Document:

Exhibit 10.2

Exhibit 10.2

LEASE OF SPACE IN INTERNATIONAL HOME FURNISHINGS CENTER®

	
IHFCo:	
IHFCo Properties, LLC

Post Office Box 828

High Point, North Carolina 27261	
LESSEE:	
The Keller Manufacturing Company, Inc.

d/b/a Keller Manufacturing Company

701 N. Water St.

Corydon, IN 47112

DESCRIPTION OF PREMISES:        
Space No M1301 including bays M1302, M1303, M1304, M1305, M1306, M1307, M1308,
M1310, M1311, M1312, M1313, M1314, M1315, M1316, M1317, M1318, M1319 and M1320
in the International Home Furnishings Center®, High Point, North
Carolina.

	
TERM:	
 	
5 Years
	 
	
COMMENCEMENT DATE:	
 	
November 1, 2003
	
EXPIRATION DATE:	
 	
October 31, 2008
	 
	
BASE RENTAL:	
 	
15,577.00 sq. ft. @ $12.00 per sq. ft. per year

ADDITIONAL OR SUPPLEMENTAL TERMS AND PROVISIONS 

This lease is contingent upon Lessee making a professionally designed showroom
statement both interiorly and exteriorly.

This lease supersedes the present lease between the Lessor and Lessee for Space
No. W747, dated December 14, 1998, and such prior lease shall be deemed
cancelled.

IHFCo, by this Agreement, leases to Lessee and Lessee leases from IHFCo,
the Premises described above, at the rental, for the term and upon the other
terms and conditions contained on this page and in IHFCo Standard
Terms and Conditions of Lease (IHFCo Form No. 201230R) which are
incorporated by reference in and made a part of this lease.

IHFCo and Lessee have caused this Lease to be executed by their duly
authorized officers, this the 4th day of November, 2003.

	
IHFCo

IHFCo Properties, LLC

By:  /s/ F. Edward Thomas

                VICE PRESIDENT

Attest:  /s/ Jane S. Lain

                SECRETARY
	
EXHIBITOR:

The Keller Manufacturing Company, Inc.

d/b/a Keller Manufacturing Company

Complete Formal Business Name

                              Indiana Corporation

          LEGAL FORM OF BUSINESS CORPORATION, PARTNERSHIP

                OR INDIVIDUAL AND STATE OF PRINCIPAL OFFICE

By:  /s/ Keith Williams

               NAME
               
               TITLE

       PRESIDENT, VICE PRESIDENT, GENERAL PARTNER, OWNER

Attest:  /s/ David T. Richardson     
               CORPORATE SEAL

       SECRETARY IF LESSEE IS A CORPORATION

CORPORATE SEAL

STANDARD TERMS AND CONDITIONS OF LEASE

IHFCo FORM NO. 201230R 

	1.0

PREMISES	
§1.1.  Description.  Lessee acknowledges receipt
of a drawing or floor plan showing the exact location of the Premises in the
International Home Furnishings Center® showroom complex owned and operated
by IHFCo (the “Home Furnishings Center”). The Home Furnishings
Center is more particularly described on a map or plat prepared by
Davis-Martin-Powell and Associates, Inc. and designated Job No. S-18512, a copy
of which is on file at the office of IHFCo and is incorporated in this Lease
by reference. The lease of the Premises includes the right of access to the
Premises through the common areas of the Home Furnishings Center.

	 	
§1.2  Relocation.  Lessee acknowledges and
agrees that it is essential to the orderly and efficient operation of the Home
Furnishings Center by IHFCo that IHFCo have the right from time to time
to relocate lessees in order to achieve optimum utilization of all space in the
Home Furnishings Center. Consequently, IHFCo shall be entitled to relocate
Lessee as provided in this section if IHFCo determines that relocation of
Lessee is in the best interest of the Home Furnishings Center in the conduct of
its business. IHFCo shall exercise its right to relocate Lessee in the
following manner: (a) the premises to which Lessee is to be relocated (the
“New Premises”) shall be selected by IHFCo and shall be equivalent
(as determined by IHFCo in its sole discretion) in size and value to the
Premises; (b) IHFCo shall notify Lessee of its intent to relocate Lessee
within a time period prior to the commencement of the next regularly scheduled
Market such that the Lessee has a reasonable period of time (as determined by
IHFCo in its sole discretion) to refixture, redecorate, and prepare to show
at that Market and identify the proposed New Premises, (c) within ten (10) days
after notice of relocation by IHFCo, Lessee, at its option, may terminate
this Lease by written notice to IHFCo; (d) if Lessee fails to terminate this
Lease as provided in (c) above, the New Premises shall be substituted for the
original Premises. This Lease shall continue in full force and effect without
any other change, and IHFCo, at its expense, shall move Lessee’s
property to the New Premises and shall pay the costs (less a reasonable
allowance for depreciation) of replacing (as nearly as possible) all
installations and improvements of Lessee which cannot be moved to the New
Premises.

	2.0
TERM	
§2.0  Commencement and Expiration Date.  The
Commencement Date and Expiration Date of the Lease term are the dates set forth
on the first page of this Lease.

	 	
§2.2  Holding Over.  If Lessee remains in
possession of the Premises after the expiration or termination of this Lease,
Lessee shall be only a tenant at will but its occupancy shall otherwise be
subject to all of the terms and provisions of this Lease, except that Lessee
shall pay per diem rent for each day Lessee occupies the premises, in an amount
equal to one hundred fifty percent (150%) of the then prevailing annual rates
for comparable space charged by IHFCo to new tenants, prorated on a daily
basis.

	3.0
RENT	
§3.1  Annual Rental.  Lessee shall pay to
IHFCo without offset or deduction the Annual Rental for the Premises,
consisting of (i) the Base Rent set forth on the first page of this Lease. The
Annual Rental is due and payable in semiannual installments, each such
semiannual installment being due and payable in advance on or before the first
day of November and on or before the first day of May (the “Rental Payment
Dates”) of each calendar year during the Lease term, except as provided in
§3.2. The first semiannual installment of rent is due and payable upon the
execution of this Lease. All payments of rent are final and nonrefundable.

	 	
§3.2  No Reduction.  If the Commencement Date is a day
other than a Rental Payment Date, Lessee acknowledges and agrees that by
receiving possession of the Premises on the Commencement Date, Lessee will be
able to show its merchandise at the next ensuing Market and will receive the
same benefits as would have been the case had the Lease term commenced on the
Rental Payment Date next preceding the actual Commencement Date. Lessee
therefore agrees to pay a full semiannual rental payment for the period of time
beginning with the Commencement Date and ending on the day before the next
Rental Payment Date.

Page 2 of 10

	 	
§3.3  Rent Adjustment.  In addition to the
Annual Rental provided for in §3.1, Lessee agrees to pay IHFCo, for
each Lease Year, an amount determined by multiplying the Annual Rental by a
percentage equal to the cumulative percentage increase, if any, in the CPI,
determined as follows:

	 	(a)	
“CPI” means the Consumer Price Index, All Urban Consumers — U.S.
City Average — All items (1982-4=100) as published by the Bureau of Labor
Statistics of the United States Department of Labor;

	 	(b)	
If the Commencement Date is a Rental Payment Date, A Lease Year is the annual
period commencing on the Commencement Date and on each anniversary thereof. If
the Lease Term commences on any other date, a Lease Year is the annual period
commencing on the Rental Payment Date next preceding the Commencement Date, and
on each anniversary thereof;

	 	(c)	
The cumulative percentage increase in the CPI shall be the percentage increase,
if any, in the CPI for the sixth month prior to the Lease Year in question over
the CPI for the same month next preceding the Commencement Date;

	 	(d)	
If the CPI ceases to use the 1982-4 average equaling 100 as the basis of
calculation, or if a change is made in the term or number of items contained in
the CPI, or if the CPI is altered, modified, converted or revised in any other
way, then the foregoing computations shall be made with the use of such
conversion factor, formula or table for converting the CPI as may be published
by the Bureau of Labor Statistics or, if the Bureau shall not publish the same,
then with the use of a conversion factor which adjusts the modified CPI to the
figure that would have been arrived at had the change in the manner of computing
the CPI in effect on the date of this lease not been altered. If the Bureau
shall cease publication of the CPI, then any substitute or successor index
published by the Bureau or other governmental agency of the United States shall
be used, similarly adjusted. If neither the CPI or a successor or substitute
index similarly adjusted is available, then a reliable governmental or other
reputable publication selected by IHFCo and evaluating the information
theretofore used in determining the CPI shall be used;

	 	(e)	
IHFCo shall bill the Lessee for the cumulative increase in the Annual
Rental at the same time as its normal invoices for Annual Rental are sent prior
to each Lease Year, and, upon request by Lessee, shall furnish Lessee with a
statement explaining the method of computation of the CPI increase; and

	 	(f)	
IHFCo shall not be obliged to make any adjustments or recomputations,
retroactive or otherwise, by reason of any revision which may later be made in
the amount of the CPI first published for any month.

Page 3 of 10

	4.0
USE AND

OCCUPANCY

BY LESSEE	
§4.1.  Use.  Lessee shall use the Premises for
the display, exhibition, and sale of home furnishings, furniture, accessories,
carpeting and wall coverings, and for office or clerical purposes to the extent
reasonably required for the conduct of such activities at the Premises, and for
no other purpose.

	 	
§4.2.  Operation During Markets.  Lessee shall open the
Premises, exhibit its products and staff the Premises with employees for the
entire period of each regularly scheduled Market.

	 	
§4.3.  Rules and Regulations.  IHFCo has
established rules, regulations guidelines and polices (the
“Guidelines”) regarding the operation of the Home Furnishings Center,
and shall be entitled to establish Guidelines from time to time after the
execution of this Lease. Lessee acknowledges receipt of a copy of the current
Guidelines and agrees to comply, and to cause its employees, contractors, agents
and others occupying the Premises to comply, with all current and future
Guidelines, provided that (a) IHFCo notifies Lessee of any Guidelines
established after the date of this Lease and (b) the Guidelines established by
IHFCo do not unreasonably interfere with Lessee’s use of the Premises
for the purposes set forth in §4.1.

	 	
§4.4.  Restriction on Other Operations of
Lessee.  Lessee agrees (insofar as and to the extent Lessee may
lawfully do so) that during all regularly scheduled Markets or other times at
which the Home Furnishings Center is officially open to buyers during the term
of this Lease, Lessee will not, within a five (5) mile radius of the Home
Furnishings Center (a) operate any other showroom under the same trade name or
names under which Lessee does business from the Premises or (b) exhibit in any
other location the same merchandise which Lessee exhibits in the Premises.
Lessee acknowledges and agrees that it is in the best interest of Lessee and
other tenants in the Home Furnishings Center as exhibitors, and in the best
interest of the successful operation of the Home Furnishings Center as a
national market for home furnishings, to maximize buyer traffic in, and the
duration of buyer visits to, the Home Furnishings Center. Lessee agrees that the
foregoing provisions are reasonably necessary to accomplish these purposes, and
that a breach of these provisions by Lessee will constitute a material breach of
the Lease.

	 	
§4.5.  Property of Others.  Lessee will not place or permit to be
placed in the Premises property of any other person or entity, unless it has
first secured the written consent of IHFCo.

	 	
§4.6.  Market Dates; Admission.  IHFCo shall
have the sole right to prescribe the dates of regularly scheduled Markets
applicable to Lessee’s lines of merchandise, and qualifications, conditions
and times of admission to the Home Furnishings Center. IHFCo may restrict
admission to accredited buyers and condition admission upon the presentation of
credentials prescribed or provided by IHFCo. Without limiting the generality
of the foregoing, Lessee agrees not to admit any buyers to the Premises during
the seven-day period prior to each Market.

	 	
§4.7.  Compliance.  Lessee agrees not to use or
occupy the Premises, or permit them to be used or occupied, in any manner which
violates applicable laws or regulations affecting the Premises or the Home
Furnishings Center established by any governmental or public authority having
jurisdiction to promulgate such laws or regulations, or by any insurance carrier
insuring the Premises, property located therein, or the Home Furnishings
Center.

	 	
§4.8.  Inspection by IHFCo.  IHFCo and
its representatives shall be entitled to enter the Premises at any reasonable
time for the purpose of inspecting the Premises, performing any work required or
permitted to be performed by IHFCo under this Lease, and exhibiting the
Premises to prospective mortgagees and tenants. IHFCo agrees that to the
extent practical, it will not unreasonably interfere with the operation of
Lessee’s business in the exercise of its rights under this
Section.

Page 4 of 10

	5.0

ASSIGNMENT AND SUBLETTING	
§5.1.  Transfers by Lessee.  Lessee agrees not to assign this
Lease or sublet all or any part of the Premises without Lessor’s prior
written consent in each instance. In the event of an assignment or sublease,
Lessee shall remain primarily liable for payment and performance of all
obligations under this Lease upon default by the assignee or subtenant,
notwithstanding the acceptance of rent or performance directly from the assignee
or subtenant by IHFCo.

	 	
§5.2.  Subleasing Policy.  All proposed subleases which
IHFCo is requested to approve pursuant to §5.1 must conform to
subleasing policies established by IHFCo from time to time, and Lessee
acknowledges and agrees that IHFCo's subleasing policies, among other
things, may provide for selection of sublessees from a priority waiting list,
the use of standard forms, direct billing by IHFCo, the imposition of
subleasing fees by IHFCo, and the retention by IHFCo of the excess of
any amounts payable under the sublease over the rent and other charges payable
under this Lease. Nothing in this section may be construed to create any
inference that IHFCo is obligated to approve any sublease which complies
with the provisions of this section.

	 	
§5.3.  Change of Ownership.  For purposes of
this Paragraph, an assignment includes: (1) one or more sales or transfers by
operation of law or otherwise by which an aggregate of more than fifty percent
(50%) of Lessee’s shares or ownership shall be vested in a party or parties
who are not shareholders or owners of Lessee as of the date of this Lease; (2)
any transfer by operation of law; (3) any assignment among co-tenants; and (4)
any assignment of a part interest in this lease.

	6.0

REPAIRS AND MAINTENANCE	
§6.1.  Acceptance.  Lessee has examined the
Premises and accepts them in their present conditions, without any
representation on the part of IHFCo as to the present or future condition of
the Premises except as otherwise specifically provided in this
Lease.

	 	
§6.2.  IHFCo's Repair Obligations.  IHFCo
shall at IHFCo's expense maintain the exterior walls, roof, structural
supports and common areas of the Home Furnishings Center in good order and
repair; provided, however, that (a) IHFCo is not an insuror and its
responsibility to do so shall be confined to making the proper repairs within a
reasonable time after it has received notice of the necessity, nature and
location of the repairs and (b) Lessee shall repair any damage to the Home
Furnishings Center caused by Lessee or its agents.

	 	
§6.3.  Lessee’s Repair Obligations.  Lessee
agrees to maintain the Premises in a neat and clean condition, in good order and
repair, and in full compliance with applicable laws, ordinances, regulations,
and codes.

	 	
§6.4.  Surrender.  At the expiration or
termination of this Lease, Lessee agrees to quit and surrender the Premises to
IHFCo in as good a condition as when received, reasonable wear and tear and
damage by fire or other casualty excepted.

	7.0.

LESSEE'S PROPERTY; ALTERATIONS AND IMPROVEMENTS	
§7.1.  Lessee’s Property.  Subject to the
security interest granted in §12.4 of this Lease, all merchandise, office
furniture and equipment, samples, inventory and other unattached movable
property placed in the Premises by Lessee shall remain the property of Lessee,
and Lessee, if it is not in default under this Lease, shall be entitled to
remove such items from the Premises, provided Lessee repairs any damage to the
Premises or the Home Furnishings Center caused by such
removal.

	 	
§7.2.  Placing Property in or Removing Property From
Premises.  Except as otherwise specifically permitted by
IHFCo's Guidelines, all property of Lessee shall be moved to or from
the Premises by the employees or designated contractors of IHFCo, at the
expense and risk of Lessee, and Lessee agrees to pay IHFCo upon receipt of
IHFCo's invoice IHFCo's standard charges for moving such items
to and from the Premises. IHFCo shall not be liable for any loss or damage
to property of Lessee, unless caused by the negligence of IHFCo or its
employees.

Page 5 of 10

	 	
§7.3.  Alterations and Improvements.  Lessee
shall be entitled to make alterations, additions, and improvements to the
Premises, provided Lessee first obtains IHFCo's written consent, which
IHFCo will not unreasonably withhold. Any alteration, addition, improvement
or other property attached to the Premises by Lessee (including, without
limitation electrical wiring, lighting fixtures, carpeting and track lighting)
shall become the property of IHFCo upon the expiration or termination of
this Lease, unless IHFCo elects to require Lessee to remove the same, repair
any damages occasioned by such installation or removal, and restore the Premises
to their original condition.

	 	
§7.4.  Performance of Work.  All work in
connection with alterations, additions, or improvements to the Premises (a)
shall be performed in a first class, workmanlike manner with all required
governmental and utility permits obtained in advance by Lessee; (b) shall not
weaken or impair the structural integrity of the Home Furnishings Center; and
(c) shall be in accordance with plans and specifications, and performed by
contractors, approved by IHFCo. All contractors performing such work shall
carry insurance satisfactory to IHFCo and shall execute lien waivers, and
indemnity agreements satisfactory to IHFCo. IHFCo shall have no duty to
Lessee or anyone else to enforce these requirements or inspect the work of
Lessee’s contractors.

	8.0

TAXES	
IHFCo agrees to pay all ad valorem taxes and assessments levied, assessed or
charged against the Home Furnishings Center. Lessee agrees to list and pay all
license, privilege, ad valorem or other taxes levied, assessed or charged
against Lessee or IHFCo on account of the operation of Lessee’s
business in the Premises or on account of property owned by
Lessee.

	9.0

UTILITIES	
IHFCo agrees to furnish heat, electricity, air conditioning, and elevator
service to the Premises for a period beginning thirty (30) days prior to the
commencement of each regularly scheduled Market, and ending fourteen (14) days
following the close of each such Market; provided, however, that IHFCo shall
not be liable for interruptions in service due to breakdowns or other causes
beyond its control. If Lessee uses the Premises at any other times, Lessee
agrees to pay such additional charges as may be imposed by IHFCo for such
excess utility use.

	10.0

INSURANCE

INDEMNITY	
§10.1.  Insurance.  Lessee agrees to keep its
property located in the Premises, including all alterations, additions and
improvements made by it, insured against loss or damage by fire or other
casualty, under an “all risks” policy in an amount equal to full
replacement cost value thereof. Lessee agrees to maintain in force comprehensive
general liability insurance coverage on the Premises, with a minimum combined
single limit of $1,000,000.00 for death, personal injury or property damage,
naming IHFCo as an additional insured. This general liability coverage may
be either on an “occurrence” or a “claims made” basis. If on
a “claims made” basis, Lessee must either:

	 	(a)	
Agree to provide
certificates of insurance evidencing the above coverages for a period of three
years after expiration of the lease, which certificate shall evidence a
“retroactive date” no later than the Commencement Date; or

	 	(b)	
Purchase the extended
reporting period endorsement for the policy or policies in force during the term
of this lease and evidence the purchase of this extended reporting period
endorsement by means of a certificate of insurance or a copy of the endorsement
itself.

	 	
All policies shall provide that unless IHFCo is given ten (10) days written notice of any
cancellation, failure to renew, or material change, the insurance shall remain in full
force and effect, without change. On or before the Commencement Date, Lessee agrees to
provide IHFCo with satisfactory evidence that all required insurance is in force.
Lessee may provide any insurance required under this Article through its corporate or
blanket policies.

Page 6 of 10

	 	
§10.2.  Waiver of Subrogation.  To the extent
that any business interruption or loss or damage to property occurring in the
Premises or in the Home Furnishings Center, or in any manner growing out of or
connected with Lessee’s occupation of the Premises or the condition thereof
(whether or not caused by the negligence of IHFCo or Lessee or their
respective agents, employees, contractors, tenants, licensees, or assigns) is
covered by insurance (regardless of whether the insurance is payable to or
protects IHFCo or Lessee, or both) neither IHFCo nor Lessee, nor their
respective officers, directors, employees, agents, invitees, assignees, tenants,
or subtenants, shall be liable to the other for such business interruption or
loss or damage to property, it being understood and agreed that each party will
look to its insuror for reimbursement. This release shall be effective only so
long as the applicable insurance policies contain a clause to the effect that it
shall not affect the right of the insured to recover under the policies. Such
clauses shall be obtained by the parties wherever possible. Nothing in this
Section may be construed to impose any other or greater liability upon either
IHFCo or Lessee than would have existed in its absence.

	 	
§10.3.  Assumption of Risks, Release, and
Indemnity.  Lessee (1) assumes all risks with respect to, (2)
releases IHFCo from liability for, and (3) agrees (except to the extent
IHFCo is effectively protected by insurance) to protect indemnify and save
harmless IHFCo from and to defend IHFCo (through counsel acceptable to
IHFCo) against any claim liability, loss, or damage arising out of or
connected with the following, however caused and wherever originating and
regardless of whether the cause or means of repairing the same is accessible to
or under the control of Lessee:

	 	(a)	
Damage to property of
Lessee, or its agents, employees or subtenants occurring in or about the Home
Furnishings Center;

	 	(b)	
Damage to property of anyone
occurring in or about the Premises;

	 	(c)	
Any injury to or
interruption of business or loss of profits attributable to or connected with
any damage to property referred to in subparagraphs (a) or (b), above.

	 	(d)	
Death or personal injury
occurring in or about the Premises (unless resulting from the negligence of
IHFCo or its employees); or

	 	(e)	
Any other risks with respect
to which Lessee is required to insure by the terms of this Lease (whether or not
such insurance is actually in force).

	 	
In addition to and without limiting the generality of the foregoing, Lessee’s assumption
of risk, release, and indemnity obligations as set forth above shall apply to any claim,
liability, loss or damage arising out of or in connection with (1) Lessee’s occupancy
of or conduct of business in the Premises (2) the condition of the Premises, (3) any
default of Lessee under this Lease; and (4) mechanic’s or materialmen’s liens
asserted by persons claiming to have dealt with Lessee or Lessee’s contractors.

Page 7 of 10

	11.0

DAMAGE OR DESTRUCTION	
§11.1.  Option to Terminate.  If the Premises
are damaged or destroyed by fire or other casualty to such extent that they are
completely untenantable, or if the area of the Home Furnishings Center in which
the Premises are located is so severely damaged that IHFCo elects to
demolish, or completely rebuild it, IHFCo may terminate this Lease by
notifying Lessee within thirty (30) days following the damage or destruction,
and rent and other charges payable by Lessee under this lease shall be
apportioned to the date of the damage or destruction.

	 	
§11.2.  Obligation to Repair or Restore.  If the
Premises are damaged by fire or other casualty, unless IHFCo has exercised
its right to terminate, if any, under §11.1, IHFCo shall with
reasonable dispatch, and in any event within one hundred eighty (180) days,
repair and restore the Premises to their condition existing at the date of the
damage or destruction (except for alterations and improvements installed by
Lessee and other property of Lessee, which Lessee shall repair and restore
within that time) and this Lease shall remain in full force and effect except
that rent shall abate as provided in §11.3.

	 	
§11.3.  Rent Abatement.  If the Premises are
damaged or destroyed by fire or other casualty and this Lease is not terminated,
rent and other charges under this Lease shall abate in the same percentage as
the rentable area of the Premises available for use bears to the entire rentable
area of the Premises; provided, however, that if the Premises are damaged or
destroyed to such extent that it is unreasonable to expect Lessee to continue to
operate the Premises as a showroom, all rent shall abate from the date of the
damage or destruction until the earlier of the date the Premises are repaired
and restored, or the date Lessee reopens the Premises as a showroom.
Notwithstanding the foregoing if IHFCo is able to repair and restore the
Premises within such time as to permit Lessee (in the exercise of reasonable
dispatch and considering the time required for Lessee to complete Lessee’s
restorations to the Premises and redecorate them) to use the Premises for a
showroom at the next ensuing Market after the damage or destruction, there shall
be no abatement of rent.

	12.0

DEFAULT	
§12.1.  Events of Default.  Lessee shall be in
default under this Lease if any one of the following Events of Default
occurs:

	 	(a)	
Lessee fails to pay when due
any installment of rent or other amount due under the terms of this Lease;

	 	(b)	
Lessee fails to pay when due
any other amount owed to IHFCo; or

	 	(c)	
Lessee repudiates or fails
to perform any obligation under §1.2 (Relocation), §4.0 (Use),
§5.0 (Assignment and Subletting), §7.3 (Alterations), §13.0
(Subordination) or §14.0 (Estoppel Certificates).

	 	(d)	
Lessee vacates or abandons
the Premises;

Page 8 of 10

	 	(e)	
Lessee becomes insolvent,
executes an assignment for the benefit of creditors, is adjudicated a bankrupt,
files for relief under the reorganization provisions of any Federal bankruptcy
law or state insolvency law, or a permanent receiver of the property of Lessee
is appointed by any court of competent jurisdiction.

	 	(f)	
Lessee repudiates or, within
ten (10) days after notice of nonperformance by IHFCo, fails to perform any
other obligation which it is required to perform under the terms of this Lease
or, if performance cannot reasonably be had within ten (10) days after notice
from IHFCo, Lessee fails to commence performance within that period and
diligently proceed to completion of performance.

	 	
§12.2.  Remedies.  If an Event of Default
occurs, IHFCo, at its option and without further notice to Lessee, may
pursue any remedy now or hereafter available to IHFCo under the laws of the
State of North Carolina. Without limiting the generality of the foregoing,
IHFCo shall be entitled to reenter the Premises by force, summary
proceedings or otherwise, expelling Lessee and removing all property from the
Premises, all without liability to Lessee or anyone else and
either:

	 	(a)	
attempt to relet the
Premises for such term and rental and upon such other terms and conditions as
IHFCo in its sole discretion deems advisable. All rentals received by
IHFCo from such reletting shall be applied, first, to payment of any
indebtedness other than rent due from Lessee to IHFCo; second, to payment of
any expenses of reletting, including, without limitation, the costs of
recovering the Premises, such alterations or repairs as may be necessary to
relet the Premises, brokerage fees, and reasonable attorney’s fees; third
to payment of any rent unpaid under the terms of this Lease; and the residue, if
any, to the payment of rent as the same becomes due and payable under this
Lease. If the amount received from such reletting and applied to rent during any
semiannual period is less than the rent reserved under this Lease, Lessee agrees
to pay the deficiency to IH FC®. The deficiency shall be calculated and paid
semiannually. No reentry or taking possession of the Premises by IHFCo shall
be construed as an election upon its part to terminate this Lease unless
IHFCo so notifies Lessee or this Lease is terminated by order of a court of
competent jurisdiction; or

	 	(b)	
notwithstanding any
reletting without termination, at any time after an Event of Default occurs,
elect to terminate this Lease, and, in addition to IHFCo's other
remedies, recover from Lessee all damages incurred by reason of Lessee’s
default, including, without limitation, the costs of recovering the Premises,
reasonable attorney’s fees, and the worth, at the time of the termination,
of the excess, if any, of the amount of rent reserved under this Lease over the
then reasonable rental value of the Premises for the remainder of the term of
the Lease, all of which amounts shall be immediately due and payable from Lessee
to IHFCo.

	 	
§12.3.  Late Charges.  If any installment of
rent or any other amount due under this Lease is not received by IHFCo
within ten (10) days after the date such payment was due, then Lessee shall be
obligated to pay, in addition to the amount due, a late charge equal to five
percent (5%) of the overdue amount. Lessee agrees that this late charge
represents a fair and reasonable estimate of the additional processing,
accounting and other costs IHFCo will incur by reason of late payment by
Lessee, the exact amount of which would be difficult to ascertain. Notification
by IHFCo to Lessee that a late payment charge has been added to the amount
of overdue rent or other charges shall not constitute a waiver of Lessee’s
default, nor preclude IHFCo from exercising any other
remedy.

Page 9 of 10

	 	
§12.4.  Security Interest.  As security for
performance and payment of all present and future rents and other obligations
required to be paid or performed by Lessee under the terms of this Lease, and
for any other amounts owed IHFCo by Lessee, Lessee hereby grants unto
IHFCo a security interest in all installations, samples, goods, merchandise,
furniture, fixtures, and other property of Lessee, now owned or hereafter
acquired, located in the Premises or the Home Furnishings Center. If an Event of
Default occurs, IHFCo at any time thereafter may exercise, in addition to
its other remedies, the rights of a secured party under Chapter 25 of the North
Carolina General Statutes. The proceeds from any sale of the collateral pursuant
to such remedies shall be applied in the following order: (a) the expense of
taking, removing, holding for sale, and preparing for sale, specifically
including IHFCo's reasonable attorney’s fees; (b) the expense of
liquidating any liens, security interests or other encumbrances superior to this
security interest; and (c) amounts owed by Lessee to IHFCo under the terms
of this Lease or otherwise, in the order herein provided for. Lessee agrees to
execute such financing statements and other documents as may be required to
perfect the security interest granted to IHFCo under this Section. If the
tenant has granted the Landlord or its predecessor a security interest under a
prior lease or other agreement (the Prior Lease), this paragraph continues and
re-affirms the security interest granted under the Prior Lease(s) and is not
intended to create a novation.

	 	
§12.5.  Partial Payment.  IHFCo shall not be
obligated to accept partial payments of rent or other charges due under this
Lease. If IHFCo accepts any such payment, IHFCo shall not be deemed to
have waived the default of Lessee by reason of non-payment of such charges in
full, nor to have waived its right to collect late charges. IHFCo will hold
any partial payment so received as a deposit against full payment of such
amounts. At any time prior to full payment by Lessee of such amounts, IHFCo
may exercise any one or more of its remedies on default, and apply the deposit
to any amounts or damages owed IHFCo as of the date IHFCo elects to
exercise such remedies, including, without limitation, pro rata rent and other
charges payable under this Lease for the current lease period up through the
date of the exercise by IHFCo of its remedies upon default. The acceptance
of such deposit by IHFCo shall be entirely without prejudice to
IHFCo's right thereafter, at any time prior to payment in full, to
assert such default, apply the deposit as provided in this section, and pursue
all remedies available to IHFCo under this Lease or applicable
law.

	 	
§12.6.  Default Under Prior Lease.  If this
Lease is to take effect at the expiration of an earlier lease between IHFCo
and Lessee for space in the Home Furnishings Center (the “Prior
Lease”), then this Lease is subject to Lessee’s performing its
obligations under the Prior Lease up through the date of its expiration. If an
Event of Default occurs under the Prior Lease and IHFCo, pursuant to its
rights under the Prior Lease, either (a) terminates Lessee’s right to
possession of the Premises or (b) terminates the Prior Lease, then this Lease
shall be automatically terminated, whether or not such termination is expressly
stated in any notice from IHFCo to Lessee.

Page 10 of 10

	13.0

SUBORDINATION	
At the election of IHFCo, this Lease shall be subordinate to a first
mortgage or deed of trust held by a lending institution and secured by the Home
Furnishings Center; provided, however, that IHFCo agrees to use reasonable
efforts to secure from the mortgagee a nondisturbance agreement providing that
in the event of foreclosure the mortgagee will recognize the validity of this
Lease, and, provided Lessee is not in default, will not disturb Lessee’s
possession hereunder.

	14.0

ESTOPPEL CERTIFICATES	
Upon ten (10) days prior written notice from IHFCo, Lessee agrees to
execute, acknowledge and deliver to IHFCo, Lessee’s certificate: (a)
stating whether this Lease is in full force and effect; (b) stating whether this
Lease has been modified, and if so, the nature of such modification; (c) stating
the date through which rent and other charges are paid in advance; (d) stating
whether, to Lessee’s knowledge, there are any uncured defaults of IHFCo
under this Lease, specifying the nature of any claimed default; and (e)
providing such other information as IHFCo may reasonably request with
respect to the status of the Lease. Any such certificate may be conclusively
relied upon by IHFCo or any prospective purchaser or mortgagee of the Home
Furnishings Center.

	15.0

NOTICES	
All notices required or permitted by the terms of this Lease shall be deemed
given when deposited in the United States Registered or Certified Mail, Postage
Prepaid, or with verification of delivery by telegram, cable, telex, commercial
courier or any other generally accepted means of business communication, to
either party, at the address set forth for such party on the first page of this
Lease. Either party may change the address to which notices must be sent by
giving notice to the other party in accordance with this
Section.

	16.0

MISCELLANEOUS	(a)	
This Lease shall be governed, construed, and enforced under the laws of North
Carolina and the parties submit to the jurisdiction of the courts of North
Carolina and stipulate that Guilford County, North Carolina, is proper venue for
the purpose of all controversies which may arise under this
Lease;

	 	(b)	
This Lease contains the entire understanding of the parties and there are no
conditions precedent to its effectiveness or collateral understandings with
respect to its subject matter;

	 	(c)	
It may not be modified
except by writing signed by both parties;

	 	(d)	
It shall not be construed
strictly against either party, but fairly in accordance with their intent as
expressed herein;

	 	(e)	
Lessor’s remedies are
cumulative and not exclusive of other remedies to which Lessor may be legally
entitled;

	 	(f)	
No waiver of any breach of a
provision of this Lease may be construed to be a waiver of any succeeding breach
of the same or any other provision, nor shall any endorsement or statement on
any check or letter accompanying payment be deemed an accord and satisfaction,
and IHFCo may accept payment without prejudice to its rights to pursue any
remedy provided for in this Lease;

	 	(g)	
Time is of the essence in
every particular, especially where the obligation to pay money is involved;

	 	(h)	
Amounts not paid IHFCo
when due will bear interest on the unpaid balance at the lower of one and
one-half percent (1-1/2%) per month or the maximum lawful rate; and

	 	(i)	
This Lease binds the
parties, their respective heirs, personal representatives, successors and
assigns.AMENDMENT NO. 1
 TO
PLEDGE AGREEMENT

            This is Amendment No. 1, effective as of June 24, 2002 (this “Amendment”), to the Pledge Agreement, dated as of December 17, 2001 (the “Pledge Agreement”), made by XL Investments Ltd., a company organized under the laws of Bermuda (“XL Investments”), XL Re Ltd, a company organized under the laws of Bermuda (“XL Re”), XL Insurance (Bermuda) Ltd, a company organized under the laws of Bermuda (“XL Insurance”), and XL Europe Ltd, a company organized under the laws of Ireland (“XL Europe” and, together with XL Investments, XL Re and XL Insurance, the “Grantors”) in favor of Citibank, N.A. (the “Bank”).

            In consideration of the agreements made in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Grantors and the Bank hereby agree as follows:

	 	1.	 	Section 1.1(a) of the Pledge Agreement is hereby amended to read in its entirety as follows:
	 	 	 
	 	  “Designated Accounts” shall mean, collectively, the custodial securities accounts maintained with the Custodian pursuant to terms of the Custody Agreement 

- 2 -

	 	  and set forth on Annex A hereto, as it may be amended from time to time. Custodial securities account(s) maintained by a Grantor with the Custodian may be designated as Designated Accounts pursuant to a Supplemental Document; provided, however, that no custodial securities account may be a Designated Account if any party to the Custody Agreement other than the Grantor maintaining such account has any interest therein or in any securities entitlements or other financial assets credited thereto; and provided, further, that Designated Accounts shall not include any securities account which has been withdrawn from the category of Designated Accounts pursuant to Section 2.3(a)(v) of this Agreement. Annex A shall be amended to reflect each addition or withdrawal of a securities account as a Designated Account.”
	 	 	 
	 	2.	 	Section 2.3(a) of the Pledge Agreement is hereby amended by deleting the first parenthetical thereof and by amending ‘three’ to ‘four’ in the clause 2.3 (a)(v).
	 	 	 
	 	3.	 	Annex A attached hereto is hereby also made Annex A to the Pledge Agreement.

- 3 -

	 	4.	 	The provisions of Article VI of the Pledge Agreement are incorporated herein and shall apply, mutatis mutandis, to this Amendment.
	 	 	 
	 	5.	 	Except as expressly amended hereby, the Pledge Agreement shall continue in full force and effect.

            IN WITNESS WHEREOF, each of the parties hereto has executed and delivered this Agreement.

	  	XL INVESTMENTS LTD
	 	 
	  	By_/s/ CHRISTOPHER V. GREETHAM
		Name:__CHRISTOPHER V. GREETHAM
	  	Title: Executive Vice President and Chief Investment Officer
	 	 
	 	 
	  	XL RE LTD
	 	 
	  	By_/s/ CHRISTOPHER V. GREETHAM
		Name:__CHRISTOPHER V. GREETHAM
	  	Title: Executive Vice President and Chief Investment Officer
	 	 
	 	 
	  	XL INSURANCE (BERMUDA) LTD
	 	 
	  	By /s/ CHRISTOPHER A. COELHO
	  	Name:_CHRISTOPHER A. COELHO
	  	Title: Senior Vice President and Chief Financial Officer 

- 4 -

	 	XL EUROPE LTD 
	  	By /s/ FIONA MULDOON
	 	Name: FIONA MULDOON 
	 	Title: Chief Financial Officer & Company Secretary
	  	 
	  	 
	  	CITIBANK, N.A.
	  	 
	 	By /s/ PHIL ARCH              
	 	Name: PHIL ARCH              
	 	Title: Vice President 

Dated as of July 1, 2003

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