first part, for and in consideration of the sum of
      Ten
      and No/ 100 Dollars ($10.00), and other good and valuable consideration, the
      receipt of which is hereby acknowledged, has given, granted, and conveyed,
      and
      by these presents does hereby give, grant and convey unto party of the second
      part a perpetual right and easement to construct and maintain under, exposed,
      across and upon the hereinafter described lands of parties of the first part
      a
      water line and to go upon said lands whenever the same is reasonably necessary
      for the purpose of inspecting, repairing and maintaining said line, the lands
      of
      the parties of the first part in Guilford County, North Carolina, and being
      more
      particularly described as follows:

    
      


      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      


    

    BEGINNING
      at point in the north right-of-way line of Pace Drive (60 foot
      right-of-way) and corner between Morris L. Crafton and Scholl America, Inc.;
      running thence along the north right-of-way line of Pace Drive (60 foot
      right-of-way) in an easterly direction 290.00 feet to a point of curve; thence
      continuing along the north right-of-way line of Pace Drive (60 foot
      right-of-way) a curve to the left having radius of 210 feet and in a
      northeasterly direction 105.05 feet to a point of reverse curve; thence
      continuing along the north right-of-way line of Pace Drive (60 foot
      right-of-way) a curve to the right having a radius of 270 feet in
      a northeasterly direction 105.08 feet to
      a point and
      corner with Scholl America, Inc. and being a 35 foot permanent sanitary
      sewer and water line easement north of and parallel to the north right-of-way
      line of Pace Drive (60 foot right-of-way) as shown on plat entitled "Water
      and
      Sanitary Sewer Line Easement for Town of Gibsonville", prepared by Alley,
      Williams, Carmen 8s King, Inc., dated September 30, 1992.

     

    It
      is
      agreed and understood that after the performance of inspection, repair or
      maintenance of said lines, the party of the second part shall be responsible
      for
      restoring said property to a condition as close as possible to the condition
      existing immediately prior to the performance of said work.

    


    TO
      HAVE AND TO HOLD the said right and easement to it, the said party of
      the second part, and its successors in title, it being agreed that the right
      and
      easement hereby granted is appurtenant to and runs with the land.

    


    Whenever
      used in this instrument, the single number shall include the plural, the plural
      the singular, and the use of any gender shall be applicable to all
      genders.

    


    IN
      TESTIMONY WHEREOF, the said parties of the first part have caused this
      Deed of Easement to be duly executed and its seal affixed.

    


    


    MEBANE
      WAREHOUSE, LLC

    A
      North Carolina Limited Liability Company

    


    By:
      /s/Kevin D. Sasser             
(SEAL)

        
      Kevin D. Sasser, Manager   (NAME)

        
Member
      - Manager

    


    By:
      /s/Vernon Lee
      Sockwell           
(SEAL)

        
Vernon
      Lee Sockwell, Manager

     

    By:
/s/Jimmy
      Sasser                        
(SEAL)

        
Jimmy
      Sasser, Manager

    


     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    STATE
      OF
      NORTH CAROLINA, COUNTY OF ALAMANCE

     

    I,                                            ,
      a Notary Public of and County, do hereby certify
      that                                                  
, personally appeared before me this day and acknowledged that he/she
      is
Member-Manager, of Mebane Warehouse, LLC, a North Carolina Limited
      Liability Company, and that by authority duly given and
      as the act of such
      entity,                                             
, signed the foregoing instrument in its name on its behalf and its act
      and deed.

    Witness
      my hand and official seal, this
      the             
 day of December, 2005.

    


    


     

    
      	 My
              Commission Expires:	                                            
              
	                                            
              	 NOTARY
              PUBLIC 


    

     

     

     

     

     

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      B

    GUARANTY
      OF LEASE

    


    THIS
      GUARANTY made, executed, and delivered this 21 st day of February, 2006 by
      NANOCOAT, INC., a Delaware corporation (the "Guarantor") to MEBANE WAREHOUSE,
      LLC, a North Carolina limited liability company (the "Landlord").

    


    RECITALS

    


    A.         Guarantor
      is a Delaware corporation and is the parent company of the Tenant in the Lease,
      HIGH PERFORMANCE COATINGS, INC., a corporation existing under the laws of the
      State of Oklahoma (the "Tenant").

    


    B.       
       Landlord is the owner of certain real property located at 7237 Pace Drive,
      Burlington, Guilford County, North Carolina, the same being more particularly
      described on Schedule I attached hereto, upon which there has been constructed
      a
      building, a shed, and a billboard.

     

    C.         Landlord
      has leased the building, the shed, and the billboard on the above­described
      real property (the "Premises") and the Premises in its entirety to Tenant
      pursuant to a written Lease Agreement dated February 21, 2006 (the "Lease")
      executed contemporaneously herewith.

    


    D.         In
      order to induce Landlord to enter into the Lease, Guarantor agreed to execute
      this Guaranty. The Guarantor hereby acknowledges that this Guaranty is therefore
      supported by adequate and full consideration.

    


    AGREEMENT

    


    NOW,
      THEREFORE, in consideration of the Premises and other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      it
      is hereby agreed as follows:

     

    1.         Guarantor
      hereby unconditionally and
      irrevocably guarantees to Landlord the following (collectively, the
      "Obligations"): (i) the due and punctual payment in full (and not merely the
      collectibility) of the rent due and payable under the Lease; (ii) the due and
      punctual payment in full (and not merely the collectibility) of all other sums
      and charges which may at any time be due and payable in accordance with, or
      under the terms of, the Lease, whether to the Landlord or third parties; (iii)
      the due and punctual payment in full (and not merely the collectibility) of
      all
      damages which may arise or be payable as a consequence of non-performance or
      non-observance of any term, covenant, or condition contained in the Lease on
      the
      part of the Tenant thereunder to be performed or observed (whether provided
      for
      in the Lease or otherwise allowable by law); and, (iv) the due and punctual
      performance of
      all of the other terms, covenants, and conditions contained in the Lease on
      the
      part of the Tenant to be performed. If Tenant shall fail to duly and punctually
      pay such rent or any other sums, charges, or damages due to Landlord or third
      parties under the Lease, Guarantor shall forthwith pay the same, together with
      interest thereon at the rate provided for under the Lease from the due date
      thereof under the Lease to the date of payment. Interest shall accrue and become
      payable only upon and after the expiration of any grace
      period.

    


    


    
      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

    

    


    2.         Guarantor
      expressly agrees that Landlord may, in its sole and absolute discretion, without
      notice to or the further assent of Guarantor and without in any way releasing,
      affecting, or impairing the obligations and liabilities of Guarantor hereunder
      (except that the obligations and liabilities of Guarantor hereunder shall be
      reduced or released to the same extent as Tenant's obligations are expressly
      reduced or released by an action of Landlord under subdivisions (i), (ii),
      or
      (iii) hereof), (i) waive compliance with or any default under or grant any
      other
      indulgence with respect to the Lease; (ii) modify, amend, or change any
      provisions of the Lease; (iii) grant extensions or renewals of the Lease and/or
      effect any release, compromise, or settlement in connection therewith; (iv)
      agree to the substitution, exchange, release, or other disposition for all
      or
      any part of the leased Premises; (v) make advances for the purposes of
      performing any term or covenant contained in the Lease, with respect to which
      Tenant shall be in default; (vi) assign or otherwise transfer its interest
      in
      the leased Premises or this Guaranty or any interest therein or herein; (vii)
      consent to an assignment of the Tenant's interest under the Lease by Tenant;
      and, (viii) deal in all respects with the Tenant as if this Guaranty were not
      in
      effect. The obligations of Guarantor under this Guaranty shall be unconditional,
      irrespective of the genuineness, validity, regularity, or enforceability of
      the
      Lease or any other security given therefor or in connection therewith,
      including, but not limited to, any assignment of leases and rents, or any other
      circumstance which might otherwise constitute a legal or equitable discharge
      of
      a surety or guarantor.

    


    3.         The
      liabilities of Guarantor under this Guaranty shall be separate and cumulative
      and primary, direct, and immediate and not conditional or contingent upon
      pursuit by Landlord of any remedies it may have against the Tenant or any other
      party with respect to the Lease, whether pursuant to the terms thereof or by
      law. Furthermore, this Guaranty shall not be affected by the release of any
      other guarantors of the Lease or the addition of other guarantors of the Lease.
      Without limiting the generality of the foregoing, Landlord shall not be required
      to make any demand on Tenant and/or any other party or otherwise pursue or
      exhaust its remedies against Tenant or any other party before, simultaneously
      with, or after enforcing its rights and remedies hereunder against Guarantor.
      Any one or more successive and/or concurrent actions may be brought hereon
      against Guarantor either in the same action, if any, brought against the Tenant
      and/or any other party, or in separate actions, as often as the Landlord, in
      its
      sole discretion, may deem it advisable. The liability of Guarantor under this
      Guaranty shall continue after any assignment or transfer by the Tenant of its
      interest under the Lease.

    


     

    


    
      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

    

    


    4.         Guarantor
      hereby expressly waives: (i) presentment and demand for payment and protest
      and
      non-payment; (ii) notice and protest; (iii) notice of any default hereunder
      or
      under the Lease and of all indulgences; (iv) demand for observance or
      performance of, or enforcement of, any terms or provisions of this Guaranty
      or
      the Lease; (v) all of the notices and demands otherwise by law which Guarantor
      may lawfully waive; (vi) acceptance of this Guaranty by Landlord and (vii)
      the
      provisions of North Carolina General Statutes Section 26-7. Guarantor agrees
      that in the event that this Guaranty shall be enforced by suit or otherwise,
      or
      if Landlord shall exercise any of its remedies under the Lease, Guarantor will
      reimburse Landlord, upon demand, for all reasonable expenses incurred in
      connection therewith, including, without limitation, reasonable attorney's
      fees.

    


    5.         Guarantor
      waives any right of subrogation for payments made under this Guaranty until
      all
      amounts owed to Landlord under the Lease have been paid in full.

    


    6.         Any
      notice, demand, request, or communication given hereunder or in connection
      herewith (hereinafter "Notices") shall be deemed sufficient if in writing and
      sent by first class mail, postage prepaid, addressed to the party to receive
      such notice,

    


    if
      to
      Landlord at:

    


    Mebane
      Warehouse, LLC Post Office Box 10 Whitsett, NC 27377

    


    Attention:
      Kevin D. Sasser or if to Guarantor at:

    


    NanoCoat,
      Inc.

    1192
      E.
      Draper Parkway Suite 518

    Draper,
      UT  84020 

    Attention:
      Bert Wonnacott

    


    Either
      party may from time to time change the address to which notices are to be
      directed by notice given in like fashion.

    


    7.         All
      rights and remedies afforded Landlord by reason of this Guaranty and the Lease,
      or by law, are separate and cumulative and joint and several and the exercise
      of
      one shall not in any way limit or prejudice the exercise of any other such
      rights or remedies. No delay or omission by Landlord in exercising such right
      or
      remedy shall operate as a waiver thereof. No waiver of any rights and remedies
      hereunder, and no modification or amendment hereof, shall be deemed made by
      Landlord unless in writing and duly signed by Landlord. Any such written waiver
      shall apply only to the particular instance specified therein and shall not
      impair the further exercise of such right or remedy or of any other right or
      remedy of Landlord and no single or partial exercise of any right or remedy
      hereunder shall preclude any other or further exercise thereof or of any other
      right or remedy,

    


    


    
      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

    

    


    8.         This
      Guaranty shall inure to the benefit of, and be enforceable by, Landlord and
      its
      successors and assigns as owners of the Landlord's interest in the Lease or
      in
      the Premises and shall be binding upon and enforceable against, Guarantor and
      its respective successors and assigns.

    


    9.         The
      parties intend that this Guaranty and the performance hereunder and all suits
      and special proceedings hereunder shall be governed by and construed in
      accordance with and under and pursuant to the laws of the State of North
      Carolina without regard to conflicts of law principles thereof and that in
      any
      action, special proceeding or other proceeding that may be brought arising
      out
      of, in connection with, or by reason of this Agreement, the laws of the State
      of
      North Carolina shall be applicable and shall govern to the exclusion of the
      law
      of any other forum. Any action, special proceeding or other proceeding with
      respect to this Agreement shall be brought exclusively in the federal or state
      courts of the State of North Carolina, and by execution and delivery of this
      Guaranty, HPC and Mebane irrevocably consent to the exclusive jurisdiction
      of
      those courts and HPC hereby submits to personal jurisdiction in the State of
      North Carolina. HPC and Mebane irrevocably waive any objection, including any
      objection based on lack of jurisdiction, improper venue or forum non conveniens,
      which either may now or hereafter have to the bringing of any action or
      proceeding in such jurisdiction in respect to this Guaranty or any matter
      related hereto. Mebane and HPC acknowledge and agree that any service of legal
      process by mail in the manner provided for notices under this Guaranty
      constitutes proper legal service of process under applicable law in any action
      or proceeding under or in respect to this Guaranty. HPC submits to the
      jurisdiction of the State of North Carolina for the resolution of any legal
      action arising out of this Guaranty and agrees that the venue for such legal
      action shall lie in Guilford County, North Carolina.

     

    10.       The
      persons executing this Guaranty on behalf of Guarantor hereby covenant and
      warrant that: (i) Guarantor is a corporation organized and in good standing
      under the laws of the State of Delaware, (ii) all Guarantor's franchise and
      corporate taxes which are due and payable have been paid; (iii) all future
      forms, reports, fees and other documents necessary for Guarantor to comply
      with
      applicable laws will be filed when due; and (iv) such persons are duly
      authorized by the board of directors of Guarantor to execute and deliver this
      Guaranty of Lease on behalf of the corporation.

    


    


    
      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

    

    


    IN
      WITNESS WHEREOF, Guarantor has caused this instrument to be executed by its
      duly
      authorized officer, on the day and year first above written.

    


     

     

    
      	 	
              NANOCOAT,
                INC. 

               

              By:_____________________________________

               
                     _____________________________________

                    
Print
                Name and Title 

            


    

    


     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

    

    


    Schedule
      1

    Legal
      Description of Premises

    


    


    That
      certain tract or parcel of land in Rock Creek Township, Guilford County, North
      Carolina, being more particularly described as follows:

    


    BEGINNING
      at a new iron stake in the northern margin of the right of way of Interstate
      85,
      a corner with Pace Oil Company, Inc. and running thence from said point of
      beginning with Pace Oil Company, Inc., North 17° 48'29" East 1021.71 feet to an
      existing iron stake in the southern margin of the 60 foot right of way of
      Greeson Road (SR 3065), a corner with Pace Oil Company, Inc.; thence along
      the
      southern margin of the 60 foot right of way of Greeson Road, South 84° 36'26"
      East 383.39 feet to an existing iron stake in the southern margin of Greeson
      Road; thence continuing along the southern margin of Greeson Road, South 83° 40'
      30" East 175.56 feet to an existing iron stake in the southern margin of Greeson
      Road, a corner with Radcliffe, Rudd and Lanier, Jr.; thence with Radcliffe,
      Rudd
      and Lanier, Jr., South 1 ° 53' 16" West 241.74 feet to an existing stone corner
      with Radcliffe et al and Pace Oil Company, Inc.; thence with Pace Oil Company,
      Inc., South 29° 52'50" West 828.41 feet to a new iron stake in the northern
      margin of the right of way of Interstate 85, a corner with Pace Oil Company,
      Inc.; thence along the northern margin of the right of way of Interstate 85,
      North 84° 34'47" West 450 feet to the point and place of BEGINNING, containing
12.642 acres, more or less.

    


    The
      foregoing description was taken from surveys of William L. Knight, Jr., dated
      December 28, 1988 and January 12, 1989.

    


    The
      above
      described property is the also depicted on that certain plat entitled "Final
      Map
      No. 1 Corporate Limits Extension Town of Gibsonville," prepared by Alley,
      Williams Carmen & King, Inc. Wayne B. Perry, Registered Land Surveyor, dated
      August 30, 1994, which plat is duly recorded in Plat Book 113, at Page 108
      of
      the Guilford County Registry.

    


    


    FURTHER
      LEASED HEREBY is all of Mebane's right, title and interest in and to that
      certain perpetual right of way and easement, 60 feet in width and running along
      the southern boundary of Tract A, containing 11.770 acres, more or less, now
      or
      formerly owned by Pace Oil Company, Inc., said easement being adjacent to the
      northern margin of the right of way of Interstate 85. Tract A and said 60 foot
      easement is more particularly described on that certain survey of Pace Oil
      Company, Inc., dated January 12, 1989, a copy of which is attached to that
      certain deed from Pace Oil Company, Inc. to Scholl America, Inc., dated January
      13, 1989, which deed is recorded in Deed Book 3713, at Page 1759 of the Guilford
      County Registry.

    


     

    


    
      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

    

    


    The
      demised premises are subject to that certain 60 foot perpetual right of way
      and
      easement appurtenant running along the southern boundary of the above-described
      12.642 acre tract, said easement being adjacent to the northern margin of the
      right of way of Interstate 85, said easement having been reserved by Pace Oil
      Company, Inc. and said easement being more particularly described in that
      certain deed recorded in Deed Book 3713, at Page 1759
      of the Guilford County Registry.

    


    The
      demised premises are further subject to that certain Deed of Easement dated
      January 5, 2006 from Mebane to the Town of Gibsonville, a copy of which is
      attached hereto.

     

     

     

     

     

     

     

    
 

     

    


    
      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

    

    


    Prepared
      by and return to: Douglas R. Hoy, PA

    2006
      S.
      Church Street, Suite A Burlington, NC 27215

    


    NORTH
      CAROLINA

    


    GUILFORD
      COUNTY

     

     

    THIS
      DEED OF EASEMENT, made this the 5th day of January,
      2006, by
      and between MEBANE
      WAREHOUSE, LLC, a North Carolina Limited Liability
      Company, party of the first part, and the TOWN OF GIBSONVILLE,
      NORTH CAROLINA, a municipal corporation of the State of North Carolina,
      party of the second part.

    


    WITNESSETH:

    


    WHEREAS,
      parties of the first part, for and in consideration of the sum of
      Ten
      and No/ 100 Dollars ($10.00), and other good and valuable consideration, the
      receipt of which is hereby acknowledged, has given, granted, and conveyed,
      and
      by these presents does hereby give, grant and convey unto party of the second
      part a perpetual right and easement to construct and maintain under, exposed,
      across and upon the hereinafter described lands of parties of the first part
      a
      water line and to go upon said lands whenever the same is reasonably necessary
      for the purpose of inspecting, repairing and maintaining said line, the lands
      of
      the parties of the first part in Guilford County, North Carolina, and being
      more
      particularly described as follows:

     

    BEGINNING
      at point in the north right-of-way line of Pace Drive (60 foot
      right-of-way) and corner between Morris L. Crafton and Scholl America, Inc.;
      running thence along the north right-of-way line of Pace Drive (60 foot
      right-of­way)
      in an easterly direction 290.00 feet to
      a point of
      curve;
thence continuing along the north right-of-way line of Pace Drive (60
      foot right-of-way) a curve to the left having radius of 210 feet and in a
      northeasterly direction 105.05 feet to a point of
      reverse curve; thence continuing along the north right-of-way line of
      Pace Drive (60 foot right-of-way) a curve to the right having a radius of 270
      feet in
      a northeasterly direction 105.08 feet to a point and corner with Scholl
      America, Inc. and being a 35 foot permanent sanitary sewer and water line
      easement north of and parallel to the north right-of-way line of Pace Drive
      (60
      foot right-of-way) as shown on plat entitled "Water and Sanitary Sewer Line
      Easement for Town of Gibsonville", prepared by Alley, Williams, Carmen &
King, Inc., dated September 30, 1992.

     

    It
      is
      agreed and understood that after the performance of inspection, repair or
      maintenance of said lines, the party of the second part shall be responsible
      for
      restoring said property to a condition as close as possible to the condition
      existing immediately prior to the performance of said work.

    


    TO
      HAVE AND TO HOLD the said right and easement to it, the said party of
      the second part, and its successors in title, it being agreed that the right
      and
      easement hereby granted is appurtenant to and runs with the land.

    


    Whenever
      used in this instrument, the single number shall include the plural, the plural
      the singular, and the use of any gender shall be applicable to all
      genders.

     

    IN
      TESTIMONY WHEREOF, the said parties of the first part have caused this
      Deed of Easement to be duly executed and its seal affixed.

    


    


     

      MEBANE
        WAREHOUSE, LLC

      A
        North Carolina Limited Liability Company

      


      By:
        /s/Kevin D. Sasser             
(SEAL)

          
        Kevin D. Sasser, Manager   (NAME)

          
Member
        - Manager

      


      By:
        /s/Vernon Lee
        Sockwell           
(SEAL)

          
Vernon
        Lee Sockwell, Manager

       

      By:
/s/Jimmy
        Sasser                        
(SEAL)

          
Jimmy
        Sasser, Manager

    

    


    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    STATE
      OF
      NORTH CAROLINA, COUNTY OF ALAMANCE

     

    I,
Amy
      Hounn,
      a Notary Public of to and County, do he by certify that person
      appeared before me this day and acknowledged the Managers of Mebane
      Warehouse, LLC, a North Carolina Limited
      Liability Company, and
      that by authority duly given and
      as
      the act of such entity, Kevin D. Sasser, Vernon Lee Sowell and Jimmy
      Sasser, signed the foregoing instrument
      in its name on its
      behalf and its act and deed.

    


    Witness
      my hand and official seal, this the 5 day of January 2006.

     

    My
      Commission Expires: 3/18/06

                                /s/
      AMY H.
      DUNN                                                          


                                                      
 NOTARY
      PUBLIC Alamance
      County North Carolina

     

     

     

    STATE
      OF
      NORTH CAROLINA, COUNTY OF ALAMANCE

     

    I,                                                             ,
      a Notary Public of said State and
      County, do hereby certify
      that                                                                                 ,
      personally appeared before me this day and acknowledged the he/she is
Member­Manager, of Mebane Warehouse, LLC, a North Carolina
      Limited
      Liability Company, and
      that by authority duly given and as the act of such entity, signed
      the foregoing instrument in its name on its behalf and its act and
      deed.

    Witness
      my hand and official seal, this
      the             day
      of December, 2005.

    


    


    My
      Commission
      Expires:                                                                                                                 
      

                                                                                   Notary
      Public