LEASE AGREEMENT

BETWEEN

JOHN W. ROOKER, LLC

AS LANDLORD

AND

HAVERTY FURNITURE COMPANIES, INC.

AS TENANT

HAVERTY FURNITURE COMPANIES, INC.

SE REGIONAL DISTRIBUTION CENTER

LEASE AGREEMENT

TABLE OF CONTENTS

SECTION                                                                                                         PAGE
-------                                                                                                         ----
ARTICLE I             PREMISES....................................................................................1

ARTICLE II            TERM........................................................................................2

ARTICLE III           RENTAL......................................................................................2

ARTICLE IV            CONSTRUCTION OF IMPROVEMENTS................................................................5

ARTICLE V             USE OF LEASED PREMISES......................................................................6

ARTICLE VI            UTILITIES...................................................................................6

ARTICLE VII           LANDLORD'S DELIVERIES.......................................................................6

ARTICLE VIII          LANDLORD'S REPRESENTATIONS AND WARRANTIES...................................................9

ARTICLE IX            MAINTENANCE, REPAIRS, AND ALTERATIONS......................................................13

ARTICLE X             INDEMNIFICATION............................................................................15

ARTICLE XI            WAIVER OF SUBROGATION......................................................................15

ARTICLE XII           SIGNS......................................................................................16

ARTICLE XIII          ENTRY BY LANDLORD..........................................................................16

ARTICLE XIV           INSURANCE..................................................................................16

ARTICLE XV            ABANDONMENT................................................................................18

ARTICLE XVI           DESTRUCTION................................................................................18

ARTICLE XVII          ASSIGNMENT AND SUBLETTING..................................................................19

ARTICLE XVIII         INSOLVENCY OF TENANT.......................................................................20

ARTICLE XIX           BREACH.....................................................................................20

ARTICLE XX            ATTORNEY'S FEES............................................................................22

ARTICLE XXI           CONDEMNATION...............................................................................23

ARTICLE XXII          NOTICES....................................................................................23

ARTICLE XXIII         WAIVER.....................................................................................24

ARTICLE XXIV          EFFECT OF HOLDING OVER.....................................................................24

ARTICLE XXV           SUBORDINATION..............................................................................24

ARTICLE XXVI          ESTOPPEL CERTIFICATE.......................................................................25

ARTICLE XXVII         PARKING....................................................................................25

ARTICLE XXVIII        BROKERAGE COMMISSIONS......................................................................25

ARTICLE XXIX          TENANT FINANCING AND WAIVER OF LANDLORD'S LIEN.............................................26

ARTICLE XXX           DISPUTE RESOLUTION.........................................................................26

ARTICLE XXXI          MISCELLANEOUS PROVISIONS...................................................................28

EXHIBITS:

EXHIBIT A.........         Legal Description of the Land
EXHIBIT B.........         Work Letter Agreement, with Schedules 1-3, as follows:
                                    (i) Schedule 1: Construction Schedule
                                    (ii) Schedule 2: Special Project Conditions
                                    (iii) Schedule 3: Form of Change Order
EXHIBIT C.........         Site Plan
EXHIBIT D.........         Subordination, Non-Disturbance, Attornment Agreement
EXHIBIT E.........         Preliminary Plans and Specifications
EXHIBIT F.........         Final Plans and Specifications
EXHIBIT G.........         Special Stipulations, with Schedule 1 and 2, as follows:
                                    (i) Schedule 1: Complete and fully executed copy of Jordan Agreement
                                    (ii) Schedule 2: Complete and fully executed copy of Mason Agreement

HAVERTY FURNITURE COMPANIES, INC.

S.E. REGIONAL DISTRIBUTION CENTER

THIS LEASE AGREEMENT (hereinafter sometimes referred to as the "Lease") is made and entered into effective as of the 26th day of July, 2001, by and between JOHN W. ROOKER, L.L.C., a Georgia limited liability company (hereinafter referred to as "Landlord"), and HAVERTY FURNITURE COMPANIES, INC., a Maryland corporation (hereinafter referred to as "Tenant");

RECITALS

Landlord desires to design, construct and lease to Tenant a facility (the "Building") and other improvements, including, without limitation, parking and paved areas for truck operations, trailer loading and storage, car parking and loading of cars and trucks (the Building and other improvements are sometimes referred to collectively as the "Improvements") on property owned by Landlord, in accordance with the terms and subject to the conditions of this Lease.

Tenant desires to have constructed and to lease from Landlord the Improvements in accordance with the terms and subject to the conditions contained in this Lease.

AGREEMENTS

FOR AND IN CONSIDERATION of the mutual covenants contained in this Agreement, Landlord and Tenant (sometimes referred to jointly as the "parties") agree as follows:

ARTICLE I

PREMISES

1.01 The Premises.

Subject to the terms and conditions of this Lease, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord the following:
(i) an industrial distribution facility (the "Building") containing approximately 491,229 square feet of warehouse space and 19,581 square feet of office/administration space and its related Improvements, to be constructed by Landlord in accordance with the Work Letter Agreement attached hereto as Exhibit "B" and incorporated herein by this reference (the "Work Letter Agreement"),
(ii) the land on which the Building and related improvements are to be located (the "Land") as more particularly described on Exhibit "A" attached hereto and by this reference incorporated herein, and (iii) all rights, easements and appurtenances pertaining to the Land, including, but not limited to, rights of access, ingress and egress at the points shown on the Site Plan attached hereto as Exhibit "C" and incorporated herein by this reference (the "Site Plan"), in, to, from and over any and all streets, ways or alleys adjoining, abutting or adjacent to the Land, and the right to use all parking and trucking areas located on the Land, all as more particularly shown on the Site Plan. The Building, related Improvements, Land, and all such rights, easements and appurtenances thereunto appertaining are sometimes collectively referred to herein as the "Leased Premises" or the "Premises."

ARTICLE II

TERM

2.01 Primary Term. TO HAVE AND TO HOLD said Leased Premises for an initial or primary term commencing on the effective date of this Lease and terminating on the last day of the month containing the fifteenth (15th) anniversary of the "Rental Commencement Date" described below. Promptly following the Rental Commencement Date, Landlord and Tenant shall execute an instrument in recordable form setting forth the Rental Commencement Date and the primary term of this Lease.

2.02 Rental Commencement Date. Subject to the exception set forth in Section 2.03 below, after the Premises are completed and the Certificate of Occupancy and possession of the Premises are delivered to Tenant in accordance with the terms of the Work Letter Agreement, but in no event earlier than August 1, 2002 (the "Rental Commencement Date").

2.03 Suspension of Rental Commencement Date. Notwithstanding anything contained herein to the contrary, if the Rental Commencement Date would otherwise occur during the period commencing on October 1, 2002, and ending on January 1, 2003, then the Rental Commencement Date shall not occur and the rental obligations of Tenant hereunder shall not commence until January 1, 2003.

2.04 Option to Extend. Tenant shall have the right and option to extend and renew the term of this Lease for five (5) successive renewal periods of five (5) years each (each an "Extended Term") provided that Tenant gives written notice to Landlord of its intention to extend the term of this Lease at least six (6) months prior to the end of the then current term of the Lease. Extensions shall be upon the same terms and conditions as contained herein, except that Tenant shall pay the annual Base Rent in the amounts specified in
Section 3.01 below. The primary term and any Extended Term with respect to which Tenant exercises this option in accordance with this Section 2.04 are collectively called the "Term."

ARTICLE III

RENTAL

3.01 Base Rent. Commencing on the Rental Commencement Date described in Section 2.02 above, Tenant agrees to pay to Landlord, without offset or abatement, except as might otherwise be specifically provided in this Lease to the contrary, "Base Rent" as set forth below:

                               Monthly Base Rent                    Annual Base Rent
                               -----------------                    ----------------
Initial Term:
------------
Years 1-3                         $ 153,630.00                       $ 1,843,560.00

Years 4-6                         $ 177,800.00                       $ 2,133,600.00

Years 7-9                         $ 189,292.00                       $ 2,271,504.00

Years 10-12                       $ 199,770.00                       $ 2,397,240.00

Years 13-15                       $ 211,263.00                       $ 2,535,156.00

Option 1:
Years 16-20                     101% of Year 15                     101% of Year 15

Option 2:
Years 21-25                     105% of Year 20                     105% of Year 20

Option 3:
Years 26-30                     105% of Year 25                     105% of Year 25

Option 4:
Years 31-35                     105% of Year 30                     105% of Year 30

Option 5:
Years 36-40                     105% of Year 35                     105% of Year 35

Tenant shall pay each monthly installment of Base Rent in advance on the first day of each month during the Term, with the first installment of Base Rent being due on the Rental Commencement Date. If the Rental Commencement Date occurs on a day other than the first day of a calendar month, the Base Rent for the month in which the Rental Commencement Date occurs will be equal to the monthly installment amount specified above multiplied by a fraction, the numerator of which is the number of days in the period between the Rental Commencement Date and the last day of that month, and the denominator of which is the total number of days in that month. The term "Lease Year" means the full twelve (12) calendar month period that begins on the Rental Commencement Date and ends on the first anniversary of the day preceding the Rental Commencement Date, if the Rental Commencement Date occurs on the first day of a calendar month, or on the first anniversary of the last day of the calendar month in which the Rental Commencement Date occurs, if the Rental Commencement Date occurs on a day other than the first day of a calendar month whichever is applicable, and each successive period of twelve (12) calendar months occurring during the Term after that initial period.

If a termination of this Lease occurs prior to the last day of the Term (the "Expiration Date") for reasons other than Tenant's default and if the effective date of termination is other than the last day of a calendar month, the parties will prorate the Base Rent payable with respect to the calendar month in which the effective date of termination occurs based on the number of days in that month, and Landlord shall promptly refund to Tenant, without demand, setoff or deduction, any previously paid Base Rent attributable to any period of time following the termination date.

Notwithstanding anything contained herein to the contrary, as provided in the Work Letter Agreement, in the event the aggregate cost to Landlord to construct the Improvements increases or

decreases on account or by reason of the Aggregate Change Order Cost (as described and defined in the Work Letter Agreement), the Base Rent shall be proportionately increased or decreased to reflect same.

3.02 Late Fee. Any payment of monthly Base Rent not received by Landlord by the tenth (10th) day of the month shall bear a late fee of two percent (2%) of the amount due; provided, however, that said late fee shall not apply with respect to the first such late payment made in any Lease Year during the Lease Term.

3.03 Additional Rent. In addition to the Base Rent, Tenant shall pay all other sums, amounts, liabilities, obligations and charges to which Tenant assumes, agrees to pay, or is responsible for hereunder, whether designated as "Additional Rent" or otherwise, promptly at the times and in the manner herein specified and, except as otherwise specifically provided elsewhere in this Lease, without deduction, setoff, abatement, counterclaim, or other defense. Such Additional Rent includes the following:

(a) Landlord's Insurance Premiums. Provided Landlord shall have complied with its obligations under Section 14.01(a) of this Lease, Tenant agrees to pay to Landlord the amount of the premiums for the "all risk" fire and extended coverage insurance on the Building and the time element insurance required to be carried by Landlord pursuant to said Section 14.01 (a) and accruing on or after the Rental Commencement Date (the "Insurance Premiums"). Landlord does hereby notify Tenant, and Tenant does hereby acknowledge, that Landlord's good faith estimate of Landlord's Insurance Premiums for the first full calendar year in which the Rental Commencement Date occurs is $15,000.00. A pro-rata adjustment shall be made with respect to any payment of Insurance Premiums due from Tenant to Landlord in connection with both the policy period during which the Rental Commencement Date occurs and the policy period during which this Lease expires or is terminated.

(b) Real Estate Taxes and Impositions. The term "Real Estate Taxes" on the Premises shall mean and include all assessments and ad valorem real estate taxes payable on account of the Improvements and the Land and accruing on or after the Rental Commencement Date, but shall not include any special assessments imposed as a result of or in connection with the development of the Premises, and shall not include any income tax or other like tax which is measured in any manner by the income of Landlord, including, without limitation, any municipal, state or federal income or excess profits taxes assessed against Landlord, or any municipal, state or federal capital levy, estate, succession, inheritance or transfer taxes of Landlord, or corporation franchise taxes imposed upon the corporate owner of the fee of the Premises. Landlord agrees to pay all Real Estate Taxes promptly and before delinquency. Provided Landlord shall have complied with its obligations under this Section 3.03 (b) and Section 3.04 below, Tenant agrees to pay to Landlord (or, at Tenant's option, directly to the taxing authority), as "Additional Rent," the net amount (after recognition of credits and abatements, if any) of all Real Estate Taxes attributable to any period of time included within the Term (the "Impositions").

With respect to Impositions that may lawfully be paid in installments over a period of years, with or without interest, the foregoing will not require Tenant to pay any portion of those installments or interest that become due to the taxing authority after the Expiration Date. Moreover, with respect to Impositions levied in respect of any period of time within which either the Rental Commencement Date or the Expiration Date occurs, Tenant must only pay a proportionate part of those Impositions, which part will bear the same ratio to the total amount of those Impositions as the number of days in the period between the Rental Commencement Date and the end of that period of time or in the period between the beginning of that period of time and the Expiration Date, whichever is applicable, bears to the total number of days in that period of time.

Tenant shall also pay, prior to delinquency, all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all personal property of Tenant contained in the Premises.

3.04 Payment of Additional Rent; Tax Contests. Tenant shall pay the Impositions and Insurance Premiums to Landlord, at the address set forth in Article XXII or at such other address as Landlord may from time to time designate, on an annual basis, but prorated for any partial years, within thirty
(30) days following receipt by Tenant of (a) an invoice for the Impositions for such period, accompanied by a true and correct copy of the tax bill(s) evidencing the Real Estate Taxes for such period and Landlord's payment in full thereof, and (b) the receipted bill showing payment in full by Landlord of the Insurance Premiums. Landlord shall retain records of all costs incurred by Landlord for Real Estate Taxes and Insurance Premiums, and copies of any of said records shall be made available to Tenant upon request. If Tenant shall request that Landlord contest the amount or validity of Real Estate Taxes assessed against the Premises, and Landlord, within thirty (30) days following such request, does not give notice to Tenant of Landlord's intention to contest such Real Estate Taxes, Tenant shall have such rights, at its sole cost and expense, to contest the validity or amount of Real Estate Taxes as are permitted by law, either in its own name or in the name of Landlord, in either case with Landlord's full cooperation. In conjunction with any such contest, Landlord shall make available to Tenant such information as Tenant may reasonably request, which information may be required by the assessor in connection with a tax contest.

3.05 "Net" Lease. Notwithstanding anything to the contrary in this Lease, (a) this Lease shall be deemed and construed to be a completely "net lease," (b) Tenant shall pay to Landlord through the Lease Term, all Base Rent when due, free and clear of and without any offset, abatement, counterclaim, defense or deduction whatsoever, except as specifically provided herein, and (c) except as otherwise expressly set forth in the Lease to the contrary, beginning on the Rental Commencement Date, Tenant shall be responsible for paying, during the Lease Term, all expenses, costs and amounts because of or in connection with the ownership, operation, management, maintenance, repair, replacement, or restoration (or any one or more of them) of the Premises.

ARTICLE IV

CONSTRUCTION OF IMPROVEMENTS

4.01 Work Letter Agreement. Landlord and Tenant acknowledge and agree that the Building and Improvements shall be constructed in accordance with the Work Letter Agreement.

4.02 Construction Risks. Nothing contained in this Lease shall constitute Landlord as the agent of Tenant, in any sense, in preparing the Land for construction or in constructing the Leased Premises. Landlord hereby indemnifies Tenant and saves and holds Tenant harmless from and against any and all claims and demands which may arise out of the performance of Landlord's work in constructing the Leased Premises as required herein by reason of any (a) mechanic's, materialman's, subcontractor's, contractor's or similar lien; (b) use of unskilled labor; or (c) willful misconduct or gross negligence of Landlord, its officers, employees, contractors, and subcontractors their officers or employees); together with any and all loss, cost, damage, liability or expense incurred by Tenant in connection therewith, including, without limitation, attorney's fees and court costs. Tenant hereby indemnifies Landlord and saves and holds Landlord harmless from and against any and all claims and demands which may arise out of the performance of Tenant's work in fixturing and merchandising the Leased Premises prior to the Rental Commencement Date by reason of any (a) mechanic's, materialman's, subcontractor's, contractor's or similar lien; (b) use of unskilled labor; and (c) to the extent not covered by any insurance required to be maintained by either party pursuant to this Lease, willful misconduct or gross negligence of Tenant, its officers, employees, contractors, and subcontractors

(and any of their officers or employees); together with any and all loss, cost, damage, liability or expense incurred by Landlord in connection therewith, including, without limitation, attorney's fees and court costs.

ARTICLE V

USE OF LEASED PREMISES

5.01 Use. The Leased Premises may be used and occupied for any lawful purposes reasonably related to Tenant's business operations, including, without limitation, warehousing and distribution, offices and such other uses as are incidental thereto and customary in connection therewith. The Premises shall not be used for any illegal purposes, or in any manner to create a nuisance or trespass, or in any manner to change its current operations therein, the result of which would be to materially change the insurance rating on the Premises.

ARTICLE VI

UTILITIES

6.01 Utilities. Tenant shall be solely responsible for and shall pay all charges for use or consumption of sanitary sewer, water (including water used for irrigation purposes, to the extent separately metered), gas, electricity, telephone and any other utility services for the Leased Premises. Landlord covenants and agrees that all utility services for the Building shall be separately metered. Landlord shall not be liable in the event of any interruption in the supply of any utilities unless and except to the extent caused by the actions or inactions of Landlord or those for whom Landlord is responsible at law. Notwithstanding the foregoing, Landlord agrees to use all reasonable efforts to aid Tenant in having any such interrupted utility restored in an expeditious manner. In relation thereto, Landlord acknowledges and agrees that in the event utility service to the Leased Premises are interrupted as a result of the negligence of Landlord or its agents and such interruption continues for more than one (1) business day after Tenant gives written notice thereof to Landlord, then, in such event, the Base Rent due hereunder shall be abated for the period beginning on that date which is the date of such notice and shall continue until such interrupted utility is restored; provided, however, in the event Tenant continues to use any portion of the Premises during such period, then, in such event, the abatement of Base Rent during such period shall be prorated based on the square footage of that portion of the Premises not in use by Tenant versus the total square footage of the Premises. Tenant agrees that it will not knowingly install any equipment which will exceed or overload the capacity of any utility facilities and that if any equipment installed by Tenant shall require additional utility facilities, the same shall be installed by Tenant, at Tenant's expense, substantially in accordance with plans and specifications approved in writing by Landlord.

ARTICLE VII

LANDLORD'S DELIVERIES

7.01 Title Matters.

(a) Within twenty (20) days after the effective date of this Lease, Landlord shall order from a title company acceptable to Tenant
("Title Company") (i) a current Title Insurance Commitment (the "Title Report") that commits to insure Tenant's leasehold interest in the Premises, and (ii) one copy of all recorded documents to which reference is made in the schedules to that Title Report. Landlord must cause the Title Company to deliver the Title Report and the associated documents to

Tenant within thirty (30) days after the date of full execution of this Lease. Within that same time period, Landlord must also deliver to Tenant a copy of all unrecorded instruments affecting title to the Premises and a certificate by which Landlord certifies to Tenant that those copies are true, correct and complete and there are no other unrecorded instruments in force that affect title to the Premises;

(b) Within thirty (30) days after the date of Tenant's receipt of the last of the Title Report, the Survey required by virtue of
Section 7.01 (d) below, and the other documents that Landlord must deliver or cause to be delivered in accordance with the terms of Section 7.02, Tenant must either submit to Landlord written objections to the condition of title to the Premises, as reflected in those delivered items, or give Landlord written notice that it finds the condition of title to the Premises, as reflected in the delivered items, to be acceptable. For purposes of this Lease, the term "Permitted Exceptions" shall mean and include only those matters that affect title to the Premises, that Landlord has disclosed to Tenant by means of the deliveries made in accordance with the terms of Section 7.02, and that Tenant acknowledges to be acceptable to it by means of written notice to Landlord. Without Tenant's prior written approval (which approval shall not be unreasonably withheld by Tenant with respect to Landlord's creation of utility easements serving only the Premises), Landlord must not permit title to the Premises to be affected by any liens, encumbrances, easements, rights-of-way, restrictions, conditions, covenants, rights or other matters that come into existence or appear of record for the first time after the effective date of the Title Report ("Intervening Encumbrances"), except for Intervening Encumbrances that come into existence by operation of law without action on Landlord's part. If Landlord proposes to create an Intervening Encumbrance or an Intervening Encumbrance comes into existence by operation of law without action on Landlord's part, Tenant must either submit to Landlord written objection to the Intervening Encumbrance or manifest by written notice to Landlord its acceptance of the Intervening Encumbrance as a Permitted Exception within twenty (20) days after the date of Tenant's receipt of the last of a written notice by which Landlord describes the Intervening Encumbrance, a copy of the instrument that creates or will create, or that evidences, the Intervening Encumbrance, and, if Tenant requests, a revised survey plat showing the areas within the Premises affected by the Intervening Encumbrance. Tenant may object to title matters in accordance with the terms of this Section 7.01 only if Tenant determines in its sole discretion that those matters render title to the Premises unmarketable or could result during the Term in unreasonable interference with the normal operation of its business on the Premises. Among the matters to which Tenant may object are (i) any easements, encumbrances or exceptions to title existing on or as of the effective date of this Lease, (ii) the depiction on the Survey of any encroachment of improvements from or onto the Land or any encroachment across any building setback line or into any easement, (iii) the failure of the legal description set forth in Exhibit "A" to close, (iv) the depiction on the Survey of any strips or gores, or (v) the inability of the surveyor preparing the Survey to specifically locate and to depict on the Survey any appurtenant easements because of incomplete descriptions or for other reasons;

(c) If Tenant objects to any title matter in accordance with the terms of this Section 7.01, Landlord shall eliminate the effect of that title matter on the title to the Premises within twenty (20) days after the date of the delivery of Tenant's objection. If Landlord fails to timely perform the foregoing obligation within the twenty (20)-day period described above in this
Section 7.01, Tenant may terminate this Lease by delivering written notice to Landlord at any time prior to the earlier of the date that is thirty (30) days after the date of the expiration of that twenty (20)-day period;

(d) Unless Tenant waives the requirement in writing, Landlord shall deliver to Tenant, at Landlord's expense, within thirty (30) days after the date of full execution of this Lease, an ALTA survey plat (the "Survey") that depicts the Land and that a land surveyor, who is duly licensed in the state where the Land is located and is acceptable to Tenant and the Title Company, prepares on the basis of a current survey of the Land. The surveyor must conduct his or her survey of the Land, and prepare and certify the Survey, in accordance with the requirements of this Section 7.01 (d) and such

other standards as Tenant may establish. The Survey will show such state of facts as a detailed physical inspection of the Land would reveal, including, without limitation, (i) the courses and measured distances of the exterior property lines of the Land, (ii) the area of the Land expressed in square feet,
(iii) the location of adjoining streets, (iv) the location of setback lines and easements, each identified, if appropriate, by the recording references of the recorded instrument that created that setback line or easement, (v) the location of encroachments, if any, upon the Land, and (vi) the location and path of utility connections, if any, for the Improvements. With respect to the easements burdening and benefiting the Land, the Survey will specifically identify their location and dimensions. The Survey will include a certification that, with respect to any support utility and mechanical easements depicted on the Survey, there are no gaps or gores between the Land and the point of commencement of the easements and those easements with no gaps or gores, from the Land to dedicated and accepted public utility easements. The legal description of the Land appearing on the Survey will be the same as that appearing in the Title Report. In addition, the surveyor must prepare and certify the Survey in accordance with the Minimum Standard Detail Requirements for land title surveys adopted by the American Land Title Association and American Congress on Surveying and Mapping. The Survey will include a certification as to whether any part of the Land lies within an area that the Federal Emergency Management Agency has designated as a flood prone or flood hazard area. Landlord must also cause, at Landlord's cost and expense, such additional survey work as may be necessary or required by the Title Company to be completed in a timely fashion for issuance of the final title insurance policy free and clear of survey exceptions. If required by the Title Company, Landlord must also cause the surveyor to recertify the Survey to the satisfaction of Tenant and the Title Company no more than five (5) days prior to the Title Policy Date;

(e) At Tenant's election, but subject to Tenant's payment of the applicable premium, Landlord must cause the Title Company to issue in Tenant's favor within one hundred twenty (120) days after the effective date of this Lease ("Title Policy Date") an extended form ALTA 1992 Form B owner's policy of title insurance (the "Title Policy"), together with any endorsements that Tenant considers necessary. The Title Policy must insure Tenant's good and marketable leasehold interest in the Premises in an amount designated by Tenant subject only to exception from insurance coverage for the Permitted Exceptions. Without limiting the generality of the foregoing, in order for the Title Policy to satisfy the requirements of this Section 7.01(e), (i) the Title Company must delete all standard exceptions from the Title Policy; (ii) the Title Policy must affirmatively insure over all survey matters, whether based upon matters of record or otherwise; (iii) the Title Company must endorse the exception as to restrictive covenants "None of Record" except for Permitted Exceptions; (iv) the Title Policy must include a standard form endorsement 100, a zoning endorsement and a contiguity endorsement and a statement that all taxes and general and special assessments that became due prior to the Title Policy Date have been paid; (v) the Title Company must limit the exception as to the lien for taxes to general real property taxes for the current year not yet due and payable and subsequent years, and must endorse that exception "Not yet delinquent by nonpayment"; and (vi) the Title Policy must include an endorsement that insures unconditional legal access to the Premises from all adjoining public or private streets or ways and from any parking facility adjoining and serving the Premises;

7.02 Landlord Deliveries. To the extent not already delivered, on or prior to five (5) days after the effective date hereof, Landlord shall deliver to Tenant each of the following (each of which shall be in form and substance satisfactory to Tenant):

(a) A copy of a current title insurance policy, abstract of title, or title report relating to the Land;

(b) A copy of a current survey of the Land;

(c) A copy of a current Phase I environmental assessment of the Land, and each and every other or additional environmental testing report or similar report relating to the Land of which Landlord has knowledge;

(d) A certificate from the appropriate governmental entity with respect to the zoning classification (and any conditions thereof) applicable to the Land;

(e) Appropriate evidence establishing the authority of Landlord to enter into this Lease and consummate the transactions described herein;

(f) An affidavit of title executed by Landlord with respect to the Leased Premises, in form and content satisfactory to Tenant's title insurance company, as required in order to issue title insurance without exception for unrecorded liens or claims or for the rights of parties in possession;

(g) Subordination, Non-Disturbance and Attornment Agreement substantially in the form attached hereto as Exhibit "D", or otherwise in form and substance satisfactory to Tenant, executed by each of Landlord, the current Landlord's Mortgagee, each ground lessor and any Mortgagee of such ground lessor; and

(h) A broker's lien waiver executed by the Broker (in form and content satisfactory to Tenant's title insurance company), sufficient to cause said title insurance company to issue its policy of title insurance in favor of Tenant without exception to any lien or claim for brokerage services, whether arising under Section 44-14-600 et. seq. of the Official Code of Georgia Annotated, or otherwise.

ARTICLE VIII

LANDLORD'S REPRESENTATIONS AND WARRANTIES

8.01 Warranties and Representations. Landlord represents and warrants to Tenant that:

(a) after due inquiry, Landlord does not have knowledge of, or reason to believe that there are, grounds for the filing of any lien against the Premises and there is no pending action, arbitration, suit, or other similar proceeding which affects or relates to the Leased Premises or which, if determined adversely to Landlord, would or might result in the creation of a lien against or other interest in the Leased Premises;

(b) after due inquiry, Landlord does not have knowledge of any pending condemnation or similar proceeding affecting any part of the Premises;

(c) after due inquiry, Landlord does not have knowledge of any legal actions, suits, or other legal or administrative proceedings that are now pending or threatened against either Landlord or the Premises and that would adversely affect Tenant's possession of the Premises in accordance with the terms of this Lease if finally adjudicated in a manner adverse to the interests of Landlord;

(d) Landlord has neither granted any leases or licenses nor created any tenancies affecting the Premises and there are no parties in possession of any portion of the Premises as trespassers or otherwise;

(e) after due inquiry, Landlord does not have knowledge of any uncured violations of federal, state or municipal laws, ordinances, orders, regulations or requirements affecting any portion of the Premises;

(f) the Premises have adequate legal access to abutting public highways, streets and roads;

(g) after due inquiry, Landlord does not have knowledge of any pending or threatened governmental or private proceedings that would impair or result in the termination of access from the Premises to abutting public highways, streets, and roads, and Landlord does not have knowledge of any general or special assessment or other governmental imposition (other than ad valorem taxes), either pending or proposed, relating to the Leased Premises, or any pending or planned street improvements or modifications in the vicinity of the Leased Premises (such as, without limitation, the construction of any proposed median) which would or might reasonably be expected to affect pedestrian or vehicular access to the Leased Premises;

(h) there is presently in existence or available water, electrical, sanitary sewer and gas utility service adequate for Tenant's intended use of the Premises;

(i) Tenant's intended use and occupancy of the Premises fully comply with all requirements of applicable building, zoning and land development ordinances and all conditions of applicable planning board, subdivision, site plan and variance approvals, if any, issued in connection with the development of the Premises;

(j) Landlord will obtain, prior to the Rental Commencement Date, all required governmental permits and authorizations, site plan approvals and permits and certificates of occupancy necessary for Tenant's occupancy and intended use;

(k) Landlord has disclosed to Tenant in writing all information known to Landlord relating to environmental hazards on or about the Leased Premises, and Landlord has delivered to Tenant a copy of each and every environmental testing report or similar report relating to the Leased Premises of which Landlord has knowledge;

(l) Landlord knows of no releases of, or the presence of, any hazardous or toxic material, substance or waste on or about the Premises or any adjacent property;

(m) to Landlord's knowledge, the Premises and all past or present operations conducted on or about the Premises have complied with all Environmental Laws (as defined in Section 8.03 below) and orders of any governmental authorities having jurisdiction under any Environmental Laws;

(n) Landlord has no knowledge of or information regarding the presence of any hazardous or toxic material, substance or waste at adjacent properties that could migrate to, through, over or under the Premises. Landlord's tender of possession of the Premises to Tenant following completion of the construction of the Improvements will constitute Landlord's reaffirmation of the warranties set forth in this Section 8.01(n) as of the date of that tender;

(o) to the best of Landlord's knowledge, the Leased Premises have never contained any underground storage tank or similar structure, and the Leased Premises have never been used as a landfill or dump, or for the operation of any business engaged in the storage or sale of petroleum products, or for the storage or disposal of any hazardous or toxic substances, or in violation of any of the aforesaid laws or regulations;

8.02 Compliance with Laws. All Improvements located on the Leased Premises shall be constructed by Landlord in compliance with all federal, state, county, municipal or local government

laws, ordinances, regulations, rules and orders (including, without limitation, all Environmental Laws, the Americans With Disabilities Act and the Occupational Safety and Health Act of 1970, as amended). Without limiting the foregoing, Landlord shall obtain, keep in effect and comply with all governmental permits and authorizations required by all Environmental Laws with respect to the Premises or operations conducted on the Premises.

8.03 Compliance with Environmental Laws.

(a) Landlord warrants and represents to Tenant that, to the best of its knowledge after due inquiry, the Premises are in full compliance with all applicable environmental laws, rules, requirements, orders, directives, ordinances and regulations of the United States of America or any state, city or municipal government or lawful authority having jurisdiction over the Premises (collectively "Environmental Laws"). Notwithstanding anything contained in this Lease to the contrary, except as set forth in paragraph (c) below, Landlord shall take, at its expense, all action necessary, including all remediation and clean up work, to ensure that the Premises comply at all times with all Environmental Laws and that the Premises are safe for use and occupancy at all times.

(b) Except as set forth in paragraph (c) below, Landlord shall defend, indemnify and save Tenant and its directors, officers, agents, employees and contractors harmless form and against all claims, obligations, demands, actions, proceedings, judgments, losses, damages, liabilities, fines, penalties and expenses (including, without limitations sums paid on settlement of claims, reasonable attorneys' fees, and reasonable consultant and expert fees and expenses) that any one or more of them may sustain in connection with any failure of the Premises to comply with Environmental Laws or in connection with any environmental condition affecting the Premises.

(c) Except as provided in paragraphs (a) and (b) above, Tenant shall timely comply, at its cost and expense, with all rules, requirements, orders, directives, ordinances and regulations applicable to Tenant's use and occupancy of the Premises, including, without limitation, the Environmental Laws, and shall defend, indemnify and hold Landlord and its directors, officers, agents, employees and contractors harmless from and against all claims, obligations, demands, actions, proceedings, judgments, losses, damages, liabilities, fines, penalties and expenses (including, without limitation, sums paid on settlement of claims, reasonable attorneys' fees, and reasonable consultant and expert fees and expenses) that any one or more of them may sustain by virtue of any environmental condition that Tenant's use and occupancy of the Premises causes and the continued existence of which violates the Environmental Laws. The liability arising by virtue of the foregoing covenants on the part of Tenant will not exceed the cost of restoring the Premises to the condition that exists at the Rental Commencement Date. Moreover, under no circumstances will Tenant be liable for the actions of parties not under the control of Tenant; provided, however, for the purposes of this sentence, Tenant's employees, consultants, invitees and authorized agents shall be deemed to be under Tenant's control.

(d) Notwithstanding the foregoing apparently to the contrary, if any environmental condition encompassed within this Section 8.03 and not attributable to Tenant's use and occupancy of the Premises is not susceptible to being corrected within one hundred eighty (180) days after the date of its discovery or if Landlord fails within one hundred eighty (180) days after the date of its discovery to correct a condition that is susceptible to being corrected within that period of time, Tenant may terminate this Lease by the delivery of written notice to Landlord at least thirty (30) days in advance of the effective date of termination specified in that notice. Further, if the correction of any environmental condition not attributable to Tenant's use and occupancy of the Premises partially or totally impairs Tenant's use of the Premises, Tenant's obligation to pay Base Rent and Additional Rent will abate during the period the corrective activity takes place in proportion to the diminished utility of the Premises in the conduct of Tenant's business.

(e) The indemnities of Landlord and Tenant contained in this Section 8.03 will not extend to loss of business, lost rentals, diminution in property value, or incidental, indirect or consequential damages.

(f) The provisions of this Section 8.03 will survive the expiration of the Term or the earlier termination of this Lease.

8.04 Entry Onto Leased Premises. During the course of construction of the Improvements, Tenant and Tenant's agents or contractors may enter upon the Leased Premises for purposes of inspecting and reviewing the work, taking measurements, making plans, installing racks and trade fixtures, security and fire alarm systems, sprinkler lines and systems, computer lines and systems, and telephones, erecting temporary or permanent signs and doing such other work as may be appropriate or desirable without being deemed thereby to have taken possession or obligated itself to pay rent, but Tenant agrees that: (a) Landlord shall have no liability for injury to any person or damage to any property of Tenant stored on the Leased Premises except for damages caused by the willful act or negligence of Landlord or its employees or agents, (b) Tenant shall not materially interfere with Landlord's construction work on the Leased Premises,
(c) Tenant shall indemnify, protect and hold harmless Landlord from and against any and all claims, demands, damages, losses, costs, expenses, liabilities and actions at law or in equity based upon any occurrence or condition arising out of or attributable to Tenant's negligent exercise of such right to the extent not covered by the insurance required to be maintained by Landlord pursuant to
Section 14.01 below, and (d) Tenant shall be solely responsible for the permitting of any such work it performs. Likewise, during such time as Tenant is on the Leased Premises for purposes of Tenant's fixturing work, Landlord agrees that: (a) Tenant shall have no liability for injury to any person or damage to any property of Landlord stored on the Leased Premises except for damages caused by the willful act or negligence of Tenant or its employees or agents, (b) Landlord shall not materially interfere with Tenant's construction work on the Leased Premises, (c) Landlord shall indemnify, protect and hold harmless Tenant from and against any and all claims, demands, damages, losses, costs, expenses, liabilities and actions at law or in equity based upon any occurrence or condition arising out of or attributable to Landlord's exercise of such right, and (d) Landlord shall be solely responsible for the permitting of any such work it performs. Tenant shall comply with the requirements set forth in the "Safety Starts Here" Safety Manual for John W. Rooker and Associates (a copy of which has been delivered to Tenant) in connection with any entry upon the Leased Premises pursuant to this Section 8.04.

8.05 Construction Warranty and Repair of Site or Structural Defects. Notwithstanding anything elsewhere in this Lease to the contrary, Landlord shall, at its sole cost and expense, upon notice by Tenant, repair, replace or otherwise correct site, structural or other construction defects, as well as defects in any of the items to be constructed or installed by Landlord in accordance with this Lease, as and in the manner provided in Section 2.03 of the Work Letter Agreement. In addition, Landlord acknowledges and agrees that it shall, at its sole cost and expense, repair any site defects or structural defects in any of the structural components of the Leased Premises discovered during the Term. Landlord acknowledges and agrees that notwithstanding any provision to the contrary contained herein, Landlord's costs incurred in connection with its obligations under this Section 8.05 shall not be passed through to Tenant.

8.06 Report of Defects. From the Rental Commencement Date until the expiration or earlier termination of the Term hereof, Tenant shall have exclusive control of the Leased Premises and Landlord shall be under no obligation to inspect the same. Tenant shall report in writing to Landlord any defective condition known to it which Landlord is required to repair, and Landlord shall move with reasonable diligence to repair such condition. Landlord agrees that in the event Landlord fails to maintain the Leased Premises as required or fails to commence to make repairs within ten (10) days after its receipt of notice from Tenant, or fails thereafter to diligently pursue such repair to completion, then Tenant shall have the

right to make such repairs and charge Landlord for the cost thereof, and Landlord shall promptly pay Tenant such costs. Failure to report such defects within a reasonable time after discovery shall make Tenant responsible to Landlord for any and all additional costs or liability incurred by Landlord resulting from such delay in notification.

ARTICLE IX

MAINTENANCE, REPAIRS, AND ALTERATIONS

9.01 Landlord's Maintenance and Repairs. Landlord agrees that it shall, at all times during the Term of this Lease, at its sole cost and expense except if and to the extent any such repairs are caused solely by Tenant's gross negligence or willful misconduct:

(a) Keep, repair and maintain in good order and condition
(i) the structural portions of the Building, including, without limitation, the roof; (ii) the exterior walls (painted, cleaned and/or sandblasted); (iii) the window frames (but only to the extent repair thereto is necessitated due to settling of the Building or other structural failure of the Building) and the windows; (iv) the foundation; (v) structural parts of the floor; (vi) all structural members; (vii) all utility lines and related facilities which service the Leased Premises and which are located outside of the Building ; (viii) the automatic sprinkler supply line (excluding exposed sprinkler heads); and (ix) the wiring from the main circuit breaker panels (excluding the circuit breaker) to the weatherboard and extending to the public utility power sources;

(b) Make any repairs to the Leased Premises which would otherwise be the responsibility of Tenant and which are required because of defective or faulty installation or materials or other latent defects;

(c) Make any repairs to the Leased Premises caused by the acts or negligence of Landlord, its employees, officers, agents, licensees, invitees, contractors or subcontractors;

(d) Make any and all structural repairs, alterations and additions (i) which may be hereafter required by any law, ordinance, order or regulation of any public authority having jurisdiction over the Leased Premises (excluding any such repairs, alterations and additions if and to the extent that the same are required because of any particular use made of the Leased Premises by Tenant, which shall be Tenant's responsibility), or (ii) which may be required or recommended by Tenant's insurance carrier if, in such carrier's professional engineering analysis and judgment, such repair, alteration or addition is necessary or advisable to prevent an increased risk of an insured loss, regardless of cause; and

(e) Landlord shall replace all landscape plantings that die during the initial year of the Term for reasons not attributable to a failure on Tenant's part to make arrangements for the landscaping care described below.

The Base Rent shall be proportionately abated for that period of time Tenant is deprived of the use of all or a portion of the Leased Premises while any such repair is being performed. The abatement of the Base Rent shall be equal to the proportion of the floor area of Building of which Tenant is deprived of the use to the total square feet of floor area of the Building.

All repairs, alterations or additions required to be made by Landlord under the terms of this Lease shall be commenced and completed within ten (10) days after Landlord receives written notice from Tenant of the need therefor; provided that if the work cannot reasonably be completed within ten (10) days, then Landlord shall have such additional time as shall be reasonably necessary, so long as Landlord has commenced the work within said ten (10)-day period and thereafter diligently proceeds to complete

the same. In the event Landlord fails or refuses to make such required repairs, alterations or additions within the time period therefor, Tenant shall have the right (but not the obligation) to make such repair, alteration or addition and upon completion thereof, deliver an invoice for the reasonable cost thereof to Landlord for payment. Landlord shall have a period of thirty (30) days after receipt of such invoice in which to pay Tenant, failing in which, Tenant may deduct the cost thereof from each monthly installment of the Base Rent thereafter becoming due until such cost, together with interest thereon at the rate of twelve percent (12%) per annum for the period from the date such cost was incurred to the date repaid, shall be recovered in full.

(f) Tenant's Maintenance and Repairs. During the Term of this Lease, Tenant agrees that, except as otherwise provided in this Lease, it shall repair and maintain in good condition (i) the interior and exterior non-structural portions of the Leased Premises, (ii) all paved areas, driveways, walkways, parking areas, grounds and landscaping located on the Premises; and
(iii) all utility lines and related facilities serving the Building and located within the Building; provided, however, Tenant shall not have any obligation to perform any maintenance and repair to the interior of the Premises caused by or resulting from Landlord's failure to perform any of its obligations hereunder. The repairs and maintenance of the Premises which are the responsibility of Tenant hereunder shall include, without limitation, interior pest control, the HVAC system; the life/safety systems, signage, the security system (access control and keying),and trash and waste removal (including, but not limited to, solid waste, hazardous waste and recycling). Landlord shall assign to Tenant the non-exclusive benefit of any warranty or other protection afforded by the manufacturers or installers of all portions of the Premises which Tenant is obligated to repair and maintain, as aforesaid. Notwithstanding anything contained herein to the contrary, Tenant shall not be required to make any repairs (to the extent over $1,000.00 per single occurrence), alterations or replacements to the HVAC system during the last twelve (12) months of the Term hereof (including any extensions thereof).

(g) Emergency Repairs. In the event it shall become necessary to make any emergency repair which would otherwise be required to be made by Landlord, Tenant shall use its best efforts to contact Landlord, and in the event of its inability to do so, Tenant may proceed forthwith to have the repairs made and pay the cost thereof and promptly thereafter deliver a bill for such repairs to Landlord. In the event the bill for such repairs is not paid within thirty (30) days after Landlord's receipt of such bill, Tenant may deduct all of its cost and expenses in connection therewith from each monthly installment of the Base Rent thereafter becoming due until such sum, together with interest thereon at the rate of twelve percent (12%) per annum for the period from the date such cost was incurred to the date repaid, shall be recovered in full. For purposes of this Section 9.01 (g), an "emergency repair" will be deemed necessary if the failure to immediately repair or correct a condition in the Premises could result in a hazardous situation or condition or have, in the reasonable opinion of Tenant or its insurance carrier, an adverse effect on or to normal business operations in the Premises or result in damage to Tenant's personal property, product or inventory, or threaten the life or safety of Tenant's employees, customers, visitors, agents or consultants.

9.02 Alterations, Additions and Improvements. Tenant shall have the absolute right, without obtaining the consent of Landlord, to make alterations, additions or improvements to the Leased Premises so long as same are made in accordance with all applicable laws, rules and regulations, and so long as same do not affect the structural integrity or reduce the level of supporting systems below that required for general warehouse use. Tenant shall, prior to making any material or substantial alterations, additions or improvements, provide to Landlord a copy of the plans and specifications therefor.

9.03 Surrender of Leased Premises. Notwithstanding any other provisions contained herein to the contrary, upon the termination of this Lease and Landlord's reasonable request made in writing within six (6) months prior to the scheduled Expiration Date, Tenant agrees to remove, within sixty (60) days

after the Expiration Date, at Tenant's sole cost and expense but without payment of any Base Rent or Additional Rent for and during such sixty (60) day removal period, all improvements made to, in or on the Premises by or at the expense of Tenant, including without limitation, counters, shelving, racks, and security systems, and such alterations, additions, trade fixtures, machinery or other trade equipment installed by Tenant, and to repair any material damage to the Leased Premises as may be occasioned by such removal. Tenant shall otherwise return the Leased Premises on the termination of this Lease broom clean and in reasonably good condition, casualty, condemnation, reasonable wear and tear excepted.

ARTICLE X

INDEMNIFICATION

10.01 Indemnity by Tenant. Except as provided in Section 11.01 below, Tenant shall indemnify and hold Landlord harmless and against all claims, actions, demands, judgments, damages, liabilities and expenses, including reasonable attorneys' fees, that may be asserted against Landlord or that Landlord may sustain by virtue of the occurrence of the death of or bodily injury to any person or the loss of, damage to, or destruction of, any property arising (a) from Tenant's use and occupancy of the Premises, except to the extent the claims, actions, demands, judgments, damages, liabilities or expenses arise from the intentional or negligent acts or omissions of Landlord or any of its representatives, agents, employees, contractors or invitees, or (b) in connection with or based upon any breach by Tenant of any of the covenants, representations or warranties of Tenant contained in this Lease. This indemnity shall survive the termination of the Lease.

10.02 Indemnity by Landlord. Except as provided in Section 11.01 below, Landlord shall indemnify and hold Tenant harmless from and against all claims, actions, demands, judgments, damages, liabilities and expenses, including reasonable attorneys' fees, that may be asserted against Tenant or that Tenant may sustain by virtue of the occurrence of the death of or bodily injury to any person or the loss of, damage to, or destruction of any property arising (a) in connection with any latent or patent defect in the condition of the Premises existing as of the Rental Commencement Date, or from any breach or default in the performance of any obligation on Landlord's part to be performed under this Lease, or (b) from the negligent or intentional acts or omissions of Landlord, or any of its representatives, agents, employees, contractors or invitees, except to the extent any such claims, actions, demands, judgments, damages, liabilities or expenses arise from the intentional or negligent acts or omissions of Tenant or any of its representatives, agents, employees, contractors or invitees, or (c) in connection with or based upon any breach by Landlord of any of the covenants, representations or warranties of Landlord contained in this Lease. This indemnity shall survive the termination of the Lease.

ARTICLE XI

WAIVER OF SUBROGATION

11.01 Mutual Release and Waiver of Subrogation. Notwithstanding any indemnity granted herein, except for and with respect to any loss or damage caused by or resulting from Landlord's failure or refusal to fully and promptly perform its repair and maintenance obligations under Section 9.01 of this Lease or from any other default by Landlord of any of its obligations hereunder, Landlord and Tenant hereby both release the other and their respective employees, agents and invitees from and waive any claims either may have against the other and their employees, agents, servants or invitees for any loss or damage to the Leased Premises, Improvements or the contents of the foregoing, and any personal property stored or placed thereon by either of them, caused by any of the perils insurable against under fire and extended coverage insurance policies with "all risks" endorsement, whether such damage or loss was caused by the negligence of either of them or their respective employees, agents, servants or invitees.

The foregoing mutual release and waiver of subrogation shall apply whether or not such insurance on the Leased Premises, Improvements, contents, and/or personal property was in force at the time of the loss of damage. Moreover, each party agrees to take all actions necessary to make the foregoing release effective and binding upon their respective insurance carriers so that such carriers specifically waive any right of subrogation that such carriers might otherwise have against the other party and/or their respective employees, agents, servants or invitees, and each of Landlord and Tenant shall deliver to the other a certificate of insurance stating that all of its hazard and liability insurance policies (including Landlord's "all risk" builder's risk insurance) covering or relating to the Premises include such a waiver of subrogation clause.

ARTICLE XII

SIGNS

12.01 Tenant Signage. Landlord acknowledges and agrees that Tenant shall have the right to design, construct and install a pylon sign on the Premises, at Tenant's sole cost and expense, and may have signage located on the Building and elsewhere on the Premises, so long as such signage is in conformance with all applicable governmental requirements. Tenant shall have the absolute right to place its corporate identification signs within the interior of the Building as Tenant so elects.

ARTICLE XIII

ENTRY BY LANDLORD

13.01 Entry by Landlord. Tenant shall permit Landlord and Landlord's agents to enter the Leased Premises at all reasonable times during normal business hours for the purpose of inspecting the same or for the purpose of maintaining the Leased Premises, or for the purpose of making repairs, alterations, or additions to any portion of the Leased Premises required or permitted hereunder or for the purpose of posting notices of non-responsibility for alterations, additions, or repairs, or for the purpose of showing the Leased Premises to prospective tenants (but only during the final six (6) months of the Lease Term), or placing upon the Leased Premises any usual or ordinary "for sale" signs, without any rebate of rent and without any liability to Tenant for any loss of occupation or quiet enjoyment of the Leased Premises thereby occasioned; and shall permit Landlord at any time within six (6) months prior to the expiration of this Lease, to place upon the Leased Premises any usual or ordinary "to let" or "to lease" signs. Landlord's right of entry hereunder is conditioned upon the following: (a) except as required to make an emergency repair, the receipt by Tenant of at least twenty-four (24) hours' prior written notice of its intent to enter the Leased Premises, which notice shall set forth with particularity the name of each individual seeking entry on behalf of the Landlord, (b) the execution by Landlord of a Confidentiality Agreement, to the extent deemed necessary by Tenant, and (c) such entry shall be conducted in such manner so as to minimize any interference with Tenant's business operations. Notwithstanding the above, Tenant herewith reserves the right to refuse entry by Landlord to all or a portion of the Leased Premises due to safety or security concerns of Tenant.

ARTICLE XIV

INSURANCE

14.01 Landlord Insurance.

(a) Landlord shall, at its own expense, procure and maintain in full force and effect at all times during the Term of this Lease,
(a) "all risk" fire and extended coverage property insurance on

the Improvements, the Building's standard leasehold improvements, and the machinery, boilers, and equipment contained therein, including without limitation, the complete sprinkler system (including the "in rack" system), but excluding any property that Tenant is obliged to insure under Section 14.02(b) below, in an amount equal to the full replacement cost thereof, and (b) time element insurance covering the loss of rental income for a period of up to twelve (12) months that may occur as a result of loss or damage to the Building caused by any peril covered by the property insurance described in (a) above. The policy or policies by which Landlord provides such insurance must name as insured parties Tenant, Landlord and those of Landlord's Mortgagees as Landlord designates by written notice to Tenant and the insurance carrier, and shall contain a mortgagee clause in favor of Landlord's designated Mortgagees. As used herein, "Mortgage" means any deed to secure debt, mortgage, deed of trust, or similar security instrument. "Mortgagee" means the holder of a Mortgage. As Additional Rent, Tenant shall reimburse Landlord for (i) the amount of the premiums for such insurance coverage, as provided in Sections 3.03(a) and 3.04 above, and (ii) the deductible portion of any claims expenses, not to exceed an amount equal to $10,000.00.

(b) In addition to the foregoing, Landlord shall, throughout the Lease Term, carry public liability insurance with respect to the ownership of the Premises.

14.02 Tenant Insurance.

(a) Tenant, at its own expense, shall obtain and keep in full force and effect at all times during the Term of this Lease, commercial general public liability insurance for the benefit of Landlord and Tenant (and, at Landlord's request, any Mortgagee of Landlord) jointly, against liability for personal injury and property damage in the amount of not less than Five Million Dollars ($5,000,000.00) in respect to injuries to or death of more than one person in any one occurrence, in the amount of not less than Three Million Dollars ($3,000,000.00) in respect to injuries to or death of any one person, and in the amount of not less than Three Million Dollars ($3,000,000.00) per occurrence in respect to damage to property, such limits to be for any greater amounts as may be reasonably indicated by circumstances from time to time existing. All or part of the liability insurance coverage, if any, that may from time to time be required or maintained in excess of the minimum limits set forth above may be provided by an umbrella policy complying in all respects with the requirements of this Article 14 and which provides that its coverage is not limited or affected by claims made with respect to personal injury or property damage at Tenant's other locations;

(b) Beginning on the Rental Commencement Date and continuing throughout the Term of this Lease, Tenant shall, at its own expense, procure and maintain in full force and effect "all risk" fire and extended coverage insurance covering the full replacement cost of Tenant's leasehold improvements and all property of every description and kind owned by Tenant and located in the Building and for which Tenant is legally liable or which was installed by or on behalf of Tenant, including without limitation, furniture, fittings, installations, alterations, additions, partitions, racks, and fixtures, subject only to a commercially reasonable deductible.

14.03 Insurance Requirements. Each insurance policy required to be maintained by Landlord and Tenant hereunder shall be written by a company having an A.M. Best Company rating of "A" or better and a financial category of "VII" or better and legally qualified to issue such insurance, and shall name as insured parties Landlord (and, at Landlord's request, any Mortgagee of Landlord) and Tenant, as their interests may appear. Each such policy shall provide that it shall not be canceled or reduced except after not less than thirty (30) days' written notice to Tenant or Landlord (and any Mortgagee of Landlord), as applicable, and shall also provide that the interest of Tenant, Landlord and any Mortgagee of Landlord shall not be invalidated by any act or negligence of Tenant or Landlord or of any person or entity having an interest in the Leased Premises nor by occupancy or use of the Leased Premises for any purpose that is

more hazardous than permitted by such policy. Tenant and Landlord shall each deliver to the other party (and, at Landlord's request, any Mortgagee of Landlord), a certificate of insurance evidencing the existence and renewal of each insurance policy which is required to be maintained by such party hereunder (and specifically confirming that such policy shall not be canceled or reduced except after not less than thirty (30) days' written notice to Tenant, Landlord and any Mortgagee of Landlord), such delivery to be made promptly after such insurance is obtained at least thirty (30) days' prior to the expiration date of such insurance policy. Except as provided in Section 14.01 (a) above with respect to Tenant's payment of the deductible portion of any of Landlord's claims expenses as "Additional Rent," if any such insurance policy has a deductible clause, the party responsible for such insurance shall be liable for the full deductible amount. Each policy of property insurance maintained by Tenant hereunder shall provide that the insurer waives any right of subrogation against Landlord and any Mortgagee of Landlord, and each policy of property insurance maintained by Landlord with respect to the Leased Premises shall provide that the insurer waives any right of subrogation against Tenant. Each such policy maintained by Tenant shall be primary and non-contributing with any insurance carried by Landlord (and any Mortgagee of Landlord).

14.04 Blanket Insurance. Each of Landlord and Tenant may provide the insurance required by virtue of the terms of this Lease by means of a combination of primary and excess or umbrella coverage and by means of a policy or policies of blanket insurance so long as (a) the amount of the total insurance allocated to the Premises under the terms of the blanket policy or policies furnishes protection equivalent to that of separate policies in the amounts required by the terms of this Lease, and (b) the blanket policy or policies comply in all other respects with the other requirements of this Lease.

14.05 Builder's Risk. During all periods of Landlord's construction hereunder, up to and including the Rental Commencement Date, Landlord shall procure for, deliver to and maintain for the benefit of Landlord and Tenant, "all risk" builder's risk insurance, in such amounts, form and substance and with such expiration dates as are reasonably acceptable to the parties hereto. Said builder's risk insurance shall include full collapse coverage.

ARTICLE XV

ABANDONMENT

15.01 Abandonment. Notwithstanding the foregoing, Tenant may vacate the Leased Premises during the Term of this Lease provided (i) Tenant is not otherwise in default hereunder; (ii) Tenant adequately secures the Leased Premises to prevent damage, destruction or vandalism to the Leased Premises;
(iii) Tenant continues such utilities to the Leased Premises as will prevent any damage to the Leased Premises; (iv) Tenant continues to provide insurance for the Leased Premises and Tenant pays any increased premium resulting from a lack of a tenant in the Leased Premises.

ARTICLE XVI

DESTRUCTION

16.01 Damage or Destruction.

(a) If the damage caused by a fire or other casualty renders the Building untenantable, the Base Rent required by virtue of Article III above will abate for the period during which the Building is untenantable, extending from the date of such damage or destruction to the date which is the earlier of (i) the date that full use of the Building is restored to Tenant and Tenant commences full operations in and deliveries from the Premises, or (ii) the date which is sixty (60) days after restoration of

the Building (exclusive of Tenant's improvements) is completed, which abatement shall be equal to the proportion of the damaged or destroyed area of the Building to the total floor area of the Building. If the damage caused by a fire or other casualty renders the Building partially untenantable, the Base Rent will partially abate until full use of the Building is restored to Tenant in proportion to the diminished utility of the Building in the conduct of Tenant's normal business operations. Landlord is entitled to receive all proceeds payable in respect of the time element insurance maintained accordance with the terms of
Section 14.01 above.

(b) If a fire or other casualty renders the Premises untenantable in whole or in part, and the estimated time for the restoration of the Premises (inclusive of leasehold improvements Tenant makes) exceeds the period that will expire on the date that is the date that is one hundred eighty
(180) days after the date of the occurrence of the fire or casualty, Tenant may terminate this Lease by the delivery of written notice to Landlord within fifteen (15) days following the date on which Landlord notifies Tenant of the estimated time for the restoration. Landlord must provide that estimate within thirty (30) days following the date of the casualty. If a termination of this Lease does not occur in accordance with the foregoing provisions of this Section 16.01(b), but Landlord fails to complete the restoration of the Premises by the date that is thirty (30) days after the date of the expiration of the period within which Landlord estimated the restoration would be completed, Tenant may terminate this Lease by the delivery of written notice to Landlord at any time following the expiration of that 30-day period, but prior to the date on which Landlord completes the restoration of the Premises. If a termination of this Lease occurs in accordance with the terms of this Section 16.01, Landlord is entitled to receive all proceeds payable in respect of the insurance that Landlord maintains in accordance with the terms of Section 14.01 above to the extent not previously disbursed to Landlord in connection with the restoration of the Premises.

(c) If fire or other casualty damages the Premises and a termination of this Lease does not occur, Landlord shall have the obligation to restore the Premises to substantially the condition that existed prior to the occurrence of the fire or other casualty, exclusive of leasehold improvements made by Tenant, using the proceeds of the insurance described in Section 14.01 above. Landlord shall exercise due diligence and dispatch in restoring the Premises. In so doing, Landlord shall comply with all applicable laws, ordinances and regulations. In performing its restoration obligation, Landlord must restore the Improvements so that they comply with laws and regulations applicable at the time of the restoration and not just the laws and regulations that were applicable at the time of original construction of the Improvements.

ARTICLE XVII

ASSIGNMENT AND SUBLETTING

17.01 Assignment and Subletting. At any time after completion of the Improvements and delivery of possession and the final, unrestricted Certificate of Occupancy to Tenant in accordance with the Work Letter Agreement, Landlord shall have the right to transfer and assign, in whole or in part, its rights and obligations in the Leased Premises; provided, however, in the event of any such transfer and assignment, Landlord shall remain primarily responsible for any liability to Tenant arising either (i) prior to the date of said assignment, or
(ii) by virtue of Landlord's failure to timely deliver the Leased Premises to Tenant in accordance with the standards and schedules set forth in this Lease. Tenant shall have the right to sublet the Premises, in whole or in part, or assign this Lease, with the written consent of the Landlord, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, in the event of any assignment or subletting, unless Landlord otherwise permits, and except in the event of an assignment or subletting to a subsidiary or affiliate of Tenant as contemplated below, Tenant shall nevertheless at all times remain fully responsible and liable for the payment of the Base Rent.

Notwithstanding the foregoing, Tenant shall have the right, without Landlord's consent, to assign this Lease to any subsidiary of Tenant, or to any corporation or other entity into which or with which Tenant, or any subsidiary thereof, may merge or consolidate, or to any corporation or other entity owned, directly or indirectly, by any subsidiary of Tenant, or to any corporation or other entity acquiring all or substantially all of the assets of Tenant. Moreover, notwithstanding anything contained in the Lease to the contrary, an assignment shall not be deemed to include a change in Tenant's corporate control or stock ownership.

ARTICLE XVIII

INSOLVENCY OF TENANT

18.01 Insolvency of Tenant. Either (a) the appointment of a receiver to take possession of all or substantially all of the assets of Tenant, or (b) a general assignment by Tenant for the benefit of creditors, or (c) any action taken or suffered by Tenant under any insolvency or bankruptcy act shall, if any such appointments, assignments or action continues for a period of sixty (60) days, constitute a breach of this Lease by Tenant, and Landlord may at its election with written notice, terminate this Lease and in that event be entitled to immediate possession of the Leased Premises and damages as provided below. Notwithstanding the foregoing, so long as all Base Rent and Additional Rent are satisfied in accordance with the Lease or applicable law, then any such actions of insolvency shall not be a breach of this Lease and Landlord may not terminate this Lease as a result thereof.

ARTICLE XIX

BREACH

19.01 Event of Default. The occurrence of any of the following shall constitute an Event of Default ("Event of Default") under this Lease on the part of Tenant:

(a) Failure to pay when due any payment of Base Rent, Additional Rent, or any other sum of money payable by Tenant under this Lease, and such failure to pay continues for a period of ten (10) days after notice from Landlord of such failure to pay;

(b) Tenant's interest in this Lease or the Leased Premises shall be subjected to any attachment, execution, levy or other judicial seizure pursuant to any order or decree entered against Tenant in any legal proceeding that is not stayed or quashed (so as to prevent seizure) pending appeal and such order or decree is not vacated or bonded against so as to prevent seizure upon the earlier to occur of (i) fifteen (15) days prior to the sale of such interest pursuant to such order or decree, or (ii) sixty (60) days after entry of the order; or

(c) Tenant breaches or fails to comply with any term, provision, condition, or covenant of this Lease, other than as described in clauses 19.01(a) and (b) above, and such breach or failure continues for thirty
(30) days after written notice from Landlord of such breach or failure to comply; or in the event such breach or failure is curable but cannot be cured within thirty (30) days and Tenant does not commence to cure such breach or failure promptly within such thirty (30) day period and continuously thereafter pursue such cure and remedy of such breach or failure within a reasonable period of time, not to exceed an additional ninety (90) days.

19.02 Remedies. Upon the occurrence of an Event of Default, Landlord shall have the option to do and perform any one or more of the following in addition to, and not in limitation of, any other remedy or right permitted it by law or in equity or by this Lease:

(a) Landlord, with or without terminating this Lease, may immediately or at any time thereafter re-enter the Leased Premises and correct or repair any condition which shall constitute a failure on Tenant's part to keep, observe, perform, satisfy, or abide by any term, condition, covenant, agreement, or obligation of this Lease or of any notice given Tenant by Landlord pursuant to the terms of this Lease, and Tenant shall fully reimburse and compensate Landlord on demand for Landlord's actual reasonable costs so incurred.

(b) Landlord, with or without terminating this Lease, may immediately or at any time thereafter demand in writing that Tenant vacate the Leased Premises and thereupon Tenant shall immediately vacate the Leased Premises and remove therefrom all property thereon belonging to or placed in the Leased Premises by, at the direction of, or with consent of Tenant, whereupon Landlord shall have the right to re-enter and take possession of the Leased Premises. Any such demand, re-entry and taking possession of the Leased Premises by Landlord shall not of itself constitute an acceptance by Landlord of a surrender of this Lease or of the Leased Premises by Tenant and shall not of itself constitute a termination of this Lease by Landlord.

(c) Landlord, with or without terminating this Lease, may immediately or at any time thereafter, re-enter the Leased Premises pursuant to a court order and remove therefrom Tenant and all property belonging to or placed on the Leased Premises by, at the direction of, or with consent of Tenant. Any such re-entry and removal by Landlord shall not of itself constitute an acceptance by Landlord of a surrender of this Lease or of the Leased Premises by Tenant and shall not of itself constitute a termination of this Lease by Landlord.

(d) Landlord, with or without terminating this Lease, may immediately or at any time thereafter use reasonable efforts to relet the Leased Premises or any part thereof, without cost to Landlord for such time or times, at such rental or rentals and upon such other terms and conditions as Landlord in its reasonable judgment (taking into account the fair market rental value of the Leased Premises) deems advisable, and Landlord may make any alterations or repairs to the Leased Premises which it may deem reasonably necessary or proper to facilitate such reletting; and Tenant shall pay all actual and reasonable costs of such reletting including but not limited to the cost of any such reasonable alterations and repairs to the Leased Premises, reasonable attorneys' fees actually incurred, reasonable leasing inducements, and reasonable brokerage commissions; and if this Lease shall not have been terminated, Tenant shall continue to pay all rent due under this Lease up to and including the date of beginning of payment of rent by any subsequent tenant of part or all of the Leased Premises, and thereafter Tenant shall pay monthly during the remainder of the term of this Lease the difference, if any, between the rent and other charges collected from any such subsequent tenant or tenants and the rent and other charges reserved in this Lease, but Tenant shall not be entitled to receive any excess of any such rents collected over the rent reserved herein.

(e) Landlord may immediately or at any time thereafter terminate this Lease, and this Lease shall be deemed to have been terminated upon receipt by Tenant of notice of such termination; upon such termination Landlord shall recover from Tenant all damages that Landlord may suffer by reason of such termination including, without limitation, all arrearages in rentals, costs, charges, additional rentals, and reimbursements, the cost (including court costs and reasonable attorneys' fees actually incurred) of recovering possession of the Leased Premises, and the actual or estimated (as reasonably estimated by Landlord) cost of any alteration of or repair to the Leased Premises which is necessary or proper to prepare the same for reletting.

(f) In addition to the foregoing, Landlord shall have all the rights and remedies available to it at law or in equity, except that there shall be no right to accelerate the payment of rent to accrue hereunder following any such Event of Default, and Landlord may not seek as damages any

amounts becoming due under the terms of this Lease in advance of the time that they become due or would have become due absent a termination of this Lease.

19.03 Re-entry by Landlord. If Landlord re-enters the Leased Premises or terminates this Lease pursuant to any of the provisions of this Lease, no such re-entry or termination shall be considered or construed to be a forcible entry.

19.04 Mitigation of Damages. In the event Tenant should default under this Lease, Landlord will conduct itself in such a manner designed to mitigate the damages caused by Tenant's default. If Tenant is dispossessed or otherwise vacates the Leased Premises but Landlord elects not to terminate the Lease, Landlord shall make reasonable, good faith efforts to relet the Leased Premises and collect the rent therefrom. In no event shall Landlord be entitled to accelerate rent.

19.05 Events of Default by Landlord. "Events of Default by Landlord" under this Lease shall be deemed to be the situations where Landlord shall fail to comply with any term, provision or covenant of this Lease and shall not commence to cure such failure within thirty (30) days after written notice thereof and diligently and in good faith continue to cure the default until completion. If the default cannot reasonably be cured within such thirty (30) day period, Landlord shall not be in default if Landlord commences to cure the default within the thirty (30) day period and diligently and in good faith continues to cure the default until completion. In no event shall Landlord's right to cure extend beyond ninety (90) days following written notice from Tenant, unless such period is extended by Tenant Delays or Excusable Delays.

19.06 Tenant's Remedies. Upon the occurrence of any Event of Default by Landlord, no Base Rent or Additional Rent shall be paid or become payable under this Lease until such Event of Default shall be cured, and Tenant may at its option, but only during the continuance of such Event of Default, and without limitation on any other right or remedy available to Tenant at law or in equity (all such rights and remedies to be cumulative):

(a) Declare the Term ended and vacate the Premises and be relieved from all obligations thereafter accruing under this Lease; and/or

(b) Pay any sum or perform any act necessary to satisfy any obligation of Landlord hereunder and deduct the cost thereof, with interest thereon at the rate of twelve percent (12%) per annum for the period from the date such cost was incurred to the date repaid, from each monthly installment of Base Rent thereafter to become due until such cost and interest shall be recovered in full; and/or

(c) Sue for injunctive relief, specific performance of this Lease, and/or damages, as the case may be.

ARTICLE XX

ATTORNEY'S FEES

20.01 Attorney's Fees. If Landlord and Tenant litigate any provision of this Lease or the subject matter of this Lease, the unsuccessful litigant will pay to the successful litigant all costs and expenses, including reasonable attorneys' fees (but only if and to the extent actually paid and based on prevailing hourly rates) and court costs, incurred by the successful litigant at trial and on any appeal. If, without fault, either Landlord or Tenant is made a party to any litigation instituted by or against the other, the other will indemnify the faultless one against all loss, liability, and expense, including reasonable

attorneys' fees (but only if and to the extent actually paid and based on prevailing hourly rates) and court costs, incurred by it in connection with such litigation.

ARTICLE XXI

CONDEMNATION

21.01 Condemnation.

(a) If any part of the Premises is taken for public use by condemnation, eminent domain or other similar action and, in Tenant's reasonable discretion, such taking adversely affects Tenant's use or occupancy of the Premises, Tenant may immediately terminate this Lease by delivering notice to Landlord.

(b) If any part of the Premises is taken and Tenant does not terminate this Lease, Base Rent and Additional Rent required hereunder will abate for the balance of the Term in proportion to the diminished utility of the Premises in the conduct of Tenant's normal business operations, and Landlord shall restore the remainder of the Premises, at its expense, as necessary to render them suitable for Tenant's use.

(c) All condemnation awards made with respect to Landlord's reversionary interest in the Premises will be the exclusive property of Landlord, but Tenant reserves the right to bring an action in its own name for its loss of business and leasehold interest as well as any other damages that Tenant may recover as a result of the condemnation action.

ARTICLE XXII

NOTICES

22.01 All notices, statements, demands, requests, consents, approvals, authorization, offers, agreements, appointments, or designations under this Lease by either party to the other shall be in writing and shall be sufficiently given and served upon the other party, if sent by either (i) hand delivery, (ii) reputable overnight courier service; (iii) facsimile or (iv) certified mail, return receipt requested, postage prepaid, and addressed as follows:

(a) To Tenant, at 780 Johnson Ferry Road, Suite 800, Atlanta, Georgia 30342, Attention: Sr. V.P., Real Estate and Development; Fax Number: (404) 443-4176; with a copy to Smith, Gambrell & Russell, LLP, Suite 3100, Promenade II, 1230 Peachtree Street, N.E., Atlanta, Georgia, 30309-3592, Attention: Jane M. Haverty, Esq., Fax Number (404) 685-6935

(b) To Landlord, at 4920 North Royal Atlanta Drive, Tucker, Georgia 30084, Attention: Elbert Rivers; Fax Number: (770) 491-1387; with a copy to such other place as Landlord may from time to time designate by notice to Tenant.

22.02 All notices shall be deemed received (i) upon receipt if sent via hand delivery or by facsimile, (ii) one day after being sent via overnight courier service, or (iii) five (5) days after being deposited in the mail in accordance with the foregoing provisions.

ARTICLE XXIII

WAIVER

23.01 The waiver by either party of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant, or condition or any subsequent breach of the same or any other term, covenant, or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant, or condition of this Lease, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent.

ARTICLE XXIV

EFFECT OF HOLDING OVER

24.01 If Tenant should remain in possession of the Leased Premises after the expiration of the Lease Term and without executing a new lease, except as provided in Section 9.03 above, then such holding over shall be construed as a tenancy from month to month, subject to all the conditions, provisions, and obligations of this Lease insofar as the same are applicable to a month to month tenancy, except that the Base Rent payable pursuant to Section 3.01 hereof shall be 115% of the Base Rent payable pursuant to said Section 3.01 during the month in which such expiration occurs.

ARTICLE XXV

SUBORDINATION

25.01 At Landlord's request, Tenant shall subordinate its rights under this Lease to (i) the lien of any first mortgage or first deed to secure debt executed in favor of the Landlord's Mortgagee, and (ii) the interest of any ground lessor; provided, however, as a condition to any subordination that Landlord requests, Landlord's Mortgagee and each such ground lessor must execute an agreement in favor of, and in form satisfactory to, Tenant whereby it agrees
(i) not to disturb Tenant's quiet possession of the Premises so long as no Event of Default hereunder has occurred and is continuing, (ii) to permit any proceeds paid in respect of the insurance Landlord maintains in force in accordance with the terms of Article XIV to be used for the restoration of the Premises and otherwise applied as provided in this Lease, and (iii) to permit any condemnation award paid in connection with a taking of any part of the Premises or any proceeds of a sale made in lieu of the condemnation of a part of the Premises to be used for the repair and alteration of the remainder of the Premises as provided in this Lease. For the benefit of such Mortgagee, Tenant will further agree in the instrument by which Tenant accomplishes the subordination of its rights under this Lease that, if proceedings are brought for foreclosure of the lien of the mortgage or deed to secure debt if Landlord's Mortgagee causes the exercise of the power of sale set forth in the mortgage or deed to secure debt, Tenant shall attorn to the purchaser upon the conclusion of the foreclosure or sale and recognize the purchaser as the landlord under this Lease. In relation to the foregoing, Tenant acknowledges and agrees that the form of Subordination, Non-Disturbance and Attornment Agreement attached hereto as Exhibit "D" (the "SNDA") is an example of a form of a Subordination, Non-Disturbance and Attornment Agreement acceptable to Tenant.

25.02 Contemporaneously with the execution of this Lease, Landlord shall cause each ground lessor, any Mortgagee of such ground lessor and Landlord's Mortgagee now holding a lien that affects the Premises to execute in favor of Tenant and deliver a SNDA satisfying the requirements set forth in
Section 25.01 above.

ARTICLE XXVI

ESTOPPEL CERTIFICATE

26.01 Estoppel Certificate. Upon ten (10) days' notice from Landlord to Tenant at any time after the Rental Commencement Date, but in no event more than twice in any calendar year, Tenant shall deliver a certificate dated as of the first day of the calendar month in which such notice is received, executed by an appropriate officer, in such form as Landlord may reasonably require and stating the following: (i) the Rental Commencement Date of this Lease; (ii) the space occupied by Tenant hereunder; (iii) the Expiration Date hereof; (iv) a description of the renewal and expansion options; (v) the amount of Base Rent currently paid by Tenant under this Lease; (vi) the nature of any default or claimed default hereunder by Landlord; (vii) that Tenant is not in default hereunder nor has any event occurred which with the passage of time or the giving of notice would become a default by Tenant hereunder; and (viii) such other statements as Landlord may reasonably require. Landlord agrees that it will execute a comparable estoppel certificate upon ten (10) days' notice from Tenant.

ARTICLE XXVII

PARKING

27.01 Parking. Tenant shall be entitled to the exclusive use, without restriction, of all of the parking spaces, trailer storage spaces and paved areas, including truck courts, located within the Leased Premises. All such parking and storage spaces shall be provided for on the Leased Premises in accordance with the Final Plans and Specifications (as defined in the Work Letter Agreement).

ARTICLE XXVIII

BROKERAGE COMMISSIONS

28.01 Landlord and Tenant acknowledge that CB Richard Ellis ("Broker") has represented Tenant in connection with this Lease. Broker's commission, however, shall be payable by Landlord. Landlord shall pay to Broker a leasing commission in an amount as set forth in a separate agreement between Broker and Landlord.

28.02 Landlord and Tenant each represents and warrants to the other that it has not dealt with any broker, agent, commission salesman or other person (other than Broker) in the negotiations for and procurement of this Lease and of the Leased Premises and that no commissions, fees, or compensation of any kind are due and payable in connection herewith to any broker, agent, commission salesman or other person (other than Broker) as a result of any such dealings. Landlord and Tenant each hereby agrees to indemnify the other and hold the other harmless from and against any and all claims, suits or judgments (including without limitation, reasonable attorneys' fees and court costs incurred in connection with any such claims, suits or judgments or in the enforcement of this indemnity) for any fees, commissions or compensation of any kind which arise out of or in any way connected with any claimed dealings or relationship with the indemnifying party. This indemnity shall survive the termination of this Lease.

ARTICLE XXIX

TENANT FINANCING AND WAIVER OF LANDLORD'S LIEN

29.01 Tenant Financing. Notwithstanding anything contained herein to the contrary, Tenant shall have the right at any time to encumber all or any part of its interest in this Lease, or in its equipment or trade fixtures located at the Leased Premises with a lien to secure financing.

29.02 Waiver of Landlord's Lien. Landlord agrees, upon Tenant's request, to execute and deliver to Tenant any waiver of lien and/or waiver of ownership rights, which may be reasonably requested by any conditional sales vendor, lessor, or chattel mortgagee, in regard to any furniture, trade fixtures, equipment, or other articles of personal property of Tenant from time to time installed by Tenant at its expense in the Leased Premises (whether owned by or leased to Tenant), and Landlord further agrees to obtain similar releases or waivers from any ground lessor and Mortgagee of all or any portion of the Premises.

ARTICLE XXX

DISPUTE RESOLUTION

30.01 Dispute Resolution.

(a) If disputes arise between Landlord and Tenant regarding (i) the interpretation of this Lease, (ii) the reasonableness of any action taken or judgment that either party makes in any instance where that party has agreed in this Lease to be reasonable in taking that action or making that judgment, (iii) the reasonableness of any cost or expense that one party seeks to charge the other in accordance with the terms of this Lease, (iv) the extent of the abatement or adjustment in Base Rent or Additional Rent that should occur by virtue of any provision of this Lease, or (v) whether either party has defaulted in respect of any of the obligations it has undertaken under the terms of this Lease, Landlord and Tenant may not initiate litigation to resolve those disputes, but shall attempt in good faith to resolve those disputes in the manner prescribed below. The parties irrevocably waive any and all rights to the contrary. In the case of the last category of disputes listed above, the parties will employ the procedures set forth in this Article XXX if one party denies in good faith the other's allegation that it has defaulted in respect of any of the obligations it has undertaken under the terms of this Lease and, until the resolution of that dispute in accordance with the procedures set forth in this Article XXX, the party alleging the occurrence of the default may not exercise any remedy available to it in connection with a default of the nature alleged other than the remedy of performing the delinquent obligation on behalf of the denying party. Without intending to limit the generality of the preceding sentence, the parties intend that, in the case of Tenant's good faith denial that it has defaulted with respect to any of the obligations it has undertaken under the terms of this Lease, Landlord may not seek to gain possession of the Premises by initiating suit in the court having jurisdiction over summary ejectment, forcible detainer, unlawful detainer or other similar actions involving the Premises or otherwise until the parties have employed the provisions set forth in this Article XXX. If the outcome of the use of those procedures is either an acknowledgment by Tenant of its default or an arbitrator's determination that Tenant is in default in respect of one or more of its obligations, Landlord may then exercise any remedies available to it, including the initiation of suit in the Court to regain possession of the Premises and Tenant's acknowledgment of default or the arbitrator's determination will be conclusive on the issue of Landlord's entitlement to possession. If a party denies in good faith the other's allegation that it has defaulted in respect of any of the obligations it has undertaken under the terms of this Lease and initiates the dispute resolution procedures set forth in this Article prior to the expiration of any grace period established with respect to that alleged default under the terms of this Lease, that action win extend that grace period by the amount of time during which the

parties are observing the procedures set forth in this Article. The procedures that the parties will use to resolve disputes to which this Article applies are as follows:

(i) Either party may give the other written notice of any dispute not resolved in the normal course of business. Officers or managers of both parties holding positions within their respective organizations at least one level higher than the personnel that have previously been involved in the dispute must meet at a mutually acceptable time and place within ten (10) days after the date of the delivery of the notice of dispute and as often after that initial meeting as they reasonably consider necessary for the purpose of exchanging relevant information and attempting to resolve the dispute.

(ii) If either the persons specified in division
(i) above fail to meet in accordance with the requirements of that division or, having met, those persons fail to resolve the dispute on behalf of the parties for whom they are respectively employed within thirty (30) days after the date of the delivery of the notice of dispute, the personnel previously involved in the dispute shall promptly prepare and exchange with each other memoranda, which state the issues in dispute and each party's position in the dispute, which summarize the negotiations that have occurred in connection with efforts to resolve the dispute, and to which they attach all documentation they consider relevant. Immediately following the exchange of those memoranda, the involved personnel shall furnish copies of the memoranda prepared on behalf of both parties to senior executives within their respective organizations that have the authority to settle the dispute. Those senior executives shall meet for negotiations at a mutually agreed time and place prior to the date that is forty-five (45) days after the date of the delivery of the notice of dispute.

(iii) If Landlord's organization does not have multiple layers of management, Landlord will comply with the foregoing procedure if a person that directly or indirectly holds an equity interest in Landlord participates in the discussions contemplated in that procedure.

(b) If the senior executives to whom the dispute is referred fail to resolve the dispute within thirty (30) days after the date of the exchange of the position memoranda between the parties, Landlord and Tenant shall attempt in good faith to resolve the dispute in accordance with the Center for Public Resources Model ADR Procedures for the Mediation of Business Disputes.

(c) If use of the mediation procedures described in paragraph (b) above fails to resolve the dispute within sixty (60) days after the initiation of those procedures, Landlord and Tenant shall finally settle the dispute by means of arbitration conducted expeditiously in accordance with the Center for Public Resources Rules for Non-Administered Arbitration of Business Disputes, with each party selecting one arbitrator and the two chosen arbitrators selecting a third. The United States Arbitration Act, 9 U.S.C. ss. I 16, will govern the arbitration and any court having jurisdiction of the dispute may enter judgment upon the award the arbitrators render. The place of the arbitration will be Atlanta, Georgia. If the dispute involves the payment of compensation by one party to the other, the parties shall empower the arbitrators to award only compensatory damages within the upper and lower limits imposed by mutual agreement of the parties. The prevailing party in any such arbitration shall be entitled to all fees, expenses and costs of the arbitration proceeding, including the fees of its appointed arbitrator.

(d) If any person involved in the meetings contemplated in paragraph (a) above wishes an attorney to accompany him or her to any of those meetings, that person shall give written notice of that intention to the other party at least three business days in advance of the meeting that the attorney will attend and the other party may also cause an attorney representing its interests to be present at that meeting.

(e) Landlord and Tenant may extend any deadline specified in this Article by mutual agreement.

(f) Landlord and Tenant shall treat all negotiations conducted in accordance with the requirements of this Article, including, without limitation the exchange of position memoranda, as confidential and as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and the rules of evidence of any court having jurisdiction over the dispute.

(g) If multiple disputes are pending concurrently, Landlord and Tenant may, upon agreement, consolidate those disputes for purposes of the mediation and arbitration stages described above.

(h) Tenant may not defer the payment of any Base Rent or Additional Rent that becomes due under the terms of this Lease that exceeds the amount of any offset Tenant alleges to be due it pending the resolution of a dispute with Landlord in accordance with the terms of this Article.

(i) The procedures specified in this Article are the sole and exclusive procedures for the resolution of disputes to which this Article is intended to apply. Either party may seek a preliminary injunction or other preliminary judicial relief, however, if, in that party's judgment, that action is necessary for the sole purpose of avoiding irreparable harm. Despite that action, the parties shall continue to participate in good faith in the procedures set forth above. All applicable limitations periods will be tolled while the procedures specified above are pending. The parties shall take all action appropriate to accomplish that tolling.

(j) The provisions of this Article XXX will survive the expiration of the Term or any earlier termination of this Lease.

ARTICLE XXXI

MISCELLANEOUS PROVISIONS

31.01 Word Construction. Whenever the singular number is used in this Lease and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and the word "person" shall include corporation, firm or association.

31.02 Change of Control. Tenant has the right to immediately terminate this Lease upon any change in the majority decision making authority, ownership or voting control of Landlord's capital stock or limited liability partnership or membership interests or assets, occurring at any time prior to completion by Landlord of the Improvements and delivery to Tenant of the final, unrestricted Certificate of Occupancy and possession of the Premises in accordance with the terms of the Work Letter Agreement, unless Tenant receives written evidence satisfactory to Tenant that John W. Rooker, L.L.C. remains at all times fully liable for all of Landlord's obligations under this Lease. Landlord shall notify Tenant in writing at least thirty (30) days before the occurrence of any change in control of the decision making authority, capital stock, business or assets of Landlord.

31.03 Financial Information. On or before the effective date hereof, Landlord must provide to Tenant a current financial statement prepared in accordance with generally accepted accounting principles and audited by an independent, certified public accountant. In addition, Landlord must provide to Tenant, (i) on an annual basis, if requested by Tenant, annual unaudited financial statements, and (ii) from time to time, any other financial information that Tenant reasonably requests.

31.04 Headings, Titles. The headings or titles to paragraphs of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part of this Lease.

31.05 Entire Agreement. This instrument, and all exhibits and schedules attached hereto, contain all of the agreements and conditions made between the parties to this Lease and may not be modified orally or in any other manner than by agreement in writing signed by all parties to this Lease.

31.06 Time of Essence. Time is of the essence of each term and provision of this Lease.

31.07 Successors and Assigns. The terms and provisions of this Lease shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors, and assigns of Landlord and Tenant.

31.08 Consents and Approvals. Where the consent, approval or acceptance of a party is required, the party agrees that such consent, approval or acceptance shall not be unreasonably withheld, conditioned or unreasonably delayed.

31.09 Relationship of Parties. Nothing contained herein shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent, partnership, or joint venture between the parties hereto. It is understood and agreed that neither the method of computation of the rent nor any other provision contained herein, nor any acts of the parties hereto, shall be deemed to create any relationship between the parties hereto other than the relationship of landlord and tenant.

31.10 Governing Law. This Lease shall be governed by Georgia law.

31.11 Memorandum of Lease. Upon the request of Landlord or Tenant, both parties shall join in the execution of a memorandum or so-called "short form" of this Lease for the purpose of recordation. Said memorandum or short form of this Lease shall describe the parties, the Leased Premises and the Lease Term, the renewal and expansion options, and shall incorporate this Lease by reference. Said memorandum or short form of this Lease shall not include the economic terms of this Lease unless both parties consent.

31.12 Covenant of Quiet Enjoyment. Landlord hereby covenants and agrees that if Tenant shall perform all of the covenants and agreements herein stipulated to be performed on Tenant's part, Tenant shall at all times during the continuance hereof have the peaceable and quiet enjoyment and possession of the Leased Premises.

31.13 Sale by Landlord. In no event shall Landlord transfer any of Landlord's leasehold or ownership title to or interest in all or any part of the Premises before construction of the Premises is complete and the final, unrestricted Certificate of Occupancy and possession of the Premises have been delivered to Tenant in accordance with the Work Letter Agreement, unless Tenant receives written evidence satisfactory to Tenant that John W. Rooker, L.L.C. remains fully liable for all obligations of Landlord under this Lease. In the event of any transfer of Landlord's ownership interest in the Premises thereafter, Landlord shall remain liable to Tenant for the payment and performance of all obligations of Landlord accruing on or before the date of such transfer but shall be relieved of all liability for obligations arising under this Lease and accruing after the consummation of such transfer, and the transferee by acceptance of such transfer shall be deemed to have assumed and agreed to perform all obligations of Landlord accruing hereunder during the period of its ownership.

31.14 Conditions Precedent. Notwithstanding anything to the contrary contained in this Lease, the obligation of Tenant to accept delivery of the Premises upon tender thereof as hereinabove provided shall be and is hereby made subject to and contingent upon the satisfaction of the following express conditions precedent:

Landlord shall have delivered to Tenant the title, survey, SNDAs, authority and other evidence as and when required by Article VII and Article XXV above, including without limitation, evidence satisfactory to Tenant that Landlord is the owner in fee simple of all the Land, subject only to such encumbrances and exceptions to title as are satisfactory and acceptable to Tenant, that such Land is zoned to permit the use and occupancy of the Premises for the purposes and in the manner contemplated by this Lease, and that all governmental permits and approvals necessary to Tenant's use and occupancy have been obtained or will in due course be obtained.

31.15 Exhibits. All Exhibits and Schedules referred to in this Lease are attached hereto and by this reference made a part hereof.

31.16 No Presumption Against Drafter. Landlord and Tenant understand, agree, and acknowledge that:

(a) This Lease has been freely negotiated by both parties; and

(b) That, in any controversy, dispute, or contest over the meaning, interpretation, validity, or enforceability of this Lease or any of its terms or conditions, there shall be no inference, presumption, or conclusion drawn whatsoever against either party by virtue of that party having drafted this Lease or any portion thereof.

31.17 Counterparts. This Lease (including the Work Letter Agreement) may be executed in any number of counterparts, each of which shall be an original but all of which, when taken together, shall constitute one and the same instrument.

31.18 Special Stipulations. CERTAIN SPECIAL STIPULATIONS ARE SET
FORTH ON THE RIDER TO LEASE WHICH IS ATTACHED HERETO AS EXHIBIT "G" AND BY REFERENCE MADE A PART HEREOF. IN THE EVENT OF ANY CONFLICT BETWEEN ANY PROVISION SET FORTH ON SAID RIDER AND ANY OTHER PROVISION CONTAINED IN THIS LEASE, THE PROVISION SET FORTH IN SAID RIDER SHALL GOVERN.

[Signatures Begin on Next Page]

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed by its proper officers, effective as of the date first above written.

                                                           LANDLORD:
Signed, sealed and delivered as to Landlord, in the        JOHN W. ROOKER, L.L.C., a Georgia Limited Liability
Presence of:                                               Company

--------------------------------------------               By:   1998 AUGUSTUS PARTNERS, L.P., a Georgia Limited
Unofficial Witness                                               Partnership, Manager

--------------------------------------------                      By:  2001 WINSTON MANAGEMENT COMPANY, LLC, a
Notary Public                                                          Georgia Limited Liability Company, its
                                                                       General Partner

                                                                  By:                                  [SEAL]
                                                                      ---------------------------------
                                                                      John W. Rooker, Member

                                                                  By:                                  [SEAL]
                                                                      ---------------------------------
                                                                      ----------------, Member


                                                           TENANT:

Signed, sealed and delivered as to Landlord, in the        HAVERTY FURNITURE COMPANIES, INC., a Maryland corporation
Presence of:
                                                           By:
--------------------------------------------                   -----------------------------------------------
Unofficial Witness                                         Name:
                                                                 ---------------------------------------------
                                                           Title:
                                                                  --------------------------------------------
--------------------------------------------
Notary Public

EXHIBIT "A"

ATTACH LEGAL DESCRIPTION OF LAND

(TO BE PROVIDED BY LANDLORD)

EXHIBIT "B"

WORK LETTER AGREEMENT WITH SCHEDULES 1-3

THIS WORK LETTER AGREEMENT is entered into as of the 26th day of July, 2001, by and between JOHN W. ROOKER, L.L.C. ("Landlord") and HAVERTY FURNITURE COMPANIES, INC. ("Tenant").

1.01     Concurrently with the execution of this Work Letter Agreement, Landlord
         and Tenant have entered into a Lease (the "Lease") covering certain
         premises (the "Leased Premises") which is more specifically specified
         and defined in the Lease. Any and all defined terms, not specifically
         defined herein shall have the meaning set forth in the Lease as if
         specifically included and set forth in this Work Letter Agreement.

1.02     This Work Letter Agreement has been executed for the purpose of
         describing and providing the requirements, standards, and
         specifications and a timetable for Landlord's construction of the
         Improvements and preparation of the Leased Premises for Tenant's use
         and occupancy.

1.03     In consideration of the mutual covenants hereinafter contained,

Landlord and Tenant hereby agree as follows:

ARTICLE II
CONSTRUCTION OF IMPROVEMENTS

2.01 PLANS AND SPECIFICATIONS; SPECIAL PROJECT CONDITIONS.

(a) Landlord shall furnish, at Landlord's sole cost and expense, all of the material, labor and equipment necessary for the design and construction of the Improvements in accordance with the terms of this Agreement. Landlord shall design and construct the Improvements in a good and workmanlike manner in accordance with (i) the Preliminary Plans and Specifications prepared by Macgregor Associates Architects (the "Design Firm") and described in Exhibit "E" attached to the Lease (the "Preliminary Plans and Specifications," and (ii) the Final Plans and Specifications described and defined below, and to be attached as Exhibit "F" to the Lease.

(b) Landlord must cause the final plans and specifications to be prepared by the Design Firm in accordance with the comments and revisions mutually agreed to by Tenant and Landlord with respect to the Preliminary Plans and Specifications, and submit those final plans and specifications for Tenant's approval on or before September 30, 2001, as provided in the Construction Schedule attached hereto as Schedule 1 and incorporated herein and in the Lease by this reference (the "Construction Schedule"). Upon Tenant's approval, such proposed final plans and specifications will constitute the "Final Plans and Specifications."

(c) Neither Landlord nor Tenant will withhold its approval, except for just and reasonable cause, and neither such party will act in an arbitrary or capricious manner with respect to the approval of the Final Plans and Specifications. Only the signature or initials of Landlord and an authorized officer of Tenant will evidence approval of the Final Plans and Specifications. The parties will attach copies of the

Final Plans and Specifications to each execution counterpart of the Lease as Exhibit "F." Following its attachment to the Lease, Exhibit "F" will supersede Exhibit "E", except as to matters that are not related to the design and construction techniques and processes that will apply to the construction of the Improvements and that Exhibit "F" does not expressly and specifically supersede.

(d) Landlord must appoint competent personnel to work with the Design Firm and Tenant in the preparation of the Final Plans and Specifications, and Tenant must appoint an employee of Tenant to review the plans and specifications that the Design Firm and Landlord propose for adoption as the Final Plans and Specifications so as not to delay unreasonably the completion of the Improvements. Landlord shall provide Tenant with "as-built" drawings of the Improvements within thirty (30) days after substantial completion. If Landlord fails to do so, Tenant may withhold Base Rent until Landlord provides those drawings.

(e) In addition to the foregoing, Landlord shall complete the construction of the Improvements in accordance with (i) all applicable statutes and building codes, governmental rules, regulations and orders, and recorded covenants, conditions and restrictions affecting title to the Premises ("Legal Requirements") and (ii) the Tenant's "Special Project Conditions" attached hereto as Schedule 2 and incorporated herein and in the Lease by this reference.

2.02 SUBSTANTIAL COMPLETION

(a) Landlord shall commence construction of the Improvements on or before August 1, 2001; the commencement of erosion control, site excavation and fill activities will constitute the commencement of construction for purposes of the foregoing requirement. Landlord shall diligently proceed with the construction of the Improvements and shall substantially complete that construction, and secure a certificate of occupancy (the "Certificate of Occupancy") permitting Tenant's lawful occupancy and full and unrestricted use of the Improvements and deliver possession thereof to Tenant on or before July 1, 2002. Landlord may satisfy the requirement for securing a Certificate of Occupancy by securing a temporary or conditional certificate of occupancy so long as (i) Tenant determines that the condition of the Improvements in the absence of those items of construction that Landlord must complete as a condition to the issuance of a final, unrestricted Certificate of Occupancy is adequate for the conduct of Tenant's business on the Premises, and (ii) that the ongoing construction activity that will be necessary in order for Landlord to secure the issuance of a final, unrestricted Certificate of Occupancy will not materially, adversely affect Tenant's fixturing and installation of Tenant's equipment and improvements or stocking of Tenant's product and inventory, or otherwise commencing business operations in the Premises. If Landlord satisfies the requirement for securing a Certificate of Occupancy by securing a temporary or conditional certificate of occupancy under the circumstances described above, Landlord must secure the issuance of a final, unrestricted Certificate of Occupancy by no later than October 1, 2002, as provided in the Construction Schedule.

(b) If delays in the commencement or completion of the construction of the Improvements occur by reason of acts or omissions on the part of Tenant or those acting for or under the direction of Tenant, casualties, acts of God (other than inclement weather), force majeure, acts of the public enemy, governmental embargo restrictions, or action or inaction on the part of public utilities or local, state or federal governments affecting the work (all of which delays are collectively referred to in this Agreement as "Excused Delays" and those that occur by reason of acts or omissions on the part of Tenant or those acting for or under the direction of Tenant are collectively referred to in this Agreement as "Tenant Delays"), the dates established above for the commencement and completion of the construction of the Improvements will be postponed by the aggregate duration of the Excused Delays. Non-availability or shortages of labor or materials, local strikes, lockouts and inclement weather will not constitute Excused

Delays and will not be cause for extending the date for completion and delivery of the Improvements to Tenant. Landlord shall also complete all "punch list items" within thirty (30) days after Landlord substantially completes construction of the Improvements and, if Landlord fails to do so, Tenant may complete those punch list items and offset the costs Tenant incurs in doing so against subsequently accruing installments of Base Rent becoming due under the terms of the Lease.

(c) Except as otherwise specifically provided in Section 2.02 (b) above with respect to Excused Delays and Tenant Delays, Tenant has no obligation to pay Base Rent or Additional Rent until Landlord completes construction of the Improvements in accordance with the Final Plans and Specifications, this Agreement, the Special Project Conditions and all Legal Requirements, secures the Certificate of Occupancy and tenders possession of the Improvements to Tenant. If, prior to Landlord's completion of the Improvements, the Improvements are partially ready for occupancy, Tenant may, but need not, occupy that portion of the Improvements that is ready for occupancy and, in the event of such partial occupancy, except for the payment of Base Rent and Additional Rent, the terms of this Lease will apply to that occupancy. Landlord must keep Tenant informed of the progress of Landlord's construction of the Improvements and must give Tenant written notice of the date upon which Landlord anticipates substantial completion of construction, at least forty-five (45) days in advance of that projected date. Commencing thirty (30) days in advance of that projected date, but in no event later than April 1, 2002, Tenant's employees and contractors may enter the Improvements for the purpose of installing, in accordance with the Special Project Conditions and Legal Requirements, Tenant's racks, machinery, equipment, fixtures and other personal property. Tenant may exercise that privilege only if Tenant complies with the requirements of Landlord's Safety Program referenced in Section 8.04 of the body of this Lease, and ensures that its employees and contractors do not interfere with Landlord's completion of the construction of the Improvements. Entry by Tenant's employees and contractors for this limited purpose will not constitute Tenant's acceptance of the Improvements or give rise to any obligation to pay Base Rent or Additional Rent with respect to the Improvements.

2.03 CONSTRUCTION WARRANTY

(a) Landlord shall incorporate only new materials and equipment into the construction of the Improvements. Landlord guarantees the Improvements against defective design, workmanship and materials, latent or otherwise, for a period of one (1) year from the Rental Commencement Date (the "Warranty Period"). Landlord also guarantees the foundations, slab, structural frame, roof deck and exterior walls of the Improvements against defective design, workmanship and materials, latent or otherwise, for a period of three (3) years from the Rental Commencement Date (the "Structural Warranty Period"). By virtue of the foregoing guaranties, Landlord shall repair or replace, at its sole cost and expense (unless and to the extent any such defect is caused solely by Tenant's gross negligence or willful misconduct), any defective item occasioned by defective design, workmanship or materials that Tenant discovers during the Warranty Period or the Structural Warranty Period, as the case may be. Notwithstanding the foregoing, on the date that Landlord substantially completes the construction of the Improvements, secures the Certificate of Occupancy and tenders possession of the Premises to Tenant, Landlord must deliver to Tenant originals of all continuing assignable guaranties and warranties (whether express or implied) issued or made in connection with the construction of the Improvements and must assign to Tenant, free and clear of all liens and encumbrances, Landlord's interest in those guaranties and warranties by means of a duly executed and acknowledged assignment in form and substance satisfactory to Tenant. From and after the expiration of the Warranty Period or the Structural Warranty Period, as the case may be, Landlord shall cooperate with Tenant in Tenant's enforcement, at Tenant's sole cost and expense, of any express warranties or guaranties of workmanship or materials given by subcontractors, architects, draftsmen, or materialmen that guarantee or warrant against defective design, workmanship or materials for a period of time in excess of the Warranty Period or the Structural Warranty Period, as the

case may be. The obligations Landlord undertakes under the terms of this Section 2.03 are in addition to the maintenance and repair obligations that Landlord undertakes under other terms of the Lease.

(b) Tenant's making of a claim for repair or replacement of a defective item or condition in the Improvements will toll the running of the Warranty Period or the Structural Warranty Period, as the case may be, with respect to the item that is the subject of that claim, and the warranties set forth in Section 2.03 (a) will remain in effect as to that item until Landlord properly corrects it even though the Warranty Period or the Structural Warranty Period would otherwise have expired. If defects covered by the warranties set forth in Section 2.03(a) deprive Tenant of possession of the Building or otherwise constructively evict Tenant from the Building, all installments of Base Rent and Additional Rent becoming due under the terms of the Lease will abate and will not be due and payable for the entire period of that dispossession or constructive eviction. If the dispossession or constructive eviction occurs with respect to only a portion of the Building, the Base Rent and Additional Rent will partially abate with the abatement being equitably calculated on the basis of the area and value of that portion of the Building from which Tenant is dispossessed or constructively evicted. If such dispossession or constructive eviction continues for more than one hundred twenty (120) days, Tenant has the right, in addition to all other remedies available to Tenant at law or in equity, to terminate the Lease without any liability whatsoever to Landlord. Tenant will exercise that right, if at all, by delivering written notice to Landlord prior to the time the dispossession or constructive eviction ends.

(c) Landlord shall complete construction and equipping of the Improvements in accordance with the terms of the Lease, this Agreement, the Construction Schedule, the Special Project Conditions, all Legal Requirements and the Final Plans and Specifications, free of mechanic's liens or other liens, and shall defend, indemnify and hold Tenant harmless from and against all claims, actions, losses, costs, damages, expenses, liabilities and obligations, including, without limitation, reasonable attorneys' fees, resulting from (i) the assertion or filing of any claim for amounts alleged to be due to the claimant for labor, services, materials, supplies, machinery, fixtures or equipment furnished in connection with the construction of the Improvements,
(ii) the foreclosure of any mechanic's or materialmen's lien that allegedly secures the amounts allegedly owed to the claimant, or (iii) any other legal proceedings initiated in connection with that claim.

2.04 CHANGE ORDERS

(a) Without invalidating the Lease, Tenant may order changes in the Final Plans and Specifications consisting of additions, deletions or other revisions to the Improvements and extensions of the progress schedule. Except as expressly provided below, the parties will authorize all changes by signing change orders ("Change Orders") in the form of Schedule 3 attached to this Work Letter Agreement and, upon the signing of a Change Order, Landlord shall prosecute the changes in accordance with the requirements of that Change Order.

For the purposes of the Lease and this Work Letter Agreement, the term "Change Order Cost" means the net amount by which the estimated aggregate cost Landlord will necessarily incur in connection with the construction of the Improvements, including, without limitation, the costs of labor and material, architectural and design fees, interest and other carrying costs, and sales or other excise taxes Landlord must pay in connection with the purchase of materials and services, will change by reason of the implementation of a change Tenant requests with respect to the Final Plans and Specifications, and shall be, at Tenant's option, either (i) paid by Tenant, or (ii) included in the calculation of Base Rent payable under the Lease by adding to the amounts set forth in Section 3.01 of this Lease, the product obtained by the Base Rent Applicable Yield (as defined below), multiplied by the sum of all Change Order Costs set forth in fully executed Change Orders (the "Aggregate Change Order Cost"). If the Aggregate Change Order Cost is a negative number, thereby reflecting that Landlord will realize savings

in the estimated aggregate cost Landlord will necessarily incur in connection with the construction of the Improvements by reason of the implementation of Tenant's requested changes, the parties will proportionately diminish the Base Rent allocable to the Improvements to reflect that cost savings.

As used herein, the term "Base Rent Applicable Yield" shall mean (i) if the Aggregate Change Order Cost is a negative number, 9.09% or (ii) if the Aggregate Change Order Cost is a positive number, 10.5% for the first $200,000.00 of the Aggregate Change Order Cost, and 11.5% for the Aggregate Change Order Cost in excess of $200,000.00.

(b) Before implementing any change to the design of the Improvements that Tenant requests after approval of the Final Plans and Specifications, Landlord must submit to Tenant in the form of a proposed Change Order, a statement of the Change Order Cost that will occur by virtue of that change and a statement of the terms and conditions under which Landlord will undertake to implement Tenant's requested change, including, without limitation, the effect that implementation of the requested change will have on the anticipated date for Landlord's completion of the Improvements. Until Tenant signs that proposed Change Order, Landlord has neither obligation nor authority to proceed to implement the requested change. Each fully-executed Change Order will become part of the Final Plans and Specifications. A delay occurring with respect to Landlord's completion of the Improvements by virtue of the review of a design change that Tenant requests, the negotiation of a mutually acceptable Change Order in connection with that request, and the implementation of the requested change will constitute a Tenant Delay. If the Aggregate Change Order Cost is a positive number, unless and to the extent that Tenant elects to pay all or any portion thereof in cash as provided in paragraph 2.04(a) above, the parties will include that sum in the Base Rent and amortize it over the initial Term as referenced above.

(c) In the event Tenant elects to pay all or any portion of the Aggregate Change Order Cost in accordance with paragraph 2.04(a) above, Tenant will pay such amount to Landlord upon completion of construction of the Improvements and delivery by Landlord to Tenant of (i) the final, unrestricted and permanent Certificate of Occupancy and (ii) an application for payment or invoice for such amount.

2.05 INSURANCE

Throughout the period between the date on which Landlord commences construction of the Improvements and the date on which Landlord completes the construction of the Improvements, secures and presents to Tenant the final, unrestricted Certificate of Occupancy, and tenders possession of the Improvements to Tenant, Landlord shall maintain in force with respect to the Improvements a policy of multiple peril ("all-risk") builder's risk insurance that has been written by an insurer reasonably satisfactory to Tenant on a completed value basis, in an amount equal to the full replacement cost of the Improvements and that contains no exclusions from coverage that Tenant determines to be objectionable. That policy must name Tenant as an additional insured and must assure Tenant that its coverage will continue for Tenant's benefit notwithstanding any act or omission on Landlord's part. That policy must provide that no cancellation, surrender or material change will become effective unless Tenant receives written notice at least thirty (30) days in advance of the time at which that cancellation, surrender or material change becomes effective. The form of that policy must comply with the requirements of Section 14.05 of the body of the Lease and otherwise be reasonably satisfactory to Tenant.

2.06 FAILURE TO TIMELY COMPLETE AND DELIVER

As provided in Section 2.03 of the Lease, if Landlord fails, for any reason, including Excused Delays, to complete the construction of the Improvements, secure and present to Tenant the final, unrestricted and permanent Certificate of Occupancy and tender possession of the Improvements to

Tenant by October 1, 2002 (the "Outside Delivery Date"), the Rental Commencement Date shall be deferred until January 1, 2003.

2.07 FINANCING

Landlord has advised Tenant that Landlord will seek third party funding for the design and construction of the Improvements through variable rate demand notes under the auspices of the Development Authority of Jackson County, Georgia; provided, however, Landlord's obligations under this Lease are not subject to or contingent upon such funding or any other third party financing or approval thereof.

ARTICLE III
TIMETABLE

3.01 SUBSTANTIAL COMPLETION

As referenced above, attached to this Work Letter Agreement as Schedule 2 is the Construction Schedule. Landlord and Tenant shall use their diligent good faith efforts to ensure construction of the Leased Premises remains on schedule in accordance with the Construction Schedule.

3.02 INSPECTION AND PUNCHLIST

As referenced in Section 2.02 above, upon receipt of Landlord's notice of substantial completion of the Improvements, Tenant shall inspect the same. Landlord shall demonstrate all systems, and the Design Team, Tenant and Tenant's insurance carrier shall jointly prepare a punchlist. In addition to any and all unfinished and incomplete items, the punchlist shall list minor and insubstantial details of construction, necessary mechanical adjustments, and needed finishing touches. Landlord shall commence to complete the punchlist items within thirty (30) days after the punchlist is produced and shall diligently pursue the work to completion.

ARTICLE IV
TENANT WORK

4.01 TENANT EARLY ACCESS

Landlord must afford Tenant and its consultants and contractors reasonable access to the Leased Premises and Improvements during construction for the purposes of inspecting the Improvements, rack installation and making preparations for work that Tenant must undertake to ready the Improvements for Tenant's use and occupancy. Landlord shall provide such access to Tenant as reasonably requested but, in any event, on or before April 1, 2002, as indicated on the Construction Schedule.

4.02 INSTALLATION OF TENANT'S FIXTURES

All construction work done by Tenant in the Leased Premises shall be pursued diligently to completion and shall be performed in a good and workmanlike manner, and in compliance with all applicable laws, including, but not limited to, all OSHA requirements. Tenant covenants and agrees that all contractors, subcontractors and other persons or entities performing work for Tenant at the Leased Premises will carry (i) liability insurance in amounts acceptable to Landlord, in Landlord's reasonable opinion, and (ii) worker's compensation insurance in the amounts required by law.

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed under seal and delivered as of the day and year first above written.

LANDLORD:
JOHN W. ROOKER, L.L.C., a Georgia Limited Liability Company

By:   1998 AUGUSTUS PARTNERS, L.P., a
      Georgia Limited Partnership, Manager

      By:  2001 WINSTON MANAGEMENT COMPANY, LLC, a Georgia
           Limited Liability Company, its General Partner

           By:                                        [SEAL]
               --------------------------------------
                      John W. Rooker, Member

           By:                                        [SEAL]
               --------------------------------------
               ----------------,Member



TENANT:

HAVERTY FURNITURE COMPANIES, INC.

By:
    -------------------------------------------------
Name:
         --------------------------------------------
Title:
       ----------------------------------------------

HAVERTY FURNITURE COMPANIES, INC.
S.E. REGIONAL DISTRIBUTION CENTER

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (this "Agreement") is made and entered into effective as of ____ day of November, 2001, by and between JOHN W. ROOKER, LLC, a Georgia limited liability company ("Landlord"), and HAVERTY FURNITURE COMPANIES, INC., a Maryland corporation ("Tenant").

WITNESSETH:

WHEREAS, Landlord and Tenant are parties to that certain Lease Agreement dated effective as of July 26, 2001, which is incorporated herein by this reference and made a part hereof (hereinafter referred to as the "Lease"), pursuant to which Landlord did lease to Tenant and Tenant did lease from Landlord certain real property located in the City of Braselton, the G.M.D. 1765 of Jackson County, Georgia (the "Land"), together with all rights, easements and appurtenances pertaining to the Land, and the industrial distribution facility (the "Building") containing approximately 491,229 square feet of warehouse space and 19,581 square feet of office/administration space and its related Improvements, to be constructed by Landlord in accordance with the Lease and the Work Letter Agreement attached thereto and incorporated therein (collectively referred therein and herein as the "Leased Premises" or the "Premises"); and

WHEREAS, as referenced in Section 2 of Exhibit "G", Special Stipulations, of the Lease, it was acknowledged by the parties that, as of effective date of the Lease, Landlord was not the owner in fee simple of all or any portion of the Land but, rather, had entered into binding contractual obligations to acquire fee simple title to all of the Land, subject only to such title exceptions as would be acceptable and approved by Tenant; and

WHEREAS, on or about the date hereof, rather than acquiring fee simple title to the Land, Landlord has transferred and assigned its contractual rights to acquire the Land to the Jackson County Industrial Authority ("Authority"), and entered into a certain Lease Agreement with the Authority dated as of _________, 2001 (herein, the "Authority Lease"), pursuant to which the Authority shall and does lease the Land to Landlord and grants to Landlord an option to purchase the Land and any improvements now or hereafter constructed thereon; and

WHEREAS, Landlord and Tenant desire to amend the Lease to evidence a revision in and to the legal description of the Land resulting from Landlord's acquisition transaction described above, and to provide for certain amendments and modifications to the Lease necessary by reason and on account of such acquisition transaction and the lease transaction with the Authority;

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

1. RECITALS. The foregoing recitals are true and correct and hereby incorporated by reference.

2. LEGAL DESCRIPTION OF THE LAND. Exhibit "A" attached to the original Lease is hereby amended by deleting the existing Exhibit "A" in its entirety and substituting in lieu thereof the Exhibit "A" attached hereto and by this reference incorporated herein.

3. TRANSFER BY LANDLORD.

(a) Section 31.13 of the Lease specifically prohibits Landlord from engaging in the transaction described in the foregoing recitals in that it provides that "[i]n no event shall Landlord transfer any of Landlord's leasehold or ownership title to or interest in all or any part of the Premises before construction of the Premises is complete and the final, unrestricted Certificate of Occupancy and possession of the Premises have been delivered to Tenant in accordance with the Work Letter Agreement, unless Tenant receives written evidence satisfactory to Tenant that John W. Rooker, L.L.C. remains fully liable for all obligations of Landlord under the Lease." Notwithstanding the foregoing, Tenant acknowledges that Landlord has and will transfer its right to acquire fee simple title in and to the Premises to the Authority, and then lease the Premises from the Authority pursuant to the Authority Lease, and Tenant hereby consents to such transaction, PROVIDED AND ON THE CONDITION THAT, by its execution of this Agreement below as "Landlord", John W. Rooker, L.L.C. does hereby agree and confirm with Tenant that such Landlord shall and does at all times remain fully, personally and unconditionally liable to Tenant for all obligations and liabilities of Landlord under the Lease.

(b) Notwithstanding anything contained in the Authority Lease to the contrary, Tenant shall have the continuing right and option, by written notice to Landlord, to require and demand that Landlord exercise its option to purchase the Premises from the Authority pursuant to and in accordance with Section 7.1 of the Authority Lease, and Landlord hereby agrees to do so, at Landlord's sole cost and expense and, within thirty (30) days of Tenant's written request and demand, Landlord shall provide Tenant with evidence reasonably acceptable to Tenant that Landlord is the sole owner of good and marketable fee simple title in and to the Premises, subject only to such encumbrances and exceptions to title as are or have been consented to and approved by Tenant.

4. MEMORANDUM OF UNDERSTANDING. Attached to this Agreement as Exhibit "B" and incorporated herein by this reference, is a true, correct and complete copy of that certain Memorandum of Understanding dated effective as of July 26, 2001 (the "MOU") by and among Tenant, Jackson County, Georgia (the "County"), the Jackson County Chamber of Commerce, Inc. (the "Chamber"), the Authority and Landlord, with respect to inter alia (i) a Regional Economic Business Assistance Grant in the amount of $500,000.00 (herein, the REBA Grant") to be applied to reduce the overall construction costs of the Improvements, and
(ii) a bond financing transaction between Landlord and the Authority pursuant to the terms of which, for the

benefit of Tenant, the County agrees to abate real and personal ad valorem taxes on the Premises for a period of four (4) years, commencing with the tax year 2003. In connection the transactions contemplated by the MOU, Landlord and Tenant hereby agree to amend and modify the Lease, as follows:

(a) REBA GRANT. If, for any reason, the REBA Grant is not obtained, Landlord and Tenant agree that, effective as of the Rental Commencement Date described in Section 2.02 of the Lease, the Base Rent set forth in Section 3.01 of the Lease shall be automatically increased as follows:

Initial Term                 Increase in Annual Base Rent
------------                 ----------------------------
 Years 1-3                            $50,000.00
 Years 4-6                            $52,600.00
 Years 7-9                            $56,000.00
Years 10-12                           $59,100.00
Years 13-15                           $62,500.00

The foregoing amounts shall be prorated to reflect the amount, if any, of the REBA Grant received less than $500,000.00.

Moreover, in the event such Grant is not obtained, the aggregate purchase price payable by Tenant for the Premises under Section 3(i) of Exhibit "G" to the Lease (with respect to Landlord's failure to expand the Premises under the Expansion Option) shall be automatically increased by an amount equal to $500,000.00 less the amount of such Grant received, if any.

Upon the earlier to occur of (i) the date of receipt of such REBA Grant, and (ii) the Rental Commencement Date, it is hereby agreed that the Lease shall be amended to reflect any such changes in the Base Rent and in the aggregate purchase price for the Premises set forth in said
Section 3(i) of Exhibit "G" and, as of the effective date of such amendment, this Section 3 (a) of this Agreement shall automatically terminate and be of no further force or effect.

(d) BOND TRANSACTION. In the event the bond financing transaction described in Paragraph 2 of the MOU is not closed or consummated due to the failure or default by Landlord, Landlord hereby agrees that Tenant's obligation to pay the Real Estate Taxes on the Premises as provided in Section 3.03(b) of the Lease shall be automatically reduced to the amount that would have been payable by Tenant thereunder if such bond financing transaction had been closed and consummated as contemplated by the MOU and the tax abatement referenced therein received, and Landlord shall be obligated for and responsible to pay the balance of such Real Estate Taxes to the proper taxing authority for the period of time and number of years that the tax abatement would otherwise had been available, as described in the MOU.

5. NON-WAIVER. Except as expressly provided for herein, Landlord and Tenant each hereby agree that nothing contained in this Agreement shall be deemed or construed to waive or to modify the terms of the Lease.

6. EFFECT OF MODIFICATION. Except as expressly modified herein, the Lease shall remain in full force and effect. The parties hereto do hereby ratify and confirm the terms and conditions of the Lease, as amended by this Agreement. In the event of any conflict between the terms of this Agreement and the terms of the Lease, the terms of this Agreement shall govern and control.

7. ENTIRE AGREEMENT. This Agreement constitutes and contains the sole and entire agreement of the parties hereto with respect to the subject matter hereof and no prior or contemporaneous oral or written representations or agreements between the parties and affecting the subject matter hereof shall have any force or effect.

8. BINDING EFFECT. This Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the parties hereto, to the extent permitted under the Lease.

9. GOVERNING LAW. This Agreement is intended to be performed in the State of Georgia and shall be construed and enforce in accordance with the internal laws thereof.

10. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, and such counterparts together constitute one and the same instrument. Signature and acknowledgement pages may be detached from the counterparts and attached to a single copy of this document to physically form one document.

11. CONSTRUCTION. Each party hereto and its counsel has reviewed and revised (or requested revisions of) this Agreement, and the normal rule of construction that any ambiguities are to be resolved against the drafting party shall not be applicable in the construction and interpretation of this Agreement.

12. DEFINITIONS. The Lease is hereby modified as provided herein. Except as otherwise provided herein, all capitalized terms used in this Agreement which are not defined herein shall have the meanings ascribed to such terms in the Lease. All references in the Lease or in this Agreement to "the Lease" or "this Lease" shall be deemed references to the Lease, as amended by this Agreement.

(Signatures Start on Next Page)

IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this Agreement to be executed under seal [in multiple originals] as of the date and year first above written.

LANDLORD:
JOHN W. ROOKER, L.L.C., a Georgia
Limited Liability Company

By: 1998 AUGUSTUS PARTNERS, L.P., a
    Georgia Limited Partnership, Manager

    By:   2001 WINSTON MANAGEMENT COMPANY, LLC, a
          Georgia Limited Liability Company, its
          General Partner

          By:                               [SEAL]
             ----------------------------------
             John W. Rooker, Member

          By:                               [SEAL]
             ----------------------------------
             ----------------,Member


TENANT:

HAVERTY FURNITURE COMPANIES, INC.,
a Maryland corporation

By:
   -------------------------------
Name:
     -----------------------------
Title:
      ----------------------------

HAVERTY FURNITURE COMPANIES, INC.
S.E. REGIONAL DISTRIBUTION CENTER

SECOND AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE (this "Agreement") is made and entered into effective as of the 29th day of July, 2002, by and between JOHN W. ROOKER, LLC, a Georgia limited liability company ("Landlord") and HAVERTY FURNITURE COMPANIES, INC., a Maryland corporation ("Tenant").

WITNESSETH:

WHEREAS, Landlord and Tenant are parties to that certain Lease Agreement dated effective as of July 26, 2001, and amended by that certain First Amendment to Lease (the "First Amendment") dated effective as of November __, 2001 (said Lease Agreement and First Amendment being incorporated herein by this reference and made a part hereof and being hereinafter referred to as the "Lease");

WHEREAS, Landlord and Tenant desire to amend the Lease to provide for certain modifications to the Lease as more particularly set forth herein;

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

1. RECITALS. The foregoing recitals are true and correct and hereby incorporated by reference.

2. REVISED SITE PLAN. The Lease is hereby amended to add thereto as new Exhibit "H" the revised site plan of the Premises attached hereto as Exhibit "H" (the "Revised Site Plan").

3. EXPANSION OPTIONS. The parties agree that approximately 35,000 cubic yards of construction-related material, as shown on the Revised Site Plan (the "Excess Material"), shall be permitted temporarily to remain in the Phase II Building Addition Area (shown on the original Site Plan and the Revised Site Plan as the area in the northeast portion of the Premises and labeled "Future Expansion"). In the event that Tenant exercises its Expansion Option pursuant to the Lease with respect to the Phase II Building Addition Area, Landlord shall promptly and in good workmanlike manner remove said Excess Material, restoring the Phase II Building Addition Area to the condition shown on the original Site Plan (Exhibit "C" to the Lease), and Tenant shall reimburse Landlord for one-half of the reasonable costs of said removal, provided that Landlord provides to Tenant copies of all invoices for said removal, and provided further that Tenant's obligation to reimburse Landlord for said removal shall under no circumstances exceed $75,000.00.

4. REBA GRANT. Section 3(a) of the First Amendment is hereby deleted in its entirety.

5. RENTAL COMMENCEMENT DATE. The parties acknowledge and agree that the Certificate of Occupancy has been delivered to the Tenant and that the Rental Commencement Date shall be August 1, 2002.

6. AS-BUILT SURVEY. The Lease is hereby amended to add thereto as new Exhibit "I" the As-Built Survey attached hereto as Exhibit "I".

7. NON-WAIVER. Except as expressly provided for herein, Landlord and Tenant each hereby agree that nothing contained in this Agreement shall be deemed or construed to waive or to modify the terms of the Lease.

8. EFFECT OF MODIFICATION. Except as expressly modified herein, the Lease shall remain in full force and effect. The parties hereto do hereby ratify and confirm the terms and conditions of the Lease, as amended by this Agreement. In the event of any conflict between the terms of this Agreement and the terms of the Lease, the terms of this Agreement shall govern and control.

9. ENTIRE AGREEMENT. This Agreement constitutes and contains the sole and entire agreement of the parties hereto with respect to the subject matter hereof and no prior or contemporaneous oral or written representations or agreements between the parties and affecting the subject matter hereof shall have any force or effect.

10. BINDING EFFECT. This Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the parties hereto, to the extent permitted under the Lease.

11. GOVERNING LAW. This Agreement is intended to be performed in the State of Georgia and shall be construed and enforce in accordance with the internal laws thereof.

12. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, and such counterparts together constitute one and the same instrument. Signature and acknowledgement pages may be detached from the counterparts and attached to a single copy of this document to physically form one document.

13. CONSTRUCTION. Each party hereto and its counsel has reviewed and revised (or requested revisions of) this Agreement, and the normal rule of construction that any ambiguities are to be resolved against the drafting party shall not be applicable in the construction and interpretation of this Agreement.

DEFINITIONS. The Lease is hereby modified as provided herein. Except as otherwise provided herein, all capitalized terms used in this Agreement which are not defined herein shall have the meanings ascribed to such terms in the Lease. All references in the Lease or in this Agreement to "the Lease" or "this Lease" shall be deemed references to the Lease, as amended by this Agreement.

IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this Agreement to be executed under seal in multiple originals as of the date and year first above written.

LANDLORD:
JOHN W. ROOKER, L.L.C., a Georgia Limited
Liability Company

By: 1998 AUGUSTUS PARTNERS, L.P., a
    Georgia Limited Partnership, Manager

    By:   2001 WINSTON MANAGEMENT COMPANY, LLC, a
          Georgia Limited Liability Company, its
          General Partner

          By:                               [SEAL]
             ----------------------------------
             John W. Rooker, Member

          By:                               [SEAL]
             ----------------------------------
             -----------------,Member


TENANT:

HAVERTY FURNITURE COMPANIES, INC.,
a Maryland corporation

By:
   -------------------------------
Name:
     -----------------------------
Title:
      ----------------------------

The undersigned have executed this Agreement to evidence their agreement and consent to the terms hereof.

SUNTRUST BANK
By: -------------------------
    Title:-------------------

(Signatures continued from previous page)

JACKSON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY

By: ----------------------------
    Title: ---------------------

EXHIBIT 10.2

CONTRACT OF SALE

THIS CONTRACT OF SALE (this "Contract of Sale") is made this __th day of August, 2002, by and between HAVERTY FURNITURE COMPANIES, INC., a Maryland corporation, as seller ("Haverty"), and HAVERTACQ 11 LLC, a Delaware limited liability company, as purchaser ("Purchaser").

WITNESSETH:

WHEREAS, Haverty is the owner of fee simple interests in the eleven parcels of Land and the Improvements thereon located and as more particularly described on Exhibit "A" attached hereto; and

WHEREAS, Haverty is the owner of the F&E;

WHEREAS, Haverty has agreed to sell and Purchaser has agreed to purchase each of the Projects upon the terms and conditions hereinafter set forth; and

WHEREAS, simultaneously with the Closing (as defined in Section 6.1), Purchaser has agreed to lease each of the Projects to Haverty, as tenant, and Haverty has agreed to lease the Projects from Purchaser, upon the terms and conditions described in the form of Lease attached hereto as Exhibit "C";

WHEREAS, Haverty has agreed to indemnify Purchaser from and against any breach by Haverty of any of its covenants, representations or warranties under this Contract of Sale and from and against the other matters related to the transaction as provided herein and in the Lease.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of each party to the others contained herein, the parties hereto mutually covenant and agree as follows:

ARTICLE I

DEFINITIONS

The capitalized terms used herein and not otherwise defined shall have the meanings assigned thereto in Appendix A or the Lease for all purposes hereof; provided that in the event of a conflict between the terms of this Contract of Sale and the terms of the Lease, the terms and provisions of the Lease shall govern.

ARTICLE II

PURCHASE AND SALE; PURCHASE PRICE

Subject to the terms and conditions contained herein, Haverty agrees to sell each of the Projects to Purchaser and Purchaser agrees to purchase each of the Projects from Haverty at the respective purchase prices ("Purchase Price") for each Project as set forth on Schedule I attached hereto. The aggregate purchase price ("Aggregate Purchase Price") for the Projects shall be an amount equal to [Forty-One Million Seven Hundred Eighty Nine Thousand Eight Hundred One and 00/100 Dollars ($41,789,801.00)]. The Aggregate Purchase Price shall be payable in cash by wire transfer to Escrowee (as defined in Section 6.2) at the Closing.

ARTICLE III

TITLE AND SURVEY

Section 3.01. Haverty has heretofore furnished to Purchaser commitments from the Title Company to issue to Purchaser or its designee at Closing extended coverage ALTA Owner's Title Policies (the "Owner's Title Policy") in the amount of the Purchase Price for each Project, naming Purchaser as the proposed insured, which commitments obligate the Title Company to insure fee simple title to each of the Projects subject only to the Permitted Exceptions set forth in Exhibit "B" attached hereto (and in no event the standard exceptions which are capable of deletion), which commitments hereby are in form and substance reasonably acceptable to Purchaser. Haverty has also heretofore furnished to Purchaser commitments from the Title Company to provide to Lender ALTA Loan Policies (the "Mortgage Title Policy") with coverage amounts for each Project equaling in the aggregate the amount of the loan to be obtained by Purchaser to acquire the Projects and otherwise shall be in form and substance reasonably acceptable to Lender.

Section 3.02. Haverty shall deliver to Purchaser the Surveys in form and substance satisfactory to Purchaser and to Lender (the "Surveys").

Section 3.03. The property information and all other information, other than matters of public record or matters generally known to the public, furnished to, or obtained through inspection of the Projects by, Purchaser, its affiliates, lenders, employees, attorneys, accountants and other professionals or agents relating to the Projects, will be treated by Purchaser, its affiliates, lenders, employees, agents, and current and prospective investors as confidential, and Purchaser shall take commercially reasonable steps, except as required by law, not to disclose such information other than on a need-to-know basis and to Purchaser's consultants who agree to take commercially reasonable steps not to disclose such information, and will be returned to Haverty by Purchaser if the Closing does not occur. The confidentiality provisions of this
Section 3.03 shall not apply to any disclosures made by Purchaser as required by law, by court order, or in connection with any subpoena served upon Purchaser; provided Purchaser shall provide Haverty with written notice before making any such disclosure.

ARTICLE IV

PURCHASER'S CONDITIONS PRECEDENT TO CLOSING

Purchaser's obligation to consummate the transaction described in this Contract of Sale is subject to the satisfaction or written waiver of the following conditions:

Section 4.01. Purchaser shall have approved the commitment for the Owner's Title Policy furnished by Haverty under Section 3.01 and the Title Company shall remain committed thereunder to issue to Purchaser the Owner's Title Policy and the Mortgage Title Policy contemplated thereunder.

Section 4.02. Purchaser shall have approved the Surveys furnished by Haverty under Section 3.02.

Section 4.03. Haverty shall have delivered to Purchaser a Phase I environmental report addressed to Purchaser and, if as a result of such report, facts are revealed that would reasonably necessitate a Phase II environmental report, a Phase II environmental report addressed to Purchaser, each in form and substance reasonably satisfactory to Purchaser stating that the Project in question is in compliance with Environmental Laws and that no Hazardous Materials are present or have been Released or are threatened to be Released at, on, under, within or emanating to or from the Project in question.

Section 4.04. Purchaser shall have received an appraisal of each of the Projects addressed to Purchaser substantiating the fair market value of each of the Projects as equal to the allocated portion of the Purchase Price attributable thereto performed by Cushman & Wakefield and otherwise in form and substance acceptable to Purchaser in its sole discretion. Purchaser shall be satisfied that the Projects shall be in the condition described in such appraisals. The appraiser shall certify to Purchaser the remaining useful life of the Improvements.

Section 4.05. Purchaser shall have completed all other inquiries, investigations, review and other due diligence matters pertaining to the Projects, and Haverty as Purchaser elects and Purchaser shall have approved the results of the same in the sole discretion of Purchaser. Each of the Projects shall be acceptable to Landlord and Lender in their sole discretion.

Section 4.06. On the Closing Date, Haverty shall not be in breach of any covenant or agreement to be performed by Haverty under this Contract of Sale or under the Other Operative Documents.

Section 4.07. Purchaser's credit committee shall have approved the transactions contemplated by this Contract of Sale, the Lease and the Operative Documents.

Section 4.08. No Material Adverse Change to any Project or any part of any thereof shall have occurred from the date of inspection by either Landlord or Lender.

Section 4.09. Haverty shall have delivered evidence satisfactory to Landlord and Lender to the effect that all insurance required by the Lease to be maintained with respect to the Premises is in full force and effect and all premiums with respect thereto have been paid in full.

Section 4.10. Haverty shall have executed and delivered the Lease in the form attached hereto as Exhibit "C".

Section 4.11. All representations and warranties made by Haverty in this Contract of Sale and the other Operative Documents shall be true and correct as of the Closing Date.

Section 4.12. Lender shall have provided non-recourse first mortgage financing to Purchaser with respect to the Projects with a term of not less than 10 years, in an amount not less than 68% of the Aggregate Purchase Price, with an amortization schedule of not less than 25 years and otherwise upon terms and conditions acceptable to Purchaser.

Section 4.13. Purchaser shall have received a tax opinion from an independent counsel selected by Purchaser as to certain tax matters in form and substance satisfactory to Purchaser and its tax counsel.

Section 4.14. Purchaser shall have received the opinions from Haverty's counsel as described in Section 10.1.

Section 4.15. There shall have occurred no Material Adverse Change since March 13, 2002. Haverty's credit rating shall be at least NAIC 2.

Section 4.16. All Taxes, if any, due and payable on or before the Closing Date in connection with the sale contemplated hereunder or with the execution, delivery, recording and filing of any of the Operative Documents or any document or instrument contemplated thereby shall have been duly paid in full or funds therefor made available to Escrowee for the payment thereof.

Section 4.17. No change shall have occurred in Applicable Laws and Regulations or the interpretation thereof by any competent court of other Governmental Authority that would make it illegal for Purchaser to participate in the transaction or would result in a Material Adverse Effect.

Section 4.18. Haverty shall have paid the Excess Fees, if any; referred to in Section 11.02.

Section 4.19. Haverty shall have provided with respect to each Project request, for the benefit of Landlord and Lender, estoppel certificates in form and substance satisfactory to Landlord and Lender.

Section 4.20. Haverty shall have provided either (a) a zoning opinion,
(b) a zoning letter from the city in which each Project is located, (c) a zoning endorsement to the Owner's Title Policy and the Mortgage Title Policy or (d) a statement from the surveyor upon the face of each Survey that confirms the zoning description, that such Project is in compliance with such zoning

and that there are no outstanding zoning violations, in each case reasonably satisfactory to Landlord and Lender.

Section 4.21. No change shall have occurred in Applicable Law and Regulations or the interpretations thereof by any competent court or other Governmental Authority that would make it illegal for Purchaser to participate in the transaction or would result in a Material Adverse Effect.

ARTICLE V

HAVERTY'S CONDITIONS PRECEDENT TO CLOSING

Haverty's obligation to consummate the transaction described in this Contract of Sale is subject to the satisfaction or written waiver of the following conditions:

Section 5.01. Purchaser shall have executed the Lease in the form attached as Exhibit "C".

Section 5.02. On the Closing Date, Purchaser shall not be in breach of any covenant or agreement to be performed by Purchaser under this Contract of Sale.

Section 5.03. All representations and warranties made by Purchaser in this Contract of Sale shall be true and correct as of the Closing Date.

Section 5.04. Haverty and Lender shall have executed a Subordination, Non-disturbance and Attornment Agreement in form and substance reasonably acceptable to Lender and Haverty.

Section 5.05. Purchaser shall have deposited or caused to be deposited the Aggregate Purchase Price with the Escrowee.

Section 5.06. No change shall have occurred in Applicable Law and Regulations or the interpretations thereof by any competent court or other Governmental Authority that would make it illegal for Haverty to participate in the transaction or would result in a Material Adverse Effect.

ARTICLE VI

CLOSING

Section 6.01. Provided all conditions precedent set forth in Articles 4 and 5 have been satisfied and/or waived, the consummation of the transaction contemplated hereunder (hereinafter referred to as "Closing") shall take place at the offices of Purchaser's counsel in New York, New York on the Closing Date or such other date and/or location mutually agreed-upon between Haverty and Purchaser.

Section 6.02. The Closing shall take place through an escrow with the Title Company, as escrowee ("Escrowee"), pursuant to a written escrow agreement among the attorneys for

Purchaser and Haverty and Escrowee, containing terms and conditions consistent with the terms and conditions of this Contract of Sale (which shall in all events be controlling) and mutually satisfactory to Purchaser and Haverty.

ARTICLE VII

HAVERTY'S REPRESENTATIONS, WARRANTIES, AND COVENANTS

Section 7.01. Haverty represents and warrants to Purchaser as follows:

(a) Due Organization. Haverty is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland, and has the full corporate power and authority to conduct its business as now conducted, to own or hold under lease its property and to enter into, and perform its obligations under this Contract of Sale and each of the other Operative Documents to which it is a party, and Haverty is duly qualified as a foreign corporation to do business and is in good standing in the State of Georgia and in every other jurisdiction in which each Project is located.

(b) Due Authorization, Execution, Delivery. The execution by Haverty of, the consummation by it of the transactions provided for in, and the compliance by it with all of the provisions of, each Operative Document to which it is party have been duly authorized by all necessary corporate action on its part and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by it with any of the terms and provisions thereof (i) requires any approval of its stockholders, or approval or consent of any trustee or holders of any of its indebtedness or obligations, except for such approvals and consents as have been duly obtained and are in full force and effect, (ii) contravenes any Applicable Laws and Regulations or Governmental Action applicable to or binding on it or any Project, which contravention would result in a Material Adverse Effect, (iii) contravenes or results in any breach of or constitutes any default under, or results in the creation of any Lien (other than Permitted Exceptions) upon any of its properties under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-laws or other agreement or instrument to which it is a party, by which it may be bound or affected or by which any Project may be affected, which contravention, breach or default would result in a Material Adverse Effect, or
(iv) requires any Governmental Action, except for the filings and recordings necessary or advisable to perfect the rights of Purchaser and Lender intended to be created by the Operative Documents and any filings that are required in the ordinary course of business in connection with the ownership, use and operation of the Premises.

(c) Enforceability. Each of the Operative Documents to which Haverty is a party has been duly executed and delivered by Haverty. Assuming the due authorization, execution and delivery by the other parties to each Operative Document to which Haverty is a party, each such Operative Document is, respectively, a legal, valid and binding obligation of Haverty enforceable against Haverty in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(d) No Actions Pending. There is no action, suit, proceeding or to the best of Haverty's knowledge, investigation at law or in equity by or before any court, governmental body, agency, commission or other tribunal now pending or, to Haverty's Actual Knowledge, threatened against Haverty or affecting Haverty or any Project or naming Haverty as a party (i) which questions the validity or enforceability of this Contract of Sale, the Lease or any of the other Operative Documents to which Haverty is or is to become a party or (ii) that is reasonably likely, if adversely determined (individually or in the aggregate), to have a Material Adverse Effect. To Haverty's Actual Knowledge, Haverty is not in default with respect to any order or other decree of any Governmental Authority, the default under which is reasonably likely to cause a Material Adverse Effect.

(e) No Material Adverse Change. Since the date of Haverty's most recent financial statement set forth on Form 10-Q there has been no Material Adverse Change in the financial condition of Haverty and its consolidated Subsidiaries, taken as a whole, except for such changes as have been disclosed in filings made by Haverty with the Securities and Exchange Commission or in press releases by Haverty. The credit rating of Haverty is at least the minimum standard set forth in Section 4.15.

(f) Disclosure. To Haverty's Actual Knowledge (i) nothing disclosed in writing by Haverty to Purchaser or any agent of Purchaser contains any untrue statement of material fact or omits to state a material fact necessary to make the statements therein not misleading and (ii) there is no fact peculiar to Haverty or existing on or in any Project or relating to their compliance with Applicable Laws and Regulations of which Haverty has Actual Knowledge that Haverty has not disclosed in writing to Purchaser which would have a Material Adverse Effect.

(g) No Defaults. If the Operative Documents had been in effect immediately prior to the execution of this Agreement no default, or event or occurrence that but for the giving of notice or the passage of time would constitute a default, under any of the Operative Documents on the part of Haverty would have occurred and be continuing.

(h) Bankruptcy. Haverty has not filed a voluntary petition in bankruptcy or been adjudicated a bankrupt or insolvent, or filed any petition or answer seeking any reorganization, liquidation, dissolution or similar relief under any federal bankruptcy, insolvency, or other law relating to relief for debtors, or sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator or liquidator of all or any part of its properties. No court of competent jurisdiction has entered an order, judgment, or decree approving a petition filed against Haverty seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any federal bankruptcy act, and no other liquidator has been appointed for Haverty or of all or any part of its properties and no such action is pending. Haverty has not given notice to any governmental authority of insolvency or pending insolvency, or suspension or pending suspension of operations. Haverty is not insolvent and will not become insolvent by reason of the transactions contemplated by the Operative Documents.

(i) Investment Company Act. Neither Haverty nor any Guarantor is an "investment company" or an "affiliated person" of an "investment company" within the meaning of the Investment Company Act of 1940.

(j) Title. Haverty owns good, marketable and indefeasible fee simple title to each Project free and clear of all liens and encumbrances other than Permitted Exceptions. Each Project is located upon a separate tax parcel.

(k) Systems. In all material respects, to Haverty's Actual Knowledge, the electrical, plumbing, heating, drainage, air conditioning, ventilation and other mechanical and electrical systems on and in the Improvements to each Project are (i) in good working order and repair, and (ii) are adequate in quality and quantity for the operation and maintenance of such Improvements in the manner required under the Lease and such Improvements are in compliance with all Applicable Laws and Regulations in all material respects.

(l) Compliance with Applicable Laws and Regulations. Haverty has received no notices, complaints or orders of violation or noncompliance of any nature whatsoever, or to Haverty's Actual Knowledge, no notice of violation or noncompliance is threatened or contemplated by any Governmental Authority (as hereinafter defined) with respect to any Project or any part thereof other than in each case routine, minor or immaterial matters. Haverty has obtained all licenses, permits, franchises and other governmental authorizations material to the conduct of its business and the maintenance, operation and ownership of each Project; provided, however, that this paragraph (l) shall not apply to environmental matters, which is governed solely by paragraph (p) below.

(m) Rights in Respect of the Projects. Haverty is not a party to any contract or agreement to sell any interest in any Project or any part thereof other than pursuant to this Contract of Sale.

(n) No Loss or Taking. There is no action pending or, to Haverty's Actual Knowledge, threatened by a Governmental Authority or other Person to initiate a Condemnation with respect to any Project or any part thereof. There is no Casualty with respect to any Project.

(o) Use of Proceeds. None of the transactions contemplated by the Operative Documents will result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulation issued pursuant thereto.

(p) Environmental Matters.

(i) Haverty complies and at all times has been in full compliance with, and each of the Projects complies and has at all times been in full compliance with, in all material respects, all Environmental Laws;

(ii) Haverty and each of the Projects has obtained and is in compliance with, all permits, licenses, authorizations, registrations and other governmental consents ("Environmental Permits") required by applicable Environmental Laws, and has made all appropriate filings for the issuance or renewal of such Environmental Permits;

(iii) no written notices, complaints or claims of violation or non-compliance with Environmental Laws or potential liability under Environmental Laws or relating to environmental matters have been received by Haverty and, no federal, state or local environmental investigation or proceeding is pending or to Haverty's Actual Knowledge,

threatened with regard to any Project or any use thereof or any alleged violation of Environmental Laws with regard to any Project;

(iv) except as set forth in the Phase I environmental reports delivered to Purchaser, none of the Projects, or any portion thereof, has been used by Haverty or, to Haverty's Actual Knowledge, by any prior owner for the generation, manufacture, storage, handling, use, transfer, treatment, recycling, transportation, processing, production, refinement or disposal of any Hazardous Material;

(v) except as set forth in the Phase I environmental reports delivered to Purchaser, no underground storage tanks or surface impoundments have been installed in any Project by Haverty or, to Haverty's Actual Knowledge, by any other person or entity, and there exists no Hazardous Material contamination at, on, under, or within any Project, whether originating on or off the applicable Project; and

(vi) except as otherwise specifically set forth in the Phase I environmental reports delivered to Landlord in connection with its acquisition of the Projects, no Hazardous Materials (including, without limitation, asbestos) are present or have been Released or are threatened to be Released at, on, under, within or emanating to or from any of the Projects or any portion thereof.

(q) Utility Services. To Haverty's Actual Knowledge, each Project has connected all services of public facilities and other utilities sufficient and necessary for the use and operation of such Project for the current use made of such Project, including, without limitation, water, gas, electricity, sewer and telephone.

(r) Use and Operation of the Projects. All agreements, easements (including without limitation Permitted Exceptions) and other rights, public or private (including, without limitation, all Applicable Laws and Regulations), which are necessary to permit the lawful use and operation of each Project in the manner in which such use is currently made and which are necessary to permit the lawful intended use and operation of all presently existing utilities, driveways, roads and other means of egress and ingress to and from the same have been obtained and are in full force and effect and Haverty has not has received notice of any pending modification or cancellation of any of the same; the use of each Project does not in any material respect depend on any variance, special exception or other municipal approval, permit or consent that has not been obtained for its continuing legal use; and all required building and use related permits, approvals and consents have been issued and are in full force and effect.

(s) Special Assessments. There is no action pending or, to Haverty's Actual Knowledge, threatened by a Governmental Authority or other Person to specially assess any Project for any public improvements constructed or to be constructed that is reasonably likely to have a Material Adverse Effect or an adverse effect on the value, utility or useful life of such Project.

(t) Access; Egress. Access to and egress from each Project are available and provided by public streets and authorized use of private roadways. To Haverty's Actual Knowledge, there are no plans of any Governmental Authority to change the highway or road

system in the vicinity of any Project, or to restrict or change access from any such highway or road to any Project, in either case, in any manner which would reasonably be expected to materially interfere with or prevent the use, occupancy or operation of such Project as contemplated by the Operative Documents.

(u) Occupancy and Possession. There are no leases or other occupancy agreements currently affecting any portion of any Project and Haverty or an Affiliate of Haverty is in sole occupancy and possession of the entirety of each Project.

(v) Tax Exempt Use Property. During the period from the commencement date of the Lease Term (as set forth in Schedule C to the Lease) through expiration or earlier termination of the Lease with respect to any Project, the Projects will not, as a result of any use or action by, or the status of Haverty, any sublessee, or any other user (other than the Purchaser) constitute "tax exempt use property" within the meaning of Section 168(h) of the Code.

(w) Nonseverable Improvements As of the commencement of the Lease Term, Haverty has no present intention to make any material nonseverable improvement to the Projects.

(x) Accuracy of Information to Appraiser All written information provided by Haverty to the Appraiser with respect to the Projects, and identified by the Appraiser as information it has relied on, will be accurate at the time provided and on the commencement date of the Lease Term (as set forth in Schedule C of the Lease), and Haverty did not withhold any information in connection with any request by the Appraiser for information that would render the information actually provided misleading.

(y) No Deductions During the Lease Term, Haverty will not claim to be the owner of the Projects or claim the MACRS Deductions, the Interest Deductions or Amortization Deductions or take any position on any income tax return that is inconsistent with the Purchaser's ownership of the Projects or with the reporting of Basic Rent in accordance with Schedule D of the Lease.

Section 7.02. The representations and warranties of Haverty contained in Section 7.01 shall be true as of the date hereof, shall be deemed remade by Haverty as of the Closing Date, shall survive the Closing Date without limitation and shall run in favor of, and benefit, Purchaser and its successors and assigns.

ARTICLE VIII

PURCHASER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS

Section 8.01. Purchaser represents and warrants to Haverty as follows:

(a) Due Organization. Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and has the full limited liability company power and authority to conduct its business as now conducted, to own or hold under lease its property and to enter into, and perform its obligations under this Contract of Sale and each of the other Operative Documents to which it is a party, and it is duly qualified

as a foreign corporation to do business and is in good standing in each other jurisdiction in which its failure to be so qualified would have a material adverse effect on any Project or the financial condition of Purchaser.

(b) Due Authorization, Execution and Delivery. The execution by Purchaser of, the consummation by it, of the transactions provided for in, and the compliance by it with all of the provisions of, each Operative Document to which it is party have been duly authorized by all necessary limited liability company action on its part and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by it with any of the terms and provisions thereof (i) requires any approval of its members, or approval or consent of any trustee or holders of any of its indebtedness or obligations, except for such approvals and consents as have been duly obtained and are in full force and effect, (ii) contravenes any Applicable Laws and Regulations or Governmental Action applicable to or binding on it or any Project, which contravention would result in a Material Adverse Effect, (iii) contravenes or results in any breach of or constitutes any default under, or results in the creation of any Lien (other than Permitted Exceptions) upon any of its properties under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, limited liability company agreement or other agreement or instrument to which it is a party, by which it may be bound or affected or by which any Project may be affected, which contravention, breach or default would result in a material adverse effect on any Project or the financial condition of Purchaser, other than any Lien (such as that in favor of the Lender) contemplated by the Operative Documents or (iv) requires any Governmental Action, except for the filings and recordings necessary or advisable to perfect the rights of Purchaser and Lender intended to be created by the Operative Documents and any filings that are required in the ordinary course of business in connection with the ownership, use and operation of any Project.

(c) Enforceability. Each of the Operative Documents to which Purchaser is a party has been duly executed and delivered by Purchaser. Assuming the due authorization, execution and delivery by the other parties to each Operative Document to which Purchaser is a party, each such Operative Document is, respectively, a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(d) No Actions Pending. There is no action, suit, proceeding or investigation at law or in equity by or before any court, governmental body, agency, commission or other tribunal served on Purchaser or, to Purchaser's Actual Knowledge, threatened against Purchaser or affecting Purchaser or naming Purchaser as a party (i) which questions the validity or enforceability of this Contract of Sale, the Lease or any of the Other Operative Documents to which Purchaser is or is to become a party or (ii) that is reasonably likely, if adversely determined (individually or in the aggregate), to have a material adverse effect on any Project or the financial condition of Purchaser. Purchaser is not in default with respect to any order of any Governmental Authority, the default under which is reasonably likely to cause a material adverse effect on any Project or the financial condition of Purchaser.

(e) Bankruptcy. Purchaser has not filed a voluntary petition in bankruptcy or been adjudicated a bankrupt or insolvent, or filed any petition or answer seeking any

reorganization, liquidation, dissolution or similar relief under any federal bankruptcy, insolvency, or other law relating to relief for debtors, or sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator or liquidator of all or any part of its properties. No court of competent jurisdiction has entered an order, judgment, or decree approving a petition filed against Purchaser seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any federal bankruptcy act, and no other liquidator has been appointed for Purchaser or of all or any part of its properties and no such action is pending. Purchaser has not given notice to any governmental authority of insolvency or pending insolvency, or suspension or pending suspension of operations. Purchaser is not insolvent and will not become insolvent by reason of the transactions contemplated by the Operative Documents.

Section 8.02. The representations, warranties, indemnities, covenants and agreements of Purchaser contained in Section 8.1 shall be true as of the date hereof, shall be deemed remade by Purchaser as of the Closing Date, shall survive the Closing without limitation and shall run in favor of, and benefit, Haverty and its successors and assigns.

ARTICLE IX

DEFAULTS

Section 9.01. In the event of the breach by Purchaser of this Contract of Sale on the Closing Date, which breach is not cured within five (5) days from the date of Haverty's written notice to Purchaser, Haverty, at its option, may:
(a) terminate its obligations under this Contract of Sale by further written notice thereof to Purchaser; (b) specifically enforce the terms and provisions of this Contract of Sale against Purchaser; (c) avail itself of any other rights and remedies available to Haverty at law or in equity as a result of such failure by Purchaser; or (d) avail itself of any combination of the foregoing.

Section 9.02. In the event of the breach by Haverty of this Contract of Sale on the Closing Date, which failure is not cured within five (5) days from the date of Purchaser's written notice to Haverty, Purchaser, at its option, may: (a) terminate its obligations under this Contract of Sale by further written notice thereof to Haverty; (b) specifically enforce the terms and provisions of this Contract of Sale against Haverty; (c) avail itself of any other rights and remedies available to Purchaser at law or in equity as a result of such failure by Haverty, including the right to record a lis pendens against any or all of the Projects; or (d) avail itself of any combination of the foregoing.

ARTICLE X

CLOSING DOCUMENTS

Section 10.01. At the Closing, Haverty shall execute and/or deliver, or cause to be executed and/or delivered to Purchaser and, where, applicable, the Title Company the following:

(a) The Owner's Title Policy and the Mortgage Title Policy in form and content required under Section 3.01; provided that the Owner's Title Policy and the Mortgage Title

Policy may be delivered after Closing if that is customary in the locality, provided that Purchaser receives a "marked" title binder at Closing reasonably acceptable to Purchaser.

(b) A duly executed and acknowledged Limited or Special Warranty Deed conveying fee simple title to the Land and Improvements with respect to each Project to Purchaser, subject only to the Permitted Exceptions.

(c) A duly executed Bill of Sale conveying all of Haverty's right, title and interest in the F&E with respect to each Project to Purchaser free and clear of all liens, security interests and adverse claims, subject only to the Permitted Exceptions.

(d) Such other documents and instruments as are reasonably required to transfer Haverty's interest in each Project to Purchaser.

(e) Certified copies of resolutions by Haverty's Board of Directors authorizing the execution of this Contract of Sale and consummation of the transactions described herein.

(f) The Lease, and related short forms or memoranda of the Lease for recording purposes.

(g) The Environmental Indemnity Agreement for the benefit of Landlord and Lender.

(h) Certificates of occupancy with respect to each Project satisfactory to Landlord and Lender.

(i) The opinion of Smith, Gambrell & Russell, LLP, substantially in the form of Exhibit "D-1" attached hereto.

(j) Such other documents reasonably required by Lender and customary in transactions similar to the transaction contemplated by this Contract of Sale.

Section 10.02. At the Closing, Purchaser shall execute and/or deliver to Haverty the following:

(a) The Aggregate Purchase Price in accordance with Article 2 hereof.

(b) The Lease, and related short forms or memoranda of the Lease for recording purposes.

(c) The opinion of Dewey Ballantine LLP, substantially in the form of Exhibit "E" attached hereto.

Section 10.03. At the Closing, Haverty and Purchaser shall jointly deliver: (a) an escrow agreement and (b) state, county and local transfer tax declarations, if any, and all such other instruments and documents requested by the Title Company customarily delivered in connection with the closing of the sale and purchase of similar properties.

ARTICLE XI

CLOSING ADJUSTMENTS

Section 11.01. There shall be no proration of real estate or personal property taxes at the Closing.

Section 11.02. The following costs shall be payable out of the Aggregate Purchase Price, assuming consummation of the transactions contemplated hereby: (a) all transfer taxes, lease taxes and all other costs associated with the transfer of title to the Projects, including title insurance premiums, survey costs and recording fees (including mortgage taxes), (b) appraisal fees, fees and expenses for third-party environmental reports (including search fees) and engineering inspections (collectively, "Capitalized Closing Costs"). Except as provided in the second succeeding sentence, Purchaser shall pay the following, assuming consummation of the transactions contemplated hereby: (v) the fee of SunTrust Robinson Humphrey (w) Lender's origination fee, (x) the fees and expenses of counsel for Purchaser and Lender, respectively, (y) fees and expenses of local counsel engaged by Landlord on behalf of the transaction and
(z) the fees of Purchaser's advisors. To the extent the fees and expenses described in clauses (x) and (y) above equal less than $550,000 in the aggregate, the difference shall be applied to the payment of Capitalized Closing Costs. To the extent the fees and expenses described in clauses (x) and (y) above exceed $650,000, Haverty shall pay such excess amounts (the "Excess Fees"). If the transactions contemplated hereby shall fail to be consummated for any reason other than Purchaser's failure to close after all conditions precedent have been satisfied, Haverty shall pay all transaction expenses described in this Section 11.02 and any others waived by or on behalf of Landlord or Lender, including but not limited to legal fees and expenses related to due diligence.

ARTICLE XII

INDEMNIFICATION

Section 12.01. (a) Haverty shall defend all actions against any of (i) Landlord (ii) any owner, beneficial owner, trustee, partner, member, officer, director, shareholder or agent of Landlord, and of any of Landlord's partners or members, and (iii) the holder of any indebtedness of Landlord secured by a mortgage, deed of trust or other security interest in the Premises, including without limitation, Lender, or any owner, beneficial owner, partner, member, officer, director, shareholder, or agent of any such holder, including without limitation, Lender, (iv) together with their respective successors and assigns (herein, collectively, "Indemnified Parties") with respect to, and shall pay, protect, indemnify and save harmless the Indemnified Parties from and against, any and all liabilities, losses, damages, costs, expenses (including reasonable attorneys' fees and expenses), causes of action, suits, claims, demands or judgments of any nature (SPECIFICALLY INCLUDING CLAIMS RESULTING FROM THE STRICT OR ABSOLUTE LIABILITY OF AN INDEMNIFIED PARTY OR FROM THE NEGLIGENCE OF AN INDEMNIFIED PARTY, but specifically excluding claims resulting from the gross negligence or willful misconduct of an Indemnified Party, subject to the provisions of Section 12.01(b) and excluding consequential or punitive damages assessed against Landlord as a result of the commission of an overt act by Landlord constituting gross negligence

or willful misconduct, subject to the provisions of Section 12.01(b))) (a) to which any Indemnified Party is subject because of Landlord's estate in any Project or the receipt of any Basic Rent or Additional Rent under the Lease or
(b) arising from (i) any accident, injury to or death of any person or loss of or damage to property occurring in, on or about any Project or portion thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways; (ii) any use, non-use or condition in, on or about, or ownership, possession, alteration, repair, operation, maintenance, leasing, subleasing or management of, any Project or any portion thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways; (iii) the construction, design, purchase, acceptance, rejection, modification, substitution or condition of any Project, including without limitation claims or penalties arising from any violation of Legal Requirements, without regard to whether compliance therewith is required by the terms of the Lease or liability in tort (strict or otherwise), (iv) any failure on the part of Haverty to perform or comply with any of the terms, covenants or conditions of the Lease or any other instrument, contract, document or agreement to which Haverty is a party relating to the Premises or any Project (a "Related Document"); (v) any representation or warranty made herein, in any certificate delivered in connection herewith or in any other Related Document, or pursuant thereto, being false or misleading in any material respect as of the date that such representation or warranty was made; (vi) performance of any labor or services or the furnishing of any materials or other property in respect to any Project or any portion thereof, (vii) any Imposition, including without limitation, any Imposition attributable to the execution, delivery, filing or recording of any Related Document, the Lease or any memorandum thereof; (viii) any lien, encumbrance or claim arising on or against any Project or any portion thereof under any Legal Requirement or otherwise which Haverty is obligated to remove and discharge pursuant to the Lease or any liability asserted against the Indemnified Parties with respect thereto, (ix) the claims of any subtenants (of any tier), licensees or other persons claiming through or under Haverty of all or any portion of any Project or any other Person acting through or under Haverty or otherwise acting under or as a consequence of the Lease or any sublease (of any tier), (x) any act or omission of Haverty or its agents, contractors, employees, licensees, subtenants or invitees or of any of the Persons described in clause (ix), and (xi) any contest referred to in Section 2.6 of the Lease; provided, however, that Haverty shall not be required to indemnify an Indemnified Party under this Section 12.01 with respect to any liability arising with respect to a Project to the extent attributable to acts or events which occur after (and are not attributable to acts or events occurring or accruing prior to) the later of (A) the expiration or earlier termination of the Lease with respect to such Project and (B) the surrender of possession of such Project to the Landlord.

(b) Under no circumstance shall Landlord or any Indemnified Party be deemed to have acted negligently, grossly negligently or willfully merely by Landlord's or such Indemnified Party's ownership of the Premises, and in no event shall any occurrence relating to any Project, whether negligent, grossly negligent or willful, be imputed to Landlord or any Indemnified Party by reason of Landlord's or such Indemnified Party's interest in such Project, it being understood that all obligations with respect to the Premises are the responsibility of Haverty under the Lease. In order to have acted negligently, grossly negligently or willfully, Landlord or any Indemnified Party must have committed an affirmative act.

Nothing in this Section 12.01 shall be construed as a guaranty by Haverty of any residual value in any Project.

Section 12.02. Haverty agrees to indemnify, reimburse, defend, and hold harmless the Indemnified Parties for, from, and against all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs and expenses, including, without limitation, interest, penalties, punitive and consequential damages, costs of any Remedial Work, reasonable attorneys' fees, disbursements and expenses, and reasonable consultants' fees, disbursements and expenses and administrative and similar costs of the Indemnified Parties, but excluding internal overhead), asserted against, resulting to, imposed on, or incurred by the Indemnified Parties, directly or indirectly, in connection with any of the following:

(a) events, circumstances, or conditions which are alleged to, or do, (1) relate to the presence or Release or threatened Release on, at, under, within or emanating to or from any of the Projects or portion thereof of any Hazardous Substance, (2) form the basis of any violation or alleged violation, of, or liability or alleged liability under, any Environmental Law by Haverty (or any subtenants or assignees), Landlord or Lender (except for violations or liability arising from the gross negligence or willful misconduct of Landlord or Lender as qualified by Section 12.01(b) above) or with respect to any such Projects, or (3) constitute Environmental Violations;

(b) any pollution, loss or damage to property or natural resources or threat to human health or safety or the health or safety of other living organisms, or the environment that is related in any way to Haverty's (or any subtenants or assignees') or any previous owner's or operator's management, use, control, ownership or operation of any Project, including, without limitation, all onsite and offsite activities involving Hazardous Substances, and whether occurring, existing or arising prior to or from and after the date hereof;

(c) any Environmental Claim against any person or entity whose liability for such Environmental Claim Haverty or Landlord has or may have assumed or retained either contractually or by operation of law;

(d) any Remedial Work required to be performed pursuant to any Environmental Law or the terms hereof; or

(e) the breach of any environmental representation, warranty or covenant set forth in the Lease, (collectively, "Indemnified Environmental Losses"), INCLUDING IN EACH CASE, WITHOUT LIMITATION, WITH RESPECT TO EACH OF THE INDEMNIFIED PARTIES, AS THE CASE MAY BE, TO THE EXTENT SUCH INDEMNIFIED ENVIRONMENTAL LOSSES RESULT FROM THE STRICT OR ABSOLUTE LIABILITY OF SUCH INDEMNIFIED PARTY OR ITS NEGLIGENCE, EXCEPT IN EACH CASE, TO THE EXTENT THAT THEY RESULT SOLELY FROM THE INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (SUBJECT TO THE PROVISIONS OF SECTION 12.01(b))).

Section 12.03. The obligations of Haverty under this Article 12 shall survive the Closing and the expiration or earlier termination of the Lease. No Indemnified Party shall be entitled to payment of any amount hereunder to the extent of any prior payment with respect to the same claim under any other indemnity from Haverty.

ARTICLE XIII

BROKER

Purchaser agrees to pay all commissions and fees due and payable to SunTrust Robinson Humphrey in connection with this transaction, but only if and when the transactions contemplated hereby are consummated. Haverty agrees to and does hereby indemnify Purchaser from all loss, damage, cost, or expense (including reasonable attorneys' fees) that Purchaser may suffer as a result of any claim or action brought by any broker or advisor, other than Sun Trust Robinson Humphrey or other than upon consummation of the transactions contemplated hereby, acting or allegedly acting on behalf of Haverty in connection with this transaction, and Purchaser agrees to and does hereby indemnify and hold Haverty harmless from all loss, damage, cost, or expense (including reasonable attorneys' fees) that Haverty may suffer as a result of any claim or action brought by any broker or advisor, other than Sun Trust Robinson Humphrey, acting or allegedly acting on behalf of Purchaser in connection with this transaction. Any compensation payable to U.S. Realty Advisors, LLC shall be the sole liability and obligation of Purchaser.

ARTICLE XIV

MISCELLANEOUS

Section 14.01. All notices to be given hereunder shall be in writing and sent by United States mail, by nationally recognized courier service or by hand and any such notice shall become effective when received, or if sent by nationally recognized courier for next day delivery, on the next day after delivery of such notice to such courier service, and shall be directed to the Address of such Person. From time to time any party may designate a new Address for purposes of notice hereunder by notice to each other parties hereto.

Section 14.02. This Contract of Sale, the Exhibits attached hereto and the other Operative Documents embody the entire agreement among the parties in connection with this transaction and there are no oral or parole agreements, representations or inducements existing between the parties relating to this transaction which arc not expressly set forth herein and covered hereby. This Contract of Sale may not be modified except by a written agreement signed by all of the parties.

Section 14.03. No written waiver by any party at any time of any breach of any provision of this Contract of Sale shall be deemed a waiver of a breach of any other provision herein, or a consent to any subsequent breach of the same or any other provision. If any action by any party shall require the consent or approval of another party, such consent or approval of such action on any one occasion shall not be deemed a consent to or approval of such action on any subsequent occasion or a consent to or approval of any other action on the same or any subsequent occasion.

Section 14.04. The captions, paragraphs, numbers and article numbers appearing in this Contract of Sale are inserted only as a matter of convenience and do not define, limit, construe or

describe the scope or intent of such paragraphs or articles of this Contract of Sale or in any way affect this Contract of Sale.

Section 14.05. All parties hereto agree that time is of the essence in this transaction and that this Contract of Sale may be executed in counterparts and shall be governed by and interpreted in accordance with the laws of the State of New York (without giving effect to the conflict of laws rules and principles of such state), and the United States of America.

Section 14.06. Purchaser and Haverty shall not and shall not permit any agent or broker to publicize the transaction contemplated by this Contract of Sale without the consent of the other party. This Contract of Sale shall remain subject to any confidentiality agreement previously executed by and between the parties hereto or their Affiliates.

Section 14.07. Haverty at its own cost and expense, shall cause to promptly and duly take, execute, acknowledge and deliver all such further acts, documents and assurances as Purchaser reasonably may request from time to time in order to carry out more effectively the intent and purposes of this Contract of Sale and the other Operative Documents.

Section 14.08. In the event of any proceeding or litigation involving this Contract of Sale, (including any appeals or bankruptcy matter) the party prevailing in such proceeding or litigation shall be entitled to recover from the other party all attorneys' fees and expenses and all costs incurred by the prevailing party in connection therewith, together with interest thereon from the date of such demand until paid at the Rate.

Section 14.09. The parties hereto hereby consent to an assignment by Purchaser to the Lender of the Purchaser's rights under this Contract of Sale.

Section 14.10. The parties intend this agreement to constitute a sale and not a financing for all purposes.

[Signatures on following page]

IN WITNESS WHEREOF, the parties hereto have executed this Contract of Sale the day and year first above written.

HAVERTY:

Haverty Furniture Companies, Inc.,
a Maryland corporation

PURCHASER:

HAVERTACQ 11 LLC,
a Delaware limited liability company

EXHIBIT 10.3

EXECUTION COPY

LEASE AGREEMENT

BETWEEN

HAVERTACQ 11 LLC

AS LANDLORD

AND

HAVERTY FURNITURE COMPANIES, INC.

AS TENANT

TABLE OF CONTENTS

                                                                                                                Page
                                                                                                                ----
ARTICLE 1.........................................................................................................1
   1.1   Lease of Premises; Title and Condition...................................................................1
   1.2   Use......................................................................................................3
   1.3   Terms....................................................................................................4
   1.4   Rent.....................................................................................................6
ARTICLE 2.........................................................................................................7
   2.1   Net Lease................................................................................................7
   2.2   Taxes and Assessments; Compliance with Law...............................................................8
   2.3   Liens...................................................................................................12
   2.4   Indemnification.........................................................................................12
   2.5   Maintenance and Repair..................................................................................13
   2.6   Permitted Contests......................................................................................14
   2.7   Certain Deposits........................................................................................15
   2.8   Assignment to Lender....................................................................................22
ARTICLE 3........................................................................................................22
   3.1   Procedure Upon Purchase.................................................................................22
   3.2   Condemnation and Casualty...............................................................................23
   3.3   Rejectable Offer and Substitution.......................................................................25
   3.4   Substitution............................................................................................29
   3.5   Rejection of Rejectable Offer or Rejectable Substitution Offer..........................................38
   3.6   Less than Major Condemnation or Casualty................................................................39
   3.7   Insurance.  ............................................................................................41
   3.8   Alterations.............................................................................................47
   3.9   Severable Alterations...................................................................................51
   3.10  Easements...............................................................................................51
   3.11  Fixtures and Equipment..................................................................................53
   3.12  Right of First Offer....................................................................................53
ARTICLE 4........................................................................................................54
   4.1   Assignment and Subletting...............................................................................54
ARTICLE 5........................................................................................................56
   5.1   Conditional Limitations; Default Provisions.............................................................56
   5.2   Bankruptcy or Insolvency................................................................................59
   5.3   Additional Rights of Landlord...........................................................................62
   5.4   Waivers.................................................................................................63
ARTICLE 6........................................................................................................63
   6.1   Notices and Other Instruments...........................................................................63
   6.2   Estoppel Certificates, Financial Information............................................................65
ARTICLE 7........................................................................................................67
   7.1   Environmental Warranty..................................................................................67
   7.2   Environmental Covenants.................................................................................69
   7.3   Environmental Indemnity.................................................................................72
   7.4   Waiver of Surety Defenses...............................................................................73

                                                                                                                Page
                                                                                                                ----
   7.5   Survival................................................................................................73
ARTICLE 8........................................................................................................73
   8.1   Holdover................................................................................................73
ARTICLE 9........................................................................................................74
   9.1   Deferred Maintenance....................................................................................74
   9.2   Deferred Maintenance Work...............................................................................74
ARTICLE 10.......................................................................................................75
   10.1  No Merger...............................................................................................75
   10.2  Surrender...............................................................................................75
   10.3  Separability; Binding Effect............................................................................76
   10.4  Table of Contents and Headings..........................................................................77
   10.5  Counterparts............................................................................................77
   10.6  Recording of Lease......................................................................................77
   10.7  Rating of the Transaction...............................................................................77
   10.8  No Brokers..............................................................................................79
   10.9  Governing Law...........................................................................................79
   10.10 Waiver of Jury Trial....................................................................................79
   10.11 Conveyance by Landlord..................................................................................79
   10.12 Intent; Relationship of the Parties.....................................................................79
   10.13 Representation by Counsel...............................................................................80
   10.14 Access to Premises......................................................................................80
   10.15 Showing.................................................................................................80
   10.16 True Lease..............................................................................................80
   10.17 Landlord's Consent and Standards........................................................................80
   10.18 Quiet Enjoyment.........................................................................................81
   10.19 Force Majeure...........................................................................................81
   10.20 [INTENTIONALLY OMITTED].................................................................................81
   10.21 Tenant's Acknowledgement of Indemnities.................................................................81
   10.22 Limitation on Landlord's Liability......................................................................81

Schedule A     -  Legal Descriptions
Schedule B     -  Permitted Exceptions
Schedule C     -  Lease Term
Schedule D     -  Basic Rent
Schedule E     -  Determination of Basic Rent Upon Release of Project or Payment of Net
                  Proceeds to Tenant
Schedule F     -  Stipulated Loss Values
Schedule G     -  Amounts Allocated to Projects
Schedule H     -  Survey Requirements
Schedule I     -  Form of Subordination, Non-Disturbance and Attornment Agreement
Schedule J        Rent Coverage Ratio
Schedule K        Certificate of Occupancy Covenant
Schedule L        Deferred Maintenance

                                                                                                      Section
                                                                                                      -------
INDEX OF DEFINITIONS
Acceptable Appraisal.............................................................................         3.3(a)
Acceptable Credit Rating.........................................................................         2.6(b)
ADA..............................................................................................            9.1
Additional Rent .................................................................................         1.4(b)
Alterations .....................................................................................         3.8(a)
Applicable Percentage............................................................................            8.1
Approved Appraiser...............................................................................         3.4(c)
Architect........................................................................................         3.6(b)
Assignee ........................................................................................         5.2(d)
Assurance .......................................................................................     5.2(b)(ii)
Basic Rent ......................................................................................         1.4(a)
Brand Standards .................................................................................         2.5(a)
Business Day ....................................................................................         1.4(a)
Casualty ........................................................................................         3.2(a)
Code ............................................................................................         3.3(a)
Compensation ....................................................................................         3.2(a)
Condemnation ....................................................................................         3.2(a)
Contract of Sale.................................................................................    3.4(d)(xvi)
Consumer Price Index.............................................................................         3.6(b)
Default..........................................................................................         5.1(a)
Deferred Maintenance.............................................................................            9.1
Depository.......................................................................................         2.2(c)
EBITDAR..........................................................................................         2.2(d)
Economically Obsolete............................................................................         3.3(b)
Environmental Claim .............................................................................     7.2(g)(iv)
Environmental Laws ..............................................................................         7.1(a)
Environmental Permits............................................................................         7.1(b)
Environmental Report.............................................................................        10.2(b)
Environmental Violation .........................................................................     7.2(g)(iv)
Estimated Cost ..................................................................................         3.8(a)
Estimated Premiums...............................................................................         3.7(h)
Event of Default ................................................................................         5.1(a)
Expiration Date .................................................................................     3.8(a)(xi)
Extended Terms ..................................................................................            1.3
Fair Market Value ...............................................................................         3.4(c)
F&E .............................................................................................    1.1(a)(iii)
Force Majeure ...................................................................................          10.19
Governmental Authority ..........................................................................         7.2(b)
Guarantor .......................................................................................    5.1(a)(iii)
Hazardous Substance .............................................................................         7.1(d)
Impositions .....................................................................................         2.2(a)
Improvements ....................................................................................     1.1(a)(ii)
Indemnified Environmental Losses.................................................................            7.3

Indemnified Parties .............................................................................            2.4
Indenture .......................................................................................         3.7(c)
Land ............................................................................................      1.1(a)(i)
Landlord.........................................................................................        Heading
Landlord Parties.................................................................................          10.22
Lease............................................................................................        Heading
Lease Termination Date ..........................................................................         3.2(b)
Legal Requirements ..............................................................................         2.2(b)
Lender...........................................................................................         3.7(c)
Liquidated Damages...............................................................................         5.1(g)
Loan.............................................................................................     3.4(d)(ii)
Loan Agreement...................................................................................    3.4(d)(xvi)
Lockup Period ...................................................................................      3.3(a)(3)
Major Casualty ..................................................................................         3.2(b)
Major Condemnation ..............................................................................         3.2(b)
Make Whole Premium ..............................................................................         3.1(b)
Material Alteration .............................................................................         3.8(a)
Net Proceeds ....................................................................................         3.2(a)
Net Worth .......................................................................................         2.2(d)
Non-Disturbance Agreement........................................................................         4.1(c)
Payment Dates ...................................................................................         1.4(a)
Permitted Exceptions ............................................................................         1.1(a)
Premises ........................................................................................         1.1(a)
Primary Term ....................................................................................            1.3
Project .........................................................................................         1.1(a)
Property ........................................................................................         1.1(a)
Purchase Option..................................................................................           3.12
Purchase Option Closing Date.....................................................................           3.12
Rate ............................................................................................         1.4(b)
Rating Agency ...................................................................................     3.4(d)(ii)
Rejectable Offer ................................................................................         3.3(a)
Rejectable Substitution Offer ...................................................................         3.3(a)
Related Document.................................................................................            2.4
Release..........................................................................................            7.1
Remedial Work ...................................................................................         7.2(b)
REMIC ...........................................................................................    3.4(d)(iii)
Renovation Work..................................................................................            9.3
Rent ............................................................................................         2.7(b)
Rent Coverage Ratio..............................................................................         2.2(d)
Replaced Project ................................................................................         3.4(a)
Responsible Officer .............................................................................         3.3(a)
Restoration Cost ................................................................................         3.6(a)
Seller...........................................................................................         2.2(a)
Severable Alterations ...........................................................................            3.9
Stipulated Loss Value ...........................................................................         3.3(a)

Structural Work .................................................................................         3.8(a)
Subject Transfer.................................................................................         4.1(d)
Substitute Project ..............................................................................         3.4(a)
Substitution ....................................................................................         3.4(a)
Substitution Documents ..........................................................................         3.3(a)
Tenant...........................................................................................        Heading
Tenant's Personal Property ......................................................................         1.1(a)
Term ............................................................................................            1.3
Treasury Rate....................................................................................         5.1(g)
Work ............................................................................................         3.8(a)

LEASE AGREEMENT

THIS LEASE AGREEMENT, dated as of August 6, 2002 (this "Lease"), is made and entered into between HAVERTACQ 11 LLC, a Delaware limited liability company (together with its successors and assigns, hereinafter referred to as "Landlord") having an address as set forth in Section 6.1, and HAVERTY FURNITURE COMPANIES, INC., a Maryland corporation (together with its successors and assigns, hereinafter referred to as "Tenant"), having an address as set forth in Section 6.1.

Landlord and Tenant hereby agree as follows:

ARTICLE 1.

1.1 Lease of Premises; Title and Condition.

(a) In consideration of the rents and covenants herein stipulated to be paid and performed by Tenant and upon the terms and conditions herein specified, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the premises (the "Premises") consisting of:

(i) each of those certain eleven (11) parcels of land more particularly described on Schedule A attached hereto and made a part hereof, together with all of the Landlord's right, title and interest, if any, in and to (1) all easements, rights-of-way, appurtenances, and other rights and benefits belonging to each of the parcels of land, and (2) all public or private streets, roads, avenues, alleys, or passageways, open or proposed, on or abutting each of the parcels of land, and any award made or to be made in lieu thereof (collectively, the "Land"); and

(ii) all buildings located on the Land, together with all plumbing, electrical, ventilating, heating, cooling, lighting and other utility systems, equipment, ducts and pipes attached to or comprising a part thereof (collectively, the "Improvements"); and

(iii) all furnaces, boilers, machinery, motors, compressors, elevators, fittings, piping, conduits, ducts, air conditioners, partitions, mechanical, electrical and HVAC systems and apparatus of every kind and all other fixtures, equipment and other personalty owned by Landlord and located on, attached, affixed or incorporated into the Land and Improvements including, without limitation, all lighting, lighting fixtures (other than track lighting), television wiring and jacks, and other miscellaneous fixtures and equipment now or hereafter located on the Land and used in the operation of the Improvements, including, without limitation, all replacements thereof (collectively, the "F&E"). ---

Notwithstanding anything to the contrary in the foregoing, the Premises and the F&E shall not under any circumstances include any of the following property of Tenant or any

sublessee: inventory (including without limitation all seating, tables, beds, draperies, cabinetry, chairs, mirrors, nightstands, furniture, furniture accessories, bathroom accessories, floor coverings, curtains, appliances, tableware, table accessories), tradenames or trademarks or the right to use the same, proprietary computer software, moveable signage, including without limitation building-mounted and/or monument-mounted sign panels, portable modular walls and partitioning, warehouse racks and lifts, surveillance cameras and related moveable security equipment, track lighting, audio-visual equipment, office furniture, office and conference accessories, moveable "Musak" equipment, telecommunications and computer equipment or stand-alone computer generators (collectively, the "Tenant's Personal Property"), which shall remain the property of Tenant, or its affiliates, as the case may be. Each of the eleven
(11) parcels of Land, together with the Improvements and F&E located thereon is sometimes hereinafter referred to as a "Project" or a "Property". In addition, Tenant may from time to time own or hold under lease from persons other than Landlord, Tenant's Personal Property and personal property located on or about the Land and Improvements that are not subject to this Lease.

The Premises are leased to Tenant in their present condition without representation or warranty by Landlord and subject to the rights of parties in possession, to the existing state of title and any state of facts which an accurate survey or physical inspection might reveal, to all applicable Legal Requirements (as hereinafter defined) now or hereafter in effect and subject to those matters listed in Schedule B attached hereto and made a part hereof (the "Permitted Exceptions").

(b) Tenant has examined the Premises and title to the Premises and has found all of the same satisfactory for its intended purposes under this Lease. Tenant acknowledges that Tenant is fully familiar with the physical condition of the Premises and that the Landlord makes no representation or warranty, express or implied, with respect to same. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LEASE, THE LEASE OF THE PREMISES IS ON AN "AS IS" BASIS, IT BEING AGREED THAT TENANT WILL LEASE THE PREMISES IN THEIR PRESENT CONDITION, WITH ALL FAULTS AND LANDLORD HEREBY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE RELATIVE TO THE PREMISES OR ANY COMPONENT PART THEREOF. Tenant acknowledges and agrees that no representations or warranties have been made by Landlord, or by any person, firm or agent acting or purporting to act on behalf of Landlord, as to (i) the presence or absence on or in the Premises of any particular materials or substances (including, without limitation, Hazardous Substances as defined in
Section 7.1), (ii) the condition or repair of the Premises or any portion thereof, (iii) the value, expense of operation or income potential of the Premises, (iv) the accuracy or completeness of any title, survey, structural reports, environmental audits or other information provided to Tenant by any third party contractor relative to the Premises (regardless of whether the same were retained or paid for by Landlord), or (v) any other fact or condition which has or might affect the Premises or the condition, repair, value, expense of operation or income potential thereof. Tenant is relying solely on Tenant's inspections of the Premises in leasing the Premises. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A

COMPLETE EXCLUSION AND NEGATION BY THE LANDLORD OF, AND THE LANDLORD DOES HEREBY DISCLAIM, ANY AND ALL WARRANTIES BY THE LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES OR ANY PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE, AND TENANT HEREBY ACKNOWLEDGES AND ACCEPTS SUCH EXCLUSION, NEGATION AND DISCLAIMER.

1.2 Use.

(a) Tenant may use the Premises for any lawful retail purpose (including without limitation showrooms for display and sale of inventory, storage of inventory, and related office functions) and no other purpose; provided, however, that no such use shall involve the location of gas stations on the land or any material likelihood that Tenant, Landlord or Lender could incur material liability under any Environmental Laws as defined in Section 7.1. Landlord and its agents and designees may enter upon and examine the Premises at reasonable times, subject to the provisions of Section 10.14. Tenant shall not use, occupy or permit any Project to be used or occupied, nor do or permit anything to be done in or on a Project in a manner which would (i) violate any certificate of occupancy or equivalent certificate affecting any of the Projects or violate any zoning or other law, ordinance or regulation, (ii) violate any use restriction or other contractual restriction applicable with respect to such Project, (iii) make void or voidable any insurance then in effect with respect to any of the Projects, (iv) materially and adversely affect in any manner the ability of Tenant to obtain fire and other insurance which Tenant is required to furnish under this Lease, (v) cause any material injury or damage to the Improvements which is not repaired in accordance with the provisions of this Lease, or (vi) constitute a public or private nuisance or waste, provided that all of the foregoing shall be qualified to the extent otherwise provided elsewhere in this Lease.

(b) Tenant shall operate each Project on a continuous basis; provided, however, that Tenant may cease operations at any Project for a period not to exceed eighteen (18) months in the aggregate for each Project; and provided, further, however, that not more than two (2) Projects shall be dark (that is, not being operated in the ordinary course of business) at the same time (it being understood that a Project under renovation for three months or less or, in connection with a Condemnation or Casualty, under repair in accordance with the terms hereof (including without limitation the immediately succeeding provision), shall not be deemed to be dark); and provided, further, however, that the Project located at 2150 Paul Jones Way, Lexington, Kentucky, shall not be permitted to go dark prior to December 10, 2003 and the Project located at 11101 Pecan Park Boulevard, Austin, Texas, shall not be permitted to go dark for more than 150 consecutive days (plus an additional 100 days if in connection with repair, renovation or remodeling after a Casualty (as hereinafter defined)) during the term of this Lease. If Tenant shall violate the prohibition with respect to the Project located at 11101 Pecan Park Boulevard, Austin, Texas set forth above, Tenant shall thereupon immediately and without further action by Landlord be deemed to have made a Rejectable Offer (as hereinafter defined) to purchase Landlord's interest in such Project on a Lease Termination Date (as hereinafter defined) twenty-five (25) days following the date of such violation for a price equal to (i) the

"Stipulated Loss Value" as specified in Schedule F attached hereto and made a part hereof, plus (ii) any Make-Whole Premium required by the Indenture, plus
(iii) any release premium required by the Indenture to release the Project from the lien of the Indenture, plus (iv) all Basic Rent, Additional Rent and other sums accrued or due and payable under this Lease with respect to such Project as of the applicable Lease Termination Date. Such Rejectable Offer shall be deemed to be accepted unless Landlord shall have rejected such offer within 10 days of the Lease Termination Date. In connection with any failure to consummate such deemed Rejectable Offer, Landlord shall, in addition to any other remedy provided under this Lease or at law or in equity, be entitled to the remedy of specific performance, and Tenant hereby agrees to the exercise of such remedy.

1.3 Terms.

(a) The Premises are leased for a primary term of twenty (20) years (the "Primary Term"), and, at Tenant's option, for up to two (2) consecutive additional five (5) year terms (the "Extended Terms"), unless and until the term of this Lease shall earlier expire or be terminated pursuant to any provision hereof. The Primary Term, each Extended Term and each Wintergreen Extended Term (as hereinafter defined) or FMV Extended Term (as hereinafter defined) (collectively, the "Term") shall commence and expire (except as otherwise required by Section 1.3(b)) on the dates set forth in Schedule C attached hereto and made a part hereof. Subject to Section 5.2(g) below, and provided that on the date Tenant elects to exercise its option to extend the Term of this Lease for an Extended Term and on the first day of such Extended Term, no Default or Event of Default shall have occurred and be continuing, Tenant may elect to exercise its option to extend the Term of this Lease for an Extended Term by giving written notice thereof to Landlord not later than (i) twenty-four (24) months prior to expiration of the Primary Term with respect to the first Extended Term, and (ii) twelve (12) months prior to the expiration of the existing Term, with respect to each Extended Term. Each notice of election to extend the Term of this Lease given in accordance with the provisions of this
Section 1.3 shall automatically extend the Term of this Lease for the Extended Term, Wintergreen Extended Term or FMV Extended Term, as the case may be, selected, without further writing; provided, however, either party, upon request of the other, shall execute and acknowledge, in form suitable for recording, an instrument confirming any such extension. Each Extended Term, Wintergreen Extended Term or FMV Extended Term, as the case may be, shall be upon the same terms as provided in this Lease for the Primary Term, except as otherwise stated herein. Tenant shall not be entitled to extend the Term of this Lease for any Extended Term, Wintergreen Extended Term or FMV Extended Term, as the case may be, unless Tenant shall have extended the Term of this Lease for the preceding Extended Term, Wintergreen Extended Term or FMV Extended Term, as the case may be, if any. Tenant may not exercise an option to extend with respect to individual Projects (and any attempt to do so shall be null and void and of no force and effect), but may exercise each such option only with respect to all Projects covered by this Lease at the time of such exercise.

(b) Not less than twenty-four (24) months prior to the expiration of the second Extended Term, subject to Section 5.2(g) and provided that on the date Tenant elects to exercise its option to extend the Term of this Lease for a Wintergreen Extended Term and on the first day

of such Wintergreen Extended Term no Event of Default shall have occurred and be continuing, Tenant shall deliver to Landlord notice of the Tenant's intent to renew this Lease at the end of such Extended Term for the initial Wintergreen Extended Term (as hereinafter defined), which shall be the first extended term provision of a period up to three (3) consecutive five (5) year terms (collectively, the "Wintergreen Renewal Lease Term") which in no event shall exceed (i) and (ii) below and shall be divided into five year increments (each, a "Wintergreen Extended Term"), or with respect to such final Wintergreen Extended Term, such fewer full year increments as will permit such final Wintergreen Extended Term to comply with this Section 1.3(b)), and which shall satisfy the following criteria: (i) the aggregate of the proposed Wintergreen Renewal Lease Term, the Extended Terms and the Primary Term is expected to be not more than 80% of the estimated remaining useful life of any of the Projects, measured from the Closing Date and determined not more than 24 months prior to the end of the second Extended Term and (ii) on the last date of such proposed Wintergreen Renewal Lease Term, the estimated Fair Market Value of each of the Projects is expected to be not less than 20% of the Purchase Price of such Project (without taking into account inflation or deflation subsequent to the Closing Date). If items (i) and (ii) in the immediately preceding sentence cannot be satisfied, the Wintergreen Renewal Lease Term may be reduced to such number of Wintergreen Extended Terms as shall satisfy items (i) and (ii). Items
(i) and (ii) above shall be determined by an Approved Appraiser selected by Tenant and reasonably acceptable to Landlord. Tenant may withdraw any notice given in accordance with this Section 1.3(b) by written notice of such withdrawal to Landlord, on or prior to the date which is (12) months before the commencement of the proposed Wintergreen Renewal Lease Term, in which case the right to renew this Lease for all or any portion of the Wintergreen Renewal Lease Term shall terminate. Each Wintergreen Extended Term shall commence on the date immediately succeeding the expiration of the immediately preceding Extended Term or Wintergreen Extended Term, as the case may be. Tenant may not exercise the Wintergreen Renewal Lease Term with respect to individual Projects (and any attempt to do so shall be null and void and of no force and effect), but may exercise the Wintergreen Renewal Lease Term only with respect to all Projects covered by this Lease at the time of such exercise.

(c) In the event that items (i) and (ii) set forth in Section 1.3(b) above cannot be satisfied with respect to the Wintergreen Renewal Lease Term, or in lieu of the Wintergreen Renewal Lease Term, not less than twelve
(12) months prior to the expiration of the Extended Term, subject to Section 5.2(g) and provided that on the date Tenant elects to exercise its option to extend the Term of this Lease for a FMV Extended Term (as hereinafter defined) and on the first day of such FMV Extended Term no Default or Event of Default shall have occurred and be continuing, Tenant shall have the option to deliver to Landlord notice of Tenant's intent to renew this Lease for up to three (3) consecutive additional five (5) year terms (the "FMV Extended Terms") unless and until the Term of this Lease shall expire or be terminated pursuant to any provision hereof; provided, however, that no FMV Extended Term shall extend beyond the date that would exceed ninety percent (90%) of the economic useful life of any Project (as set forth in the most recent of (a) the Closing Appraisal, and (b) the appraisal obtained in connection with the proposed Wintergreen Renewal Lease Term). Each FMV Extended Term will commence on the date immediately succeeding the expiration of the last Extended Term or immediately preceding FMV Extended Term, as the case may be. The rent payable on each date as set forth

in Schedule D shall be equal to the fair market rental value, as agreed by Tenant and Landlord, at the end of the last Extended Term or the applicable FMV Extended Term (determined not more than twenty four (24) months prior to the beginning of any FMV Extended Term). Tenant may not exercise an option to extend with respect to individual Projects (and any attempt to do so shall be null and void and of no force and effect), but may exercise each such option only with respect to all Projects covered by this Lease at the time of such exercise.

1.4 Rent.

(a) Tenant shall pay to Landlord by federal funds wire transfer in immediately available funds (in U.S. Dollars) as basic rent for the Premises the amounts set forth in Schedule D attached hereto and made a part hereof (the "Basic Rent") on the dates set forth therein (or if any such date falls on a day which is not a Business Day (as hereinafter defined), the next succeeding Business Day, the "Payment Dates"), to such account or to such other account or to such address or to such other person as Landlord from time to time may designate. In addition, during all Extended Terms and Wintergreen Extended Terms, the Basic Rent shall be as set forth in Schedule D. Tenant's liability for use of the Projects shall be equal to the Basic Rent allocable to each month. A "Business Day" is defined as any day other than a Saturday or Sunday or other day on which the banks in New York, New York are authorized or required to be closed. If, with respect to any month (with such month starting on the 15th day of the month prior to such month and ending on the 14th day of such month), the Basic Rent due and allocable with respect to such month is for a period of days less than the full number of days in such month, the Basic Rent due for such month shall be pro rated to an amount equal to the Basic Rent specified for such month multiplied by a fraction the numerator of which is the number of days the Lease is in effect for such month and the denominator of which is the number of days in such month.

(b) All taxes, costs, expenses and amounts which Tenant is required to pay pursuant to this Lease (other than Basic Rent), together with every fine, penalty, interest and cost which may be added for non-payment or late payment thereof, shall constitute additional rent ("Additional Rent"). Additional Rent shall also include all sums and other charges payable by Tenant to Landlord pursuant to any other agreement between Landlord and Tenant, which specifies that such sums or charges constitute Additional Rent. All Additional Rent shall be paid directly by Tenant to the party to whom such Additional Rent is due. Tenant shall pay and discharge all Additional Rent before the imposition of any fine, lien, interest or penalty with respect thereto, but if such a fine, lien, penalty or interest is imposed, Tenant shall also pay such amount as Additional Rent. If Tenant shall fail to pay any such Additional Rent or any other sum due under this Lease prior to the time when the same shall become delinquent, Landlord shall have all rights, powers and remedies with respect thereto as are provided herein or by law in the case of non-payment of any Basic Rent and shall, except as expressly provided herein, have the right to pay the same on behalf of Tenant. Tenant shall pay to Landlord any penalty or late charge (to the extent arising out of an Event of Default under this Lease) payable to Lender (or that would have been payable to Lender but for an advance of funds by the Landlord) under the Loan, plus interest, at a rate (the "Rate") equal to the lesser of (i) the default rate of interest per annum under the Indenture (provided that if there is more than one Indenture, then reference shall be made to the Indenture which constitutes a first mortgage lien on Landlord's interest in

the Premises and provided further, that at any time that no such first mortgage shall exist, the Rate under this clause (i) shall be the Prime Rate (as hereinafter defined)) plus five percent (5%), and (ii) the maximum rate permitted by law, on all overdue Basic Rent, all overdue Additional Rent and all other sums due under this Lease, in each case, from the due date thereof until paid. After the occurrence and during the continuance of an event of default under the Loan Agreement to the extent arising out of an Event of Default under this Lease, Tenant shall pay, as Additional Rent, any additional interest payable by Landlord to Lender as a consequence thereof. In addition, if Tenant fails to make any payment of Basic Rent, Additional Rent or other sums payable under this Lease to Landlord within two (2) Business Days (with respect to Basic Rent) or five (5) Business Days with respect to Additional Rent or other sums after delivery of written notice to Tenant that any such Basic Rent, Additional Rent, or other sum payable under this Lease has not been paid on the due date thereof, Tenant shall pay a late charge equal to five percent (5%) of the amount past due. Landlord and Tenant agree that any such late charge shall be deemed to be liquidated damages for breach of Tenant's obligation to pay Rent when due, that the amount of actual damages suffered by Landlord as a result of such breach cannot be ascertained as of the date hereof, that such amount is a reasonable sum considering the circumstances on the date hereof and that such amount is not a penalty. Tenant shall perform all its obligations under this Lease at its sole cost and expense, and shall pay all Basic Rent, Additional Rent and any other sum due under this Lease when due and payable, without offset, notice or demand.

ARTICLE 2.

2.1 Net Lease.

(a) This Lease is a net lease and, any present or future law to the contrary notwithstanding, shall not terminate except as otherwise expressly provided herein, nor shall Tenant be entitled to any abatement, reduction (except as otherwise expressly provided herein in connection with termination with respect to a Project), diminution (except as otherwise expressly provided herein in connection with termination with respect to a Project), set-off, counterclaim, defense (except for the defense that the performance or payment has been made) or deduction with respect to any Basic Rent, Additional Rent or other sums payable under this Lease, nor shall Tenant be excused from the performance of its obligations under this Lease, by reason of (except as otherwise expressly provided herein in connection with termination with respect to a Project in accordance with Article 3 hereof): any damage to or destruction of any or all of the Projects or any portion thereof; any defect in the condition, design, operation or fitness for use of any or all of the Projects or any portion thereof; any taking of any or all of the Projects or any part thereof by condemnation or otherwise; any prohibition, limitation, interruption, cessation, restriction or prevention of Tenant's use, occupancy or enjoyment of any or all of the Projects, or any interference with such use, occupancy or enjoyment by any person; any eviction by paramount title or otherwise; any default by Landlord under this Lease or under any other agreement; the impossibility or illegality of performance by Landlord, Tenant or both; any action of any governmental authority (including, without limitation, changes in Legal Requirements); construction on or renovation of any or all of the Projects; or any failure in any or all of the Projects to comply with applicable laws, Legal Requirements, or any other cause

whether similar or dissimilar to the foregoing. All costs, expenses and obligations of every kind and nature whatsoever relating to the Premises and the appurtenances thereto and the use and occupancy thereof by Tenant and/or its successors, assigns, or sublessees which may arise or become due and payable with respect to the period which ends on the expiration or earlier termination of the Term in accordance with the provisions hereof (whether or not the same shall become payable during the Term or thereafter) shall be paid by Tenant, except as otherwise expressly provided herein. It is the purpose and intention of the parties to this Lease that the Basic Rent, Additional Rent and other sums payable to Landlord under this Lease shall be absolutely net to Landlord and that this Lease shall yield, net to Landlord, the Basic Rent, Additional Rent (except in such instances in which Additional Rent is required to be paid directly by Tenant to a third party to whom such Additional Rent is due), and other sums payable to Landlord as provided in this Lease. The parties intend that the obligations of Tenant under this Lease shall be separate and independent covenants and agreements and shall continue unaffected unless such obligations shall have been modified or terminated pursuant to an express provision of this Lease.

(b) Tenant shall remain obligated under this Lease in accordance with its terms and, except as otherwise expressly provided herein, shall not take any action to terminate, rescind or avoid this Lease, notwithstanding any bankruptcy, insolvency, reorganization, liquidation, dissolution or other proceeding affecting Landlord or any action with respect to this Lease which may be taken by any trustee, receiver or liquidator or by any court.

(c) Except as otherwise expressly provided herein in connection with the termination of a Project, Tenant waives all rights to terminate or surrender this Lease, or to any abatement or deferment of Basic Rent, Additional Rent or other sums payable under this Lease.

2.2 Taxes and Assessments; Compliance with Law.

(a) Subject to Tenant's right to contest pursuant to Section 2.6 of this Lease, Tenant shall pay on an after tax basis, prior to delinquency, all "Impositions", which are defined as: (i) all taxes (including, without limitation, those described in (iii) below), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not commenced or completed within the Term of this Lease), excises, levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees), water and sewer rents and charges, ground lease rents, and all other governmental and quasi-governmental charges, general and special, ordinary and extraordinary, foreseen and unforeseen, and any interest and penalties thereon which are, at any time prior to or during the Primary Term or any Extended Term, Wintergreen Extended Term or FMV Extended Term hereof, imposed or levied upon or assessed against or which arise with respect to (A) the Premises, (B) any Basic Rent, Additional Rent or other sums payable under this Lease, (C) this Lease or the leasehold estate hereby created, or (D) the operation, possession or use of the Premises or (E) the transactions contemplated by this Lease and other related documents; (ii) all gross receipts taxes or similar taxes (i.e., taxes based upon gross income which fail to take into account deductions with respect to depreciation, interest, taxes or ordinary and necessary business expenses, in each case relating to the Premises)

imposed or levied upon, assessed against or measured by any Basic Rent, Additional Rent or other sums payable under this Lease; (iii) all sales (including those imposed on lease rentals), value added, ad valorem, gross receipts, use and similar taxes at any time levied, assessed or payable on account of the acquisition, ownership, leasing, operation, possession or use of the Premises; (iv) all transfer, recording, stamp and real property gain taxes incurred upon the sale or transfer, or other disposition of the Premises or any interest therein to the Landlord (specifically excluding any real property gain taxes payable by Landlord upon the sale of the Premises or any Project to a third party other than in connection with the exercise of remedies in connection with an Event of Default) or to Tenant, (v) all offers, claims and demands of mechanics, laborers, materialmen and others which, if unpaid, might create a lien on the Premises, (vi) all charges of utilities, communications and similar services serving the Premises, and (vii) any other tax relating to the Premises resulting from any law enacted or adopted or amended after the date of this Lease imposed on Landlord pursuant to the Indenture (as hereinafter defined). Notwithstanding clause (i) above, Tenant shall not be required to pay any franchise, estate, inheritance, transfer, net income or similar tax of Landlord unless such tax is imposed, levied or assessed in substitution for any other tax, assessment, charge or levy which Tenant is required to pay pursuant to this
Section 2.2(a), provided that if during the Term, there shall be assessed, levied, charged or imposed on Landlord a capital levy or other tax directly on the rents received therefrom or upon the value of the Premises or any then existing or proposed improvements on the Premises, then all such levies and taxes shall be payable by Tenant before delinquency. Subject to Tenant's right to contest pursuant to Section 2.6 of this Lease, Tenant shall furnish to Landlord, within thirty (30) days after the due date thereof, proof of payment of all Impositions. If any such Imposition may legally be paid in installments without the accrual of interest thereon, Tenant may pay such Imposition in installments; in such event, Tenant shall be liable only for Taxes attributed to the Primary Term and any Extended Term, Wintergreen Extended Term or FMV Extended Term hereof.

(b) Tenant shall comply with and cause each of the Projects to comply with and shall assume all obligations and liabilities with respect to (i) all laws, ordinances and regulations, and other governmental and quasi-governmental rules, orders and determinations presently in effect or hereafter enacted, made or issued, both foreseen and unforeseen and ordinary and extraordinary applicable to the applicable Project or the ownership, operation, use or possession thereof and (ii) all contracts (including, but not limited to, insurance policies (including, without limitation, to the extent necessary to prevent cancellation thereof and to insure full payment of any claims made under such policies)), agreements, covenants (including the covenant set forth on Schedule K), conditions and restrictions now or hereafter applicable to each Project or the ownership, operation, use or possession thereof (collectively, "Legal Requirements"), including but not limited to all such Legal Requirements which require structural, unforeseen or extraordinary changes; provided that any such requirement to make structural, unforeseen or extraordinary changes shall be subject to the terms and provisions of Article 3 hereof to the extent such Article 3 applies). Notwithstanding the foregoing, Legal Requirements shall not include any contracts, agreements, covenants, conditions or restrictions applicable to a Project which are hereafter voluntarily entered into by Landlord without the consent or approval of Tenant (which approval shall not be unreasonably withheld or delayed), unless Landlord is

required to enter into such contract, agreement, covenant, condition or restriction by any governmental or quasi-governmental entity.

(c) If required by Landlord by notice in writing to Tenant, Tenant agrees that it shall deposit with Landlord, or, if directed by Landlord, to Lender (or its designee) (in the event such deposits are required, Landlord hereby irrevocably directs Tenant to make such deposits with Lender as long as the Indenture shall remain outstanding, and Tenant hereby grants a security interest in such account, if such is established, to Landlord and consents to the pledge of and the granting of a security interest in such account, if such is established, by Landlord to Lender) on each Payment Date, as Additional Rent, one twelfth (1/12) of all Impositions for the Premises during the next twelve
(12) months in order to accumulate sufficient funds to pay all such Impositions at least thirty (30) days prior to their respective dates as reasonably estimated by Landlord according to the most recent tax bills or assessment and tax rate notices. To the extent permitted by applicable law, neither Landlord nor Lender or its designee (each of Landlord and Lender or such designee hereinafter referred to as "Depository"), as the case may be, shall be required to maintain such amounts in an account separate from other funds of such party or to deposit any such amounts in an interest-bearing account. If required by Landlord by notice in writing to Tenant, Tenant shall deposit with Depository, prior to the date which is thirty (30) days prior to the delinquency date of any Imposition, such additional amount as may be necessary to provide Depository with sufficient funds in such deposit account to pay each such charge at least thirty (30) days in advance of the delinquency date thereof. Depository shall apply the aforesaid deposits and interest, if any, thereon for such purpose not later than the last day on which any such charges may be paid without penalty or interest or disburse or cause Depository to disburse them to Tenant upon presentation of evidence of payment and a certificate of an officer of Tenant in form and substance satisfactory to Landlord. If, at any time, the amount of any Imposition is increased or Landlord or Lender receives information that such Imposition will be increased, or if Landlord shall determine in its reasonable judgment that the amounts of such deposit will be insufficient for the payments due, and if the monthly deposits then being made by Tenant for this purpose (if continued) would not make up a fund sufficient to pay such Imposition thirty
(30) days prior to the due date, said monthly deposits thereupon shall be increased and Tenant immediately shall deposit with the Depository, on demand, sufficient moneys so that the moneys then on hand for the payment of said Imposition, plus the increased payments and such additional sums demanded, shall be sufficient so that the Depository shall have received from Tenant adequate amounts to pay such Imposition at least thirty (30) days before such Imposition becomes due and payable. In the event the amount of the funds deposited by Tenant exceeds the amount of the estimated Impositions, then the Landlord shall decrease the amount required for subsequent deposits under this Section 2.2(c). For purposes of determining whether the Depository has on hand sufficient moneys to pay any particular Imposition at least thirty (30) days prior to the due date therefor, deposits for each category of Imposition shall be treated separately, it being the intention that the Depository shall not be obligated to use moneys deposited for the payment of an item not yet due and payable to the payment of an item that is due and payable. Notwithstanding the foregoing, it is understood and agreed that (i) to the extent permitted by applicable law, deposits provided for hereunder may be held by the Depository in a single bank account and commingled with other funds of the Depository, and (ii) the Depository may, if Tenant fails to make any deposit required hereunder,

apply deposits made for any one Imposition for the payment of the same, any other Imposition or any outstanding Basic Rent or Additional Rent. If an Event of Default shall have occurred and be continuing under this Lease, all deposits then held by the Depository shall be applied on account of any and all sums due under this Lease and Tenant shall forthwith pay the resulting deficiency in accordance with the terms hereof. If Landlord ceases to have any interest in any Project, Landlord shall direct the Depository to transfer to the person or entity who owns or acquires such interest in such Project and is the transferee of the Landlord's interest in this Lease, the deposits made pursuant to the provisions hereof. In addition, in the event that Lender (or a servicing agent on Lender's behalf) is the Depository, Lender shall have the right to transfer the deposits (or to cause its servicing agent to transfer such deposits) to any transferee of the Indenture or to the holder of any substitute Indenture. Upon any such transfer of the deposits, after acknowledgement of such transfer by the transferee and notice thereof to Tenant, the transferor shall be deemed to be released from all liability with respect thereto and Tenant agrees to look to the transferee solely with respect thereto, and the provisions hereof shall apply to each successive transfer of the said deposits. Tenant shall be deemed the owner of any such deposit and shall pay all taxes associated therewith.

(d) Tenant shall not be required to make the deposits required by
Section 2.2(c) so long as (i) subject to Section 2.6, Tenant shall pay all Impositions as the same become due and payable before delinquency, (ii) Tenant shall, upon request, furnish to Landlord receipts for payment of all Impositions or other evidence of such payment reasonably satisfactory to Landlord, (iii) no Event of Default shall have occurred and be continuing, (iv) Tenant has a Net Worth in excess of $100,000,000 and (v) Tenant is maintaining a Rent Coverage Ratio (as hereinafter defined) with respect to all Projects of at least 1.25:1. Tenant's obligation to make the deposits required by Section 2.2(c) shall immediately resume and shall continue (x) in the event of the failure of any condition set forth in clauses (i), (ii) or (iii) above, until the expiration or earlier termination of this Lease, (y) in the event of the failure of the condition set forth in clause (iv) above, until such time as Tenant's Net Worth shall be equal to or greater than $150,000,000 and (z) in the event of the failure of the condition set forth in clause (v) above, until such time as Tenant's Rent Coverage Ratio with respect to all Projects is equal to or greater than 1.5:1. For purposes of this Lease, "Rent Coverage Ratio" shall mean, as of any date, with respect to any Project, the ratio of (i) Tenant's EBITDAR with respect to such Project for the Rent Coverage Determination Period, as certified to by the chief financial officer, treasurer or chief accounting officer of Tenant, to (ii) the Basic Rent payable under this Lease with respect to such Project for such Rent Coverage Determination Period, subject to the audit rights of Landlord and Lender if the allocation or operating expenses with respect to such Project is materially different than with respect to Tenant as a whole, for such period. Any time Rent Coverage Ratio is to be calculated with respect to all Projects, such calculation shall be made on an aggregate basis. The Rent Coverage Ratio with respect to each Project and as to all Projects as of the most recent fiscal year end prior to the Closing is set forth in Schedule J, together with the calculations relating thereto. For purposes of this Lease, "Rent Coverage Determination Period" shall mean, as of any date, the 12-month period ending with the most recently completed calendar quarter not less than 30 days prior to such date (or, at any date that (i) Tenant shall have Net Worth greater than $150,000,000 and (ii) the Rent Coverage Ratio as of the date of the last calculation shall be equal to or greater than 1.5.1, the 12-month period ending with the most

recently completed fiscal year. For purposes of this Lease, "EBITDAR" shall mean for any period, with respect to any Project, (i) net merchandise sales at such Project, plus (ii) delivery and services income at such Project, plus, (iii) all other income from such Project, minus (iv) cost of goods sold at such Project, minus (v) profit center and branch expenses allocable to such Project (including, without limitation, advertising costs, selling costs, occupancy costs, warehouse charges, delivery costs, general and administrative expenses) minus (vi) credit costs, losses, discounts and charges allocable to goods sold at such Project. For purposes of the foregoing, (i) no deduction shall be made for interest expense, corporate income taxes, depreciation, amortization, rent payable under this Lease or general corporate overhead (except to the extent such expenses are customarily allocated to individual stores), and (ii) the calculations shall be made in accordance with generally accepted accounting principles, and (iii) allocations of income or expense among Tenant's stores, profit centers or regions shall be fairly allocated and consistent with Tenant's internal accounting methodology as certified by Tenant's chief financial officer, treasurer or chief accounting officer. For purposes of this Lease, "Net Worth" shall mean, as of a given date, (x) the total assets of Tenant as of such date less (y) Tenant's liabilities as of such date determined in accordance with generally accepted accounting principles; provided, however, that at any time that Tenant is subject to the reporting requirements of Sections 13 and 15(d) of the Securities and Exchange Act of 1934, as amended, Net Worth shall be as set forth in Tenant's most recent Form 10-K or Form 10-Q filed with the Securities and Exchange Commission.

2.3 Liens. Subject to Tenant's right to contest pursuant to Section 2.6 of this Lease, Tenant will promptly remove and discharge any charge, lien, security interest or encumbrance upon any Project or any Basic Rent, Additional Rent or other sums payable under this Lease which arise for any reason, including all liens which arise out of the possession, use, occupancy, construction, repair or rebuilding of a Project or by reason of labor or materials furnished or claimed to have been furnished to Tenant or for any Project, but not including (i) the Permitted Exceptions, and (ii) the Indenture and any other mortgage, charge, lien, security interest or encumbrance created by Landlord without the consent of Tenant or encumbrance created due to Landlord's gross negligence or willful misconduct subject to the provisions in
Section 10.17(b) hereof. Nothing contained in this Lease shall be construed as constituting the consent or request of Landlord, express or implied, to or for the performance by any contractor, laborer, materialman, or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition repair or demolition of or to any Project or any part thereof which would result in any liability of the Landlord for the payment therefor. Notice is hereby given that Landlord will not be liable for any labor, services or materials furnished or to be furnished to Tenant, or to anyone holding an interest in any of the Projects or any part thereof through or under Tenant, and that no mechanic's or other liens for any such labor, services or materials shall attach to or affect the interest of Landlord in and to a Project.

2.4 Indemnification. Tenant shall defend all actions against any of
(i) Landlord, (ii) any owner, beneficial owner, trustee, partner, member, officer, director, shareholder or agent of Landlord, and of any of Landlord's partners or members, and (iii) the holder of any

indebtedness of Landlord secured by a mortgage, deed of trust or other security interest in the Premises, including without limitation, Lender (as hereinafter defined), or any owner, beneficial owner, partner, member, officer, director, shareholder, or agent of any such holder, including without limitation, Lender,
(iv) together with their respective successors and assigns (herein, collectively, "Indemnified Parties") with respect to, and shall pay, protect, indemnify and save harmless the Indemnified Parties from and against, any and all liabilities, losses, damages, costs, expenses (including reasonable attorneys' fees and expenses), causes of action, suits, claims, demands or judgments of any nature (SPECIFICALLY INCLUDING CLAIMS RESULTING FROM THE STRICT OR ABSOLUTE LIABILITY OF AN INDEMNIFIED PARTY OR FROM THE NEGLIGENCE OF AN INDEMNIFIED PARTY, but specifically excluding claims resulting from the gross negligence or willful misconduct of an Indemnified Party, subject to the provisions of Section 10.17(b) and excluding consequential or punitive damages assessed against Landlord as a result of the commission of an overt act by Landlord constituting gross negligence or willful misconduct, subject to the provisions of Section 10.17(b))) (a) to which any Indemnified Party is subject because of Landlord's estate in any Project or the receipt of any Basic Rent or Additional Rent under this Lease or (b) arising from: (i) any accident, injury to or death of any person or loss of or damage to property occurring in, on or about any Project or portion thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways; (ii) any use, non-use or condition in, on or about, or ownership, possession, alteration, repair, operation, maintenance, leasing, subleasing or management of, any Project or any portion thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways; (iii) the construction, design, purchase, acceptance, rejection, modification, substitution or condition of any Project, including without limitation claims or penalties arising from any violation of Legal Requirements, without regard to whether compliance therewith is required by the terms of this Lease or liability in tort (strict or otherwise); (iv) any failure on the part of Tenant to perform or comply with any of the terms, covenants or conditions of this Lease or any other instrument, contract, document or agreement to which Tenant is a party relating to the Premises or any Project (a "Related Document"); (v) any representation or warranty made herein, in any certificate delivered in connection herewith or in any other Related Document, or pursuant thereto, being false or misleading in any material respect as of the date that such representation or warranty was made; (vi) performance of any labor or services or the furnishing of any materials or other property in respect to any Project or any portion thereof; (vii) subject to Section 2.2, any Imposition, including without limitation, any Imposition attributable to the execution, delivery, filing or recording of any Related Document, this Lease or memorandum thereof;
(viii) any lien, encumbrance or claim arising on or against any Project or any portion thereof under any Legal Requirement or otherwise which Tenant is obligated to remove and discharge pursuant to Section 2.3 or any liability asserted against the Indemnified Parties with respect thereto; (ix) the claims of any subtenants (of any tier), licensees or other persons claiming through or under Tenant of all or any portion of any Project or any other Person acting through or under Tenant or otherwise acting under or as a consequence of this Lease or any sublease (of any tier); (x) any act or omission of Tenant or its agents, contractors, employees, licensees, subtenants or invitees or of any of the Persons described in clause (ix), and (xi) any contest referred to in
Section 2.6; provided, however, that Tenant shall not be required to indemnify an Indemnified Party under this Section 2.4 with respect to any liability arising with respect to a Project to the extent attributable to acts or events which occur after (and are not attributable to acts or events

occurring or accruing prior to) the later of (A) the expiration or earlier termination of this Lease with respect to such Project and (B) the surrender of possession of such Project to the Landlord.

The indemnities contained in this Section 2.4 shall survive (i) the expiration or earlier termination of this Lease with respect to any or all of the Projects, and (ii) any conveyance of Landlord's interest in any or all of the Projects to Tenant pursuant to this Lease.

2.5 Maintenance and Repair.

(a) Tenant acknowledges that it has received the Premises in good order and repair. Tenant, at its own expense, will: (i) maintain all parts of the Premises in as good repair and condition as at the commencement of this Lease, except for ordinary wear and tear; (ii) maintain the Premises in accordance with all Legal Requirements; (iii) comply with the standards imposed by any insurance policies required to be maintained hereunder which are in effect at any time with respect to any Project or any part thereof; and (iv) take all action and make all structural and non-structural, foreseen and unforeseen and ordinary and extraordinary changes and repairs and replacements which may be required to keep all parts of the Premises in good repair and condition and as shall be necessary to maintain each Project in accordance with the Brand Standards. For the purposes of this Lease, "Brand Standards" shall mean the design, construction, operational, and maintenance, service and repair standards for the typical retail furniture store then franchised or operated by Tenant or its affiliates or subsidiaries, under the "Havertys Furniture" trade name, including its rules of operation and other standards and policies regarding, without limitation, life safety and security standards, all as may be amended from time to time by Tenant in its reasonable discretion, provided that such standards, taken as a whole, shall not be materially lower than such standards in existence as of the date hereof. Landlord shall not be required to maintain, repair or rebuild all or any part of the Premises. Tenant waives the right to (x) require Landlord to maintain, repair or rebuild all or any part of the Premises, or (y) make repairs at the expense of Landlord pursuant to any Legal Requirement, contract, agreement, covenant, condition or restriction set forth in Section 2.2(b)(ii), at any time in effect.

(b) In the event that all or any part of the Improvements shall encroach upon any property, street or right-of-way adjoining or adjacent to any Project, or shall violate the agreements or conditions affecting any Project or any part thereof, or any Legal Requirement, or shall hinder, obstruct or impair any easement or right-of-way to which a Project is subject, then, promptly after written request of Landlord (unless such encroachment, violation, hindrance, obstruction or impairment is a Permitted Exception) or of any person so affected, Tenant shall, at its expense, either (i) obtain valid and effective waivers or settlements of all claims, liabilities and damages resulting therefrom, or (ii) make such changes, including alteration or removal, to the Improvements and take such other action as shall be necessary to remove or eliminate such encroachments, violations, hindrances, obstructions or impairments, provided that, if Landlord's consent is required for such changes pursuant to this Lease, Landlord's consent shall have been obtained, which consent shall not be unreasonably withheld.

2.6 Permitted Contests.

(a) Tenant shall not be required, nor shall Landlord have the right, to pay, discharge or remove an Imposition, lien or encumbrance, or to comply with any Legal Requirement applicable to the Premises or the use thereof, as long as no Event of Default under this Lease shall have occurred and be continuing and Tenant shall, in good faith, contest the existence, amount or validity thereof by appropriate proceedings diligently pursued; and provided, that (i) with respect to a failure to pay such Imposition, lien or encumbrance or failure to perform such Legal Requirement, Tenant shall have provided security as set forth in Section 2.6(b), which shall be deposited with Landlord or, as required by the Indenture, Lender prior to the commencement of such contest, (ii) Tenant shall give Landlord prior written notice of Tenant's intent to contest such matter (other than in connection with customary real property tax contests that require payment in full of the contested tax as a condition to such contest), (iii) such contest and/or failure or delay to pay such Imposition, lien or encumbrance or perform such Legal Requirement will not (1) subject Landlord or Lender to any risk of criminal or any risk of civil penalties or fines (other than de minimus charges) or to any risk of prosecution for a crime, (2) subject any Project or any part thereof to being condemned, vacated, forfeited or otherwise impaired, (3) have the effect of interrupting or preventing the collection of any contested amount or other realization of value from any Project or any part thereof or interest therein, the Basic Rent, Additional Rent or any other sums payable under this Lease or any portion thereof to satisfy the claim, (4) subject any Project, any portion thereof or interest therein, the Basic Rent, Additional Rent or any other sums payable under this Lease or any portion thereof to satisfy the claim, (5) subject any Project, any portion thereof or interest therein, the Basic Rent, Additional Rent or any other sums payable under this Lease or any portion thereof, to any reasonable likelihood of sale, forfeiture, interruption or loss by reason of such proceedings or (6) affect the ownership, lease or occupancy of any Project or Landlord's ability or right to exercise its remedies under this Lease, or Lender's ability or right to exercise its remedies under the Indenture, including without limitation, foreclosure against the applicable Project and
(iv) Tenant shall pay any interest, late charges, fines and/or penalties resulting from any such contest by Tenant; provided, further, that prior to the date on which such Imposition or charge would otherwise have become delinquent Tenant shall have given Landlord and Lender prior notice of such contest. To the extent that the consent of Landlord is required with respect to any contest of Tenant, Landlord agrees not to unreasonably withhold such consent, and upon such consent, Landlord shall reasonably cooperate with Tenant to the extent so required of Tenant's contest at Tenant's sole cost and expense.

(b) Tenant shall give such security (including a bond) as may be reasonably required by Landlord or, as required by the Indenture, Lender to ensure ultimate payment of such Imposition, lien or encumbrance (including any interest, late charges, fines and/or penalties incurred in connection therewith) and compliance with Legal Requirements and to prevent any sale, forfeiture, interruption or loss of any Project or any portion thereof, any Basic Rent, Additional Rent or other sums required to be paid by Tenant under this Lease, by reason of such nonpayment or noncompliance. Notwithstanding the preceding sentence, during such time as no Event of Default shall have occurred and be continuing and either Tenant or a Guarantor (as hereinafter defined) has a solicited long term unsecured debt rating (or, if neither Tenant nor any

Guarantor has a solicited long term unsecured debt rating, a corporate credit rating) of, to the extent rated by any of the following, (i) not less than BB by Standard & Poor's Rating Group, and Ba2 by Moody's Investors Service, Inc., and NAIC 3 rating, in each case "stable" (an "Acceptable Credit Rating"), Tenant shall not be required to provide such security with respect to a contest if the contest involves claims for less than $250,000 for any particular Project and if claims for less than $500,000 are then being contested for all Projects.

2.7 Certain Deposits.

(a) Tenant acknowledges that Landlord has required the establishment of a Capital Reserve Account (related to capital expenditures) and a Rollover Reserve Account, which initially are to be left unfunded. Anything contained herein to the contrary notwithstanding, if required by Landlord by notice in writing to Tenant, Tenant agrees that it shall deposit with Landlord, or, if directed by Landlord, to Lender (or its designee) (in the event such deposits are required, Landlord hereby irrevocably directs Tenant to make such deposits with Lender as long as the Indenture shall remain outstanding, and Tenant hereby grants a security interest in such account to Landlord and consents to the pledge of and the granting of a security interest in such account by Landlord to Lender) such amount as reasonably determined by Landlord in each such account on each Payment Date, as Additional Rent, one twelfth (1/12) of all amounts required by Landlord to be deposited to any such account for the Premises for the next twelve (12) months as reasonably estimated by Landlord. To the extent permitted by applicable law, neither Landlord nor Lender or its designee, as the case may be, shall be required to maintain such amounts in an account separate from other funds of such party or to deposit any such amounts in an interest-bearing account, provided, however, in the event such amounts are maintained in an interest bearing account and no Event of Default shall have occurred and be continuing hereunder, Tenant shall be entitled to receive any interest earned thereon on a quarterly basis. Tenant shall deposit with Depository, prior to the date which is thirty (30) days prior to the delinquent date of any such charge, such additional amount as may be necessary to provide Depository with sufficient funds in such deposit account to pay each such charge at least thirty (30) days in advance of the delinquent date thereof. Depository shall apply the aforesaid deposits and interest, if any thereon for such purpose not later than the last day on which any such charges may be paid without penalty or interest. If, at any time, the amount of any such requirement is increased or Landlord or Lender receives information that the cost of the related replacement or repair will be increased, and if the monthly deposits then being made by Tenant for this purpose (if continued) would not make up a fund sufficient to pay such amounts thirty (30) days prior to the delinquent date, or if Landlord shall determine in its reasonable judgement that the amounts of such deposit will be insufficient for the payments due, said monthly deposits thereupon shall be increased and Tenant immediately shall deposit with the Depository, on demand, sufficient moneys so that the moneys then on hand for the payment of said amounts, plus the increased payments and such additional sums demanded, shall be sufficient so that the Depository shall have received from Tenant adequate amounts to pay such amounts at least thirty (30) days before such Imposition becomes due and payable. In the event the amount of the funds deposited by Tenant exceeds the amount necessary to fully fund the required deposits, then the Landlord shall decrease the amount required for subsequent deposits under this Section 2.7(a). For purposes of determining whether the Depository has on hand sufficient moneys to

pay the costs of any particular replacement or repair at least thirty (30) days prior to the due date therefor, deposits for each category of replacement or repair shall be treated separately, it being the intention that the Depository shall not be obligated to use moneys deposited for the payment of an item not yet due and payable to the payment of an item that is due and payable. Notwithstanding the foregoing, it is understood and agreed that (i) to the extent permitted by applicable law, deposits provided for hereunder may be held by the Depository in a single bank account and commingled with other funds of the Depository, and (ii) the Depository may, if Tenant fails to make any deposit required hereunder, apply deposits made for any one replacement or repair for the payment of the same, any other replacement or repair or any outstanding Basic Rent or Additional Rent. If an Event of Default shall have occurred and be continuing under this Lease, all deposits then held by the Depository shall be applied on account of any and all sums due under this Lease and Tenant shall forthwith pay the resulting deficiency in accordance with the terms hereof. If Landlord ceases to have any interest in any Project, Landlord shall direct the Depository to transfer to the person or entity who owns or acquires such interest in such Project and is the transferee of the Landlord's interest in this Lease, the deposits made pursuant to the provisions hereof. In addition, in the event that Lender (or a servicing agent on Lender's behalf) is the Depository, Lender shall have the right to transfer the deposits (or to cause its servicing agent to transfer such deposits) to any transferee of the Indenture or to the holder of any substitute Indenture. Upon any such transfer of the deposits, after acknowledgement of such transfer by the transferee and notice thereof to Tenant, the transferor shall be deemed to be released from all liability with respect thereto and Tenant agrees to look to the transferee solely with respect thereto, and the provisions hereof shall apply to each successive transfer of the said deposits. Tenant shall be deemed the owner of any such deposit and shall pay all taxes associated therewith. Tenant's obligations under this Section 2.7 shall survive expiration or early termination of the Lease.

(b) Tenant shall not be required to make the deposits with respect to the Capital Reserve Account required by Section 2.7(a) so long as (i) no Event of Default has occurred and is continuing hereunder, (ii) Tenant shall have permitted Landlord or Lender, subject to Section 10.14, to make periodic inspections of each Project and such inspections taken as a whole shall not demonstrate the need for deferred maintenance (i.e., repairs and/or maintenance which in the reasonable opinion of the Landlord or Lender based on a property condition report prepared by an engineer selected by Landlord or Lender in its sole discretion should have been previously performed in accordance with the requirements of this Lease) in excess of the Capital Reserve Trigger Amount in the aggregate. Tenant's obligation to make the deposits required with respect to the Capital Reserve Account under Section 2.7(a) shall immediately resume and shall continue in the event of the failure of the conditions set forth in clauses (i) or (ii) above until the expiration or earlier termination of this Lease; provided that, Tenant's obligation to make the deposits required with respect to the Capital Reserve Account under Section 2.7(a) by reason of the failure of the condition set forth in clause (ii) above shall not resume unless such failure continues for 30 days after Tenant receives notice thereof from Landlord (provided, however, that if such condition cannot reasonably be satisfied within such 30-day period, and Tenant shall have commenced to satisfy such condition within such 30-day period and thereafter diligently and expeditiously proceeds to satisfy the same, such 30-day period shall be extended for an additional period of time as is reasonably necessary for Tenant in the exercise of due diligence to

satisfy such condition). If Tenant's obligation to make the deposits required with respect to the Capital Reserve Account under Section 2.7(a) is triggered by the failure of the condition set forth in clause (ii), then in addition to the obligation to make the payments required under Section 2.7(a), Tenant shall also deposit into the Capital Reserve Account 125% of the estimated cost of the deferred maintenance (as estimated by Landlord) and shall promptly perform such repairs. For purposes of this Lease, "Capital Reserve Trigger Amount" shall mean $250,000, adjusted annually by a percentage equal to the increase in the Consumer Price Index in years subsequent to the date of this Lease, but in no event by an amount in excess of 2.5% annually. For purposes of this Section 2.7(b), "Consumer Price Index" shall mean the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor, New York Metropolitan Statistical Area, All Items (1982-84 = 100), or any successor index thereto, approximately adjusted. In the event that the Consumer Price Index is converted to a different standard reference base or otherwise revised, the determination of adjustments provided for herein shall be made with the use of such conversion factor, formula or table for converting the Consumer Price Index as may be published by the Bureau of Labor Statistics or, if said Bureau shall not publish the same, then with the use of such conversion factor, formula or table as may be published by Prentice-Hall, Inc., or any other nationally recognized publisher of similar statistical information. If the Consumer Price Index ceases to be published, and there is no successor thereto, (x) such other index as Landlord and Tenant shall agree upon in writing or (y) Landlord and Tenant cannot agree, such other index as reasonably selected by Landlord, shall be substituted for the Consumer Price Index. The amount of any deposit required by Section 2.7(a) with respect to the Capital Reserve Account shall be limited to an amount per year equal to the product obtained by multiplying $0.16 by the aggregate number of rentable square feet of space in all Projects.

(c) Tenant shall not be required to make the deposits required under Section 2.7(a) with respect to the Rollover Reserve Account provided that
(i) no Event of Default shall have occurred and be continuing hereunder, (ii) Tenant has a net worth in excess of $100,000,000, and (iii) Tenant is maintaining a Rent Coverage Ratio with respect to all Projects of at least 1.25:1. Tenant's obligation to make the deposits required under Section 2.7(a) with respect to the Rollover Reserve Account shall immediately resume and shall continue (A) in the event of the failure of any condition set forth in clause
(i) of this Section 2.7(c) until the expiration or earlier termination of this Lease, and (B) in the event of a failure of the condition set forth in clause
(ii) or (iii), until such time as the condition set forth in each of clauses
(ii) and (iii) shall have been satisfied as of the end of any calendar quarter. Notwithstanding anything to the contrary set forth in this Section 2.7(c), at any time Tenant shall have a Net Worth equal to or less than $150,000,000 or the Rent Coverage Ratio with respect to all Projects is less than 1.5:1, Tenant shall be required to make the monthly deposits required with respect to the Rollover Reserve Account under Section 2.7(a) (but only such portion of the monthly deposits attributable to the affected Project or Projects) with respect to any Project where Tenant (or a subtenant of Tenant pursuant to a sublease entered into in accordance with this Lease) is not in occupancy and open for business (unless such Project is not open for business (x) for a period of up to three months in connection with renovation or (y) for a period of less than eighteen months in connection with repairs to a Project that Tenant is permitted to rebuild, replace or repair and is rebuilding, replacing or repairing in accordance with the provisions of Section 3.6 and in good

faith intends to reopen for business). Tenant's obligation to make the required deposits in accordance with the preceding sentence shall continue until such time as Tenant shall have a Net Worth in excess of $150,000,000 and a Rent Coverage Ratio with respect to all of the Projects at least equal to 1.5:1. If Tenant shall at any time become obligated to make the required monthly deposits with respect to the Rollover Reserve Account set forth in Section 2.7(a) (or a portion of such monthly deposits in accordance with this Section 2.7(c)) then Tenant shall, in addition to making such monthly deposits, deposit into the Rollover Reserve Account an amount equal to the aggregate deposits Tenant would have made into the Rollover Reserve Account if Tenant had been required to make such deposits in accordance with Section 2.7(a) from the initial date of this Lease. Provided no Default or Event of Default shall have occurred and be continuing, the balance of the Rollover Reserve Account (or, with respect to a release of funds pursuant to clause (iii) below, such portion of the balance of the Rollover Reserve Account attributable to the subject Project) shall be released to Tenant within 5 days of Tenant's request therefor, if, as of any calendar quarter (i) Tenant shall have a Net Worth in excess of $150,000,000 and
(ii) Tenant shall maintain a Rent Coverage Ratio with respect to all of the Projects at least equal to 1.5:1 or (iii) with respect to any Project for which a deposit was made because neither Tenant nor any subtenant pursuant to a sublease entered into in accordance with this Lease are open for business, upon either (A) Landlord's and Lender's receipt of an estoppel certificate from such subtenant or a replacement subtenant pursuant to which such subtenant or replacement subtenant certifies to Landlord and Lender that (1) such subtenant or replacement subtenant has taken occupancy of its demised premises, (2) such subtenant or replacement subtenant has commenced the payment of rent under its sublease and (3) that such subtenant or replacement subtenant is obligated pursuant to its sublease to occupy its demised premises and pay rent under its sublease for a period of no less than five years from the date of such estoppel certificate or (B) Landlord's and Lender's receipt of evidence reasonably satisfactory to each of them that Tenant has opened for business at such Project and has continuously operated its business at such Project for twelve consecutive months. The amount of any deposit required by Section 2.7(a) with respect to the Rollover Reserve Account is initially anticipated to be an amount per year equal to the product obtained by multiplying $0.50 by the aggregate number of square feet of selling space in the Projects and shall in no event exceed $3,000,000 in the aggregate.

(d) Landlord shall disburse, or shall cause Lender to disburse, funds held in the Capital Reserve Account to Tenant, within 15 days after the delivery by Tenant to Landlord and Lender of a request therefor (but not more often than once per month), in increments of at least $5,000 provided that (i) such disbursement is for a capital expense approved in advance by Landlord; (ii) Landlord shall have (if it desires) verified (by an inspection conducted at Tenant's expense) performance of the work associated with such capital expense; and (iii) the request for disbursement is accompanied by (A) a certificate of Tenant's chief financial officer certifying (1) that such funds will be used to pay or reimburse Tenant for such capital expenses and a description thereof, (2) that the same has not been the subject of a previous disbursement and (3) that all previous disbursements have been used to pay the previously identified approved capital expenses, and (B) lien waivers or other evidence of payment satisfactory to Landlord, (C) at Landlord's option, a title search for the applicable Project or Projects indicating that such Project or Projects are free from all liens, claims and other encumbrances not previously approved by Landlord and (D) such other evidence as Landlord shall reasonably request that the capital

expenditures at the subject Project or Projects to be funded by the requested disbursement have been completed and are paid for or will be paid upon such disbursement to Tenant.

(e) Landlord shall disburse, or shall cause Lender to disburse, funds held in the Rollover Reserve Account to Tenant, within 15 days after the delivery by Tenant to Landlord of a request therefor (but not more often than once per month), in increments of at least $5,000, provided (i) such disbursement is for a leasing expense approved by Landlord; (ii) Landlord shall have (if it desires) verified (by an inspection conducted at Tenant's expense) performance of any construction work associated with such leasing expense; and
(iii) the request for disbursement is accompanied by (A) a certificate of Tenant's chief financial officer certifying (w) that such funds will be used only to pay (or reimburse Tenant for) such approved leasing expenses and a description thereof, (x) that the same has not been the subject of a previous disbursement, and (y) that all previous disbursements have been used only to pay (or reimburse Tenant for) the previously identified approved leasing expenses, and (B) reasonably detailed supporting documentation as to the amount, necessity and purpose therefor.

(f) Tenant shall have the option, at any time when no Event of Default exists, to deliver a Letter of Credit in a face amount equal to the sum then required to be on deposit in the Capital Reserve Account and having a term of one year (the "Capital Reserve L/C"). Upon the delivery by Tenant of the Capital Reserve L/C, Landlord shall return or cause to be returned to Tenant the then balance in the Capital Reserve Account. Tenant's delivery of the Capital Reserve L/C in accordance with this Section 2.7(f) shall not reduce Tenant's obligation to make subsequent deposits into the Capital Reserve Account as required in accordance with Section 2.7(a). Provided no Event of Default then exists, Landlord shall return or cause to be returned the Capital Reserve L/C to Tenant upon the satisfaction of the conditions to the release of the balance of the Capital Reserve Account set forth in Section 2.7(d); provided that, at such time as Tenant is entitled to a partial disbursement of proceeds from the Capital Reserve Account in accordance with Section 2.7(d), Landlord shall, provided no Event of Default then exists, agree to accept a new Capital Reserve L/C or an amendment to the Capital Reserve L/C which will have the effect of reducing the Capital Reserve L/C to an amount equal to the then aggregate required balance of the Capital Reserve Account. Landlord (or Lender) shall have the right, but not the obligation, to draw down all or any portion of the Capital Reserve L/C and deposit the proceeds thereof into the Capital Reserve Account to be held in accordance with this Section 2.7, upon the occurrence of any of the following:

(i) if Landlord and Lender receive a Non-Renewal Notice (as hereinafter defined), twenty-five days before the expiration of the Capital Reserve L/C, but only if Tenant has not previously delivered a replacement Capital Reserve L/C;

(ii) if Landlord receives a notice from the issuer of the Capital Reserve L/C that the Capital Reserve L/C will be terminated, twenty-five days before the effective date of the termination, but only if Tenant has not previously delivered a replacement Capital Reserve L/C; or

(iii) ten Business Days after Landlord has notified Tenant that the issuer of the Capital Reserve L/C is no longer an Approved Bank, but only if Tenant has not previously delivered a replacement Capital Reserve L/C.

Notwithstanding anything to the contrary contained in this Section 2.7 or elsewhere in this Lease, neither Landlord nor Lender shall have any obligation to draw on the Capital Reserve L/C upon the happening of an event described in clauses (i) through (iv) above, and neither Landlord nor Lender shall be liable for any losses sustained by Tenant due to the insolvency of the issuer of the Capital Reserve L/C, notwithstanding that neither Landlord nor Lender elected to draw on the Capital Reserve L/C. If for any reason the Capital Reserve L/C shall expire without a replacement Capital Reserve L/C having been delivered to Landlord, Tenant shall within 5 days after demand, unless Landlord or Lender shall have drawn on the Capital Reserve L/C prior to its expiration, deliver to Landlord a new Capital Reserve L/C. "Letter of Credit" shall mean an irrevocable, unconditional, transferable, clean sight draft, letter of credit in favor of Landlord, or, at any time the Loan is in place, Lender, and entitling Landlord or Lender, as the case may be, to draw thereon in New York, New York, issued by a domestic Approved Bank or the U.S. agency or branch of a foreign Approved Bank, to Tenant or an applicant/obligor that is an Affiliate of Tenant, which letter of credit shall provide that such letter of credit shall be deemed to be automatically renewed, without amendment, for consecutive periods of one year each, unless the issuing bank sends a written notice (a "Non-Renewal Notice") to Landlord and Lender by certified or registered mail, return receipt requested, not less than thirty (30) days next preceding the then expiration date of such letter of credit, that it elects not to have such letter of credit renewed. "Approved Bank" shall mean a bank whose long term unsecured debt obligations are rated at least "AA" by Standard & Poor's Rating Group or, provided that Tenant delivers a confirmation to the effect described in Section 3.4(d)(ii), such other bank whose long term unsecured debt obligations are rated at least "A" by Standard & Poor's Rating Group; provided, however, that any Letter of Credit supplied in connection with the immediately preceding proviso shall be for an amount not in excess of $100,000.

(g) Tenant shall have the option, at any time when no Event of Default exists, to deliver a Letter of Credit in a face amount equal to the sum then required to be on deposit in the Rollover Reserve Account and having a term of one year (the "Rollover Reserve L/C"). Upon the delivery by Tenant of the Rollover Reserve L/C, Landlord shall return or cause to be returned to Tenant the then balance in the Rollover Reserve Account. Tenant's delivery of the Rollover Reserve L/C in accordance with this Section 2.7(g) shall not reduce Tenant's obligation to make subsequent deposits into the Rollover Reserve Account as required in accordance with Section 2.7(a). Provided no Event of Default then exists, Landlord shall return or cause to be returned the Rollover Reserve L/C to Tenant upon the satisfaction of the conditions to the release of the balance of the Rollover Reserve Account set forth in Section 2.7(e); provided that, at such time as Tenant is entitled to a partial disbursement of proceeds from the Rollover Reserve Account in accordance with Section 2.7(e), Landlord shall, provided no Event of Default then exists, agree to accept a new Rollover Reserve L/C or an amendment to the Rollover Reserve L/C which will have the effect of reducing the Rollover Reserve L/C to an amount equal to the then aggregate required balance of the Rollover Reserve Account. Landlord (or Lender) shall have the right, but not the obligation, to draw down all or any portion of the

Rollover Reserve L/C and deposit the proceeds thereof into the Rollover Reserve Account to be held in accordance with this Section 2.7, upon the occurrence of any of the following:

(i) Landlord and Lender receive a Non-Renewal Notice, twenty-five days before the expiration of the Rollover Reserve L/C, but only if Tenant has not previously delivered a replacement Rollover Reserve L/C;

(ii) if Landlord receives a notice from the issuer of the Rollover Reserve L/C that the Rollover Reserve L/C will be terminated, twenty-five days before the effective date of the termination, but only if Tenant has not previously delivered a replacement Rollover Reserve L/C; or

(iii) ten Business Days after Landlord has notified Tenant that the issuer of the Rollover Reserve L/C is no longer an Approved Bank, but only if Tenant has not previously delivered a replacement Rollover Reserve L/C.

Notwithstanding anything to the contrary contained in this Section 2.7 or elsewhere in this Lease, neither Landlord nor Lender shall have any obligation to draw on the Rollover Reserve L/C upon the happening of an event described in clauses (i) through (iv) above, and neither Landlord nor Lender shall be liable for any losses sustained by Tenant due to the insolvency of the issuer of the Rollover Reserve L/C, notwithstanding that neither Landlord nor Lender elected not to draw on the Rollover Reserve L/C. If for any reason the Rollover Reserve L/C shall expire without a replacement Rollover Reserve L/C having been delivered to Landlord, Tenant shall within 5 days after demand, unless Landlord or Lender shall have drawn on the Rollover Reserve L/C prior to its expiration, deliver to Landlord a new Rollover Reserve L/C.

2.8 Assignment to Lender. Tenant acknowledges that Landlord will assign this Lease, together with any security deposit to be posted hereunder, to Lender as collateral for the Loan and consents thereto.

ARTICLE 3.

3.1 Procedure Upon Purchase.

(a) If Tenant shall purchase one or more Projects pursuant to this Lease, Landlord shall convey or cause to be conveyed title thereto on an "as is, where is" basis and without recourse to or warranty by the Landlord, and Tenant or its designee shall accept such title, subject to the condition of the applicable Project on the date of purchase, the Permitted Exceptions, all liens and encumbrances created by, through, under or with the consent of Tenant and all applicable Legal Requirements (including, without limitation, the power of eminent domain), and subject to the same disclaimers as set forth in Section 1.1
(b), but free of the lien of the Indenture and of liens and encumbrances resulting from acts of Landlord taken without the consent of Tenant.

(b) Upon the date fixed for any purchase of any Project, Tenant shall, by wire transfer of immediately available funds, pay to Landlord, or as Landlord may direct in writing, the purchase price therefor specified herein, together with all Basic Rent, Additional Rent, the Make Whole Premium (as hereinafter defined), if applicable, and other sums then accrued or due and payable under this Lease with respect to the applicable Project to and including such date of purchase, and there shall be delivered to Tenant a deed to or other conveyance of the interests in the applicable Project or portion thereof then being sold to Tenant and any other instruments necessary to convey the title thereto described in Section 3.1(a) and to assign any other property then required to be assigned by Landlord pursuant hereto. Tenant shall pay, on an after-tax basis, (i) all charges incident to such conveyance and assignment, including, without limitation, reasonable counsel fees, escrow fees, recording fees, title insurance premiums, transfer taxes and all other applicable taxes (other than any income or franchise taxes of Landlord) which may be imposed by reason of such conveyance and assignment and the delivery of said deed or conveyance and other instruments, (ii) all costs and expenses (other than the Make Whole Premium) incurred by Landlord in connection with a defeasance of all or any portion of the indebtedness secured by the Indenture, including, without limitation, reasonable attorneys' fees and expenses of Landlord, Lender and the Rating Agencies (as hereinafter defined), any revenue, documentary stamp or intangible taxes, or any other tax or charge due in connection with the transfer or creation of the note or notes which evidence the indebtedness secured by the Indenture or the defeased indebtedness, and (iii) all costs and expenses associated with the release of the lien of the Indenture from the applicable Project. Upon the completion of any purchase of an entire Project (but not of any lesser interest than an entire Project) but not prior thereto (whether or not any delay or failure in the completion of such purchase shall be the fault of Landlord), this Lease shall terminate with respect to such Project, except with respect to obligations and liabilities of Tenant under this Lease, actual or contingent, which have arisen on or prior to such completion of purchase or which, pursuant to the provisions of this Lease, survive such termination. The "Make Whole Premium" shall have the meaning set forth in the Indenture, or if not defined in the Indenture, shall mean the amount which Landlord is obligated to pay in excess of outstanding principal and accrued interest in connection with a full or partial prepayment or defeasance of the Indenture, which prepayment or defeasance arises as a result of the event giving rise to the Make Whole Premium; provided that notwithstanding any other provision of this Lease to the contrary, Tenant shall not be liable to Landlord or Lender for any Make Whole Premium in the event of a purchase by Tenant of a Project pursuant to a Rejectable Offer (as hereinafter defined) in the event of a Major Casualty or Major Condemnation (as hereinafter defined). To the extent that the provisions of this Lease require Tenant to pay sums then accrued or due and payable under this Lease with respect to a Project on a Lease Termination Date (as hereinafter defined) and such Lease Termination Date does not occur on a Payment Date, such accrued amounts shall include all Basic Rent allocated to the applicable Project (such amount to be determined by multiplying the then annual Basic Rent by a fraction, the numerator of which is the allocated adjustment amount allocated to the applicable Project in Schedule G attached hereto and made a part hereof, and the denominator of which is the aggregate amount allocated in Schedule G to all Projects then subject to this Lease) from and including the immediately preceding Payment Date, through and including such Lease Termination Date (allocated on a per diem basis based on a 360-day year for the annual Basic Rent and the actual number of days elapsed) plus any additional interest (which may include

interest attributable to a period subsequent to the Lease Termination Date if such Lease Termination Date is other than the first day of a month (or such other date in which a loan payment is due under the Loan Agreement)) or other expenses payable under the Loan in connection with prepayment of the Loan. Tenant acknowledges that, notwithstanding certain provisions permitting rights of purchase or substitution in connection with a Major Casualty, a Major Condemnation or a Project becoming Economically Obsolete, this Lease is a single unitary master lease, that the entering into by Tenant of this single, unitary master lease was a material inducement to Landlord to purchase the Projects from the Seller and that Landlord would not have purchased any Project independently or the Projects as a whole without the inducement of this single, unitary master lease.

(c) In the event that this Lease shall be terminated with respect to a particular Project upon purchase of such Project by Tenant or upon rejection of a Rejectable Offer (as hereinafter defined) or a Rejectable Substitution Offer (as hereinafter defined), the Basic Rent from and after the applicable Lease Termination Date shall be adjusted to reflect the termination of the applicable Project in the manner set forth in Schedule E attached hereto and made a part hereof. In the event of the termination of this Lease with respect to a particular Project as a result of a substitution, the Basic Rent shall not be adjusted.

3.2 Condemnation and Casualty.

(a) General Provisions. Subject to Tenant's rights to utilize or obtain the same in accordance with Section 3.2(b) and Section 3.6, Tenant hereby irrevocably assigns to Landlord any award, compensation or insurance payment to which Tenant may become entitled by reason of Tenant's interest in the Premises
(i) if the use, occupancy or title of a Project or any part thereof is taken, requisitioned or sold in, by or on account of any actual or threatened eminent domain proceeding or other action by any person having the power of eminent domain ("Condemnation") or (ii) if a Project or any part thereof is damaged or destroyed by fire, flood or other casualty ("Casualty") (all awards, compensations, and insurance payments on account of any Condemnation or Casualty net of (A) any amounts applicable to Tenant's Personal Property (B) provided that no Event of Default shall have occurred and be continuing, any amounts applicable to the interruption of Tenant's business within the affected Project hereinafter collectively called "Compensation"). In the event of any Casualty, or in the event of a Condemnation or threatened Condemnation with respect to a Project, Tenant shall give prompt written notice thereof to Landlord, with a copy to Lender, (which notice shall set forth Tenant's good faith estimate of the cost of repairing or restoring any damage or destruction caused thereby, or, if Tenant cannot reasonably estimate the anticipated cost of restoration, Tenant shall nonetheless give Landlord, with a copy to Lender prompt notice of the occurrence of any such Casualty or Condemnation, and will diligently proceed to obtain estimates to enable Tenant to quantify the anticipated cost of such restoration, whereupon Tenant shall promptly notify Landlord, with a copy to Lender, of such good faith estimate). If a Casualty covered by any insurance policy maintained in accordance with the terms hereof (an "Insured Casualty") occurs where the loss does not exceed $250,000, provided no Default or Event of Default has occurred and is continuing, Tenant may settle and adjust any claim without the prior consent of Landlord; provided such adjustment is carried out in a competent and timely manner, and Tenant is hereby

authorized to collect and receipt for the insurance proceeds (the "Proceeds"). In the event of an Insured Casualty where the loss equals or exceeds $250,000 (a "Significant Casualty"), Tenant may settle and adjust any claim, provided that
(i) no Default or Event of Default has occurred and is continuing, (ii) such claim is settled in a timely and competent manner, (iii) each of Landlord and Lender may, at its option, participate in the settlement and adjustment of any claim, (iv) Tenant shall not settle any such claim without the prior written consent of each of Landlord and Lender, which consent shall not unreasonably be withheld and (v) the Proceeds shall be due and payable solely to Landlord or, if required by the Indenture, Lender. The expenses incurred by Landlord and Lender in the settlement, adjustment and collection of the Proceeds shall be reimbursed by Tenant upon demand. In the event of a Condemnation, Tenant may settle and adjust any claim, provided that (i) no Default or Event of Default has occurred and is continuing, (ii) such claim is settled in a timely and competent manner,
(iii) each of Landlord and Lender may, at its option, participate in the settlement and adjustment of any claim and (iv) Tenant shall not settle any such claim without the prior written consent of each of Landlord and Lender, which consent shall not be unreasonably withheld and (v) the proceeds of such Condemnation shall be due and payable solely to Landlord or, if required by the Indenture, Lender. All Compensation shall be paid directly to Landlord (or at Landlord's discretion, to Lender) and shall be applied pursuant to the applicable provisions of Article 3, and all such Compensation (less the reasonable costs and expenses of Landlord, Tenant and Lender, if applicable, in collecting such Compensation), is herein called the "Net Proceeds".

(b) Major Condemnation and Major Casualty. If (i) a Condemnation shall take more than twenty percent (20%) of the land area of a Project and is reasonably likely to have a material adverse effect on Tenant's business conducted at the Project, or (ii) the Net Proceeds of such Condemnation shall be for an amount in excess of $2,000,000, or (iii) if a Casualty shall affect more than fifty percent (50%) (or twenty percent (20%) if in connection with a Rejectable Substitution Offer described in Section 3.3(a)(i)(B)) of the building area in a Project, and any such event shall render such Project unsuitable for restoration for continued use and occupancy in Tenant's business, or (iv) there is taken or conveyed, such that restoration is not practically or economically feasible, (A) a portion of the parking area contained within the applicable Project such that the remaining portion of said parking area contains greater than or equal to twenty percent (20%) fewer parking spaces than existed at such Project immediately prior to such casualty or condemnation, or (B) any part of the loading and maneuvering area serving the Premises such that loading or maneuvering becomes impractical, or (C) any of the entrances or exits to the Land, or (v) if as a result of such Casualty or Condemnation the affected Project cannot be restored within eighteen (18) months to the affected Project's pre-existing condition and utility as existed immediately prior to such Insured Casualty or Condemnation and to an economic unit not less valuable and not less useful than the same was immediately prior to such Insured Casualty or Condemnation or (vi) if such Condemnation or Casualty shall otherwise render such Project unsuitable for restoration for continued use and occupancy in Tenant's business and Tenant shall provide evidence thereof reasonably acceptable to Landlord (herein, a "Major Casualty" and a "Major Condemnation"), then Tenant may, and in connection with any event described in clause (v) shall, not later than thirty (30) days after such Major Condemnation or Major Casualty, as the case may be, deliver to Landlord (x) notice of its intention to terminate this Lease with respect to such Project on the first Payment Date (herein, with respect to any

termination resulting from a Rejectable Offer or a Rejectable Substitution Offer, the "Lease Termination Date") which occurs not less than one hundred twenty (120) days and not more than one hundred fifty (150) days after the delivery of such notice (it being understood that in all events under this Lease, the Lease Termination Date must be on a Payment Date) and (y) a certificate of Tenant describing the event giving rise to such termination and stating that Tenant has determined in good faith that such Major Condemnation or Major Casualty, as the case may be, has rendered the applicable Project unsuitable for restoration for continued use and occupancy in Tenant's business, and (z) documentation to the effect that termination of this Lease with respect to such Project will not be in material violation of any agreement then in effect with which Tenant is obligated to comply pursuant to this Lease. If the Lease Termination Date occurs during the Primary Term, such notice must be accompanied by either a Rejectable Offer or a Rejectable Substitution Offer, as described in Section 3.3, in which event the provisions of such Section shall be controlling.

3.3 Rejectable Offer and Substitution.

(a) In the event of a Major Casualty or Major Condemnation during the Primary Term, Tenant shall deliver to Landlord, no later than thirty (30) days after such Major Casualty or Major Condemnation, (i) either (A) an irrevocable rejectable written offer (the "Rejectable Offer") to purchase Landlord's interest in the affected Project on the Lease Termination Date for a price equal to the "Stipulated Loss Value" as specified on Schedule F attached hereto and made a part hereof, or (B) provided that the proposed Lease Termination Date is after the earlier of (1) forty two (42) months from the date hereof and (2) two (2) years from the "starting day" (within the meaning of
Section 860G(a)(9) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the "Code")) of the securitization of the Loan (as hereinafter defined) (the "Lockup Period") so long as no Event of Default shall have occurred and be continuing, an irrevocable written offer (the "Rejectable Substitution Offer") to substitute a Substitute Project (as hereinafter defined), for the affected Project on the Lease Termination Date in accordance with Section 3.4, and (ii) a certificate from the president, the chief financial officer or the treasurer of Tenant (herein, a "Responsible Officer") which (A) describes the event(s) giving rise to the Major Casualty or Major Condemnation, as the case may be, and (B) states that Tenant has determined that such event has rendered such Project unsuitable for restoration or for the continued use and occupancy in Tenant's business, and (iii) if Tenant delivers a Rejectable Substitution Offer, the following items (herein, the "Substitution Documents") (A) a description of the proposed Substitute Project, (B) an Acceptable Appraisal of the Replaced Project (as hereinafter defined), performed in accordance with the criteria set forth in Section 3.4 from an Approved Appraiser, (C) a current appraisal of the proposed Substitute Project performed in accordance with the criteria set forth in Section 3.4, (D) a current title insurance commitment for the proposed Substitute Project satisfying the requirements set forth in Section 3.4, (E) a current ALTA survey for the proposed Substitute Project satisfying the requirements set forth in
Section 3.4, (F) a current Phase I environmental report for the proposed Substitute Project satisfying the requirements set forth in Section 3.4, (G) operating statements for the proposed Substitute Project for the previous three
(3) years (or such shorter period of operation by Tenant or its Affiliate), (H) a current engineering report for the proposed Substitute Project satisfying the requirements of Section 3.4 and (I) an indemnity

for adverse tax consequences. Within ninety (90) days of the date Landlord receives the items required to be delivered in (i), (ii) and (iii) above, as applicable, (x) if Landlord receives a Rejectable Offer, Landlord shall deliver written notice of its election to either accept or reject Tenant's Rejectable Offer (with a failure to respond constituting an acceptance of such Rejectable Offer), and (y) if Landlord receives a Rejectable Substitution Offer, Landlord shall deliver written notice of its election to either accept or reject the Rejectable Substitution Offer (with a failure to respond constituting an acceptance of such Rejectable Substitution Offer), provided that the Substitution (as hereinafter defined) satisfies the conditions of Section 3.4 (it being specifically understood that an acceptance of the Rejectable Substitution Offer shall not constitute satisfaction of any of the conditions set forth in Section 3.4). Any rejection by Landlord of a Rejectable Offer or Rejectable Substitution Offer shall comply with and be accomplished in accordance with the provisions of Section 3.5. In the event of an acceptance or deemed acceptance of a Rejectable Offer, on the applicable Lease Termination Date, the applicable Project shall be conveyed to Tenant or its designee in exchange for payment by Tenant to Landlord of the applicable Stipulated Loss Value, together with all Basic Rent, Additional Rent and other sums accrued or due and payable under this Lease with respect to the applicable Project as of the applicable Lease Termination Date and on the applicable Lease Termination Date, the Net Proceeds, if any, payable in connection with the Major Casualty or Major Condemnation triggering the right to make such Rejectable Offer (or the right to receive the same when made if payment therefor has not yet been made) shall, notwithstanding anything to the contrary contained in this Section 3.3., be assigned and/or turned over to the Tenant on the closing of the title for the applicable Project, provided that all amounts payable to Landlord in connection with such acceptance or deemed acceptance of a Rejectable Offer, including the purchase price of the applicable Project, have been paid. In the event of an acceptance or deemed acceptance of a Rejectable Substitution Offer, on the applicable Lease Termination Date, the Replaced Project shall (upon satisfaction of the conditions set forth in Section 3.4) be conveyed to Tenant or its designee in exchange for delivery of the Substitute Project, and upon payment by Tenant to Landlord of all Basic Rent, Additional Rent and other sums accrued or due and payable under this Lease with respect to the applicable Project as of the Lease Termination Date and on the applicable Lease Termination Date, the Net Proceeds, if any, payable in connection with the Major Casualty or Major Condemnation triggering the right to make such Rejectable Substitution Offer (or the right to receive the same when made if payment therefor has not yet been made) shall, notwithstanding anything to the contrary contained in this Section 3.3., be assigned and/or turned over to the Tenant on the closing of the title for the Replaced Project, provided that all amounts payable to Landlord in connection with such acceptance or deemed acceptance of a Rejectable Substitution Offer have been paid. For purposes of this Section 3.3, an appraisal, report, survey, environmental report, operating statement, engineering report, or any other document permitted to be delivered pursuant to this Section 3.3, shall be "current" if it is dated within one hundred twenty
(120) days prior to the proposed Lease Termination date. Acceptable Appraisal shall mean an appraisal of a proposed Substitute Project that is (i) dated not more than 120 days prior to the applicable Lease Termination Date, (ii) signed by a qualified, independent MAI appraiser with no interest, direct or indirect, in the Loan or any Project, and whose compensation is not affected by the value of the Project reflected in such appraisal, (iii) addressed to Landlord and Lender and its successors and assigns, (iv) made in compliance with the requirements of the Federal National Mortgage

Association Company or Federal Home Loan Mortgage Corporation, or any successor thereto, and Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated thereunder and (v) otherwise reasonably satisfactory to the Landlord and the Lender in all respects.

(b) In the event that a Project becomes Economically Obsolete, Tenant shall be allowed, provided that the Lockup Period has expired, to deliver to Landlord (i) (x) so long as no Event of Default has occurred and is continuing and (y) the substitution complies with all REMIC (as hereinafter defined) or other securitization regulations applicable to the Loan, a Rejectable Substitution Offer to substitute a Substitute Project for the affected Project on the Lease Termination Date in accordance with Section 3.4, and (ii) a certificate from a Responsible Officer of Tenant which (A) describes the event(s) giving rise to the Project becoming Economically Obsolete, (B) states that Tenant has determined that the Project is Economically Obsolete, and
(C) states that Tenant shall not use such Project in Tenant's business for five
(5) years after the closing of the transfer of the Project and (iii) the Substitution Documents. Within ninety (90) days of the date Landlord receives the items referenced in (i), (ii) and (iii) of this Section 3.3(b), Landlord shall deliver written notice of its election to either accept or reject Tenant's Rejectable Substitution Offer (with a failure to respond constituting an acceptance of such Rejectable Substitution Offer), provided that the Substitution satisfies the conditions of Section 3.4 (it being specifically understood that an acceptance of the Rejectable Substitution Offer shall not constitute satisfaction of any of the conditions set forth in Section 3.4). In the event of an acceptance or deemed acceptance of a Rejectable Substitution Offer, on the applicable Lease Termination Date, the applicable Project shall (upon satisfaction of the conditions set forth in Section 3.4) be conveyed to Tenant or its designee in exchange for delivery of the Substitute Project, and upon payment by Tenant to Landlord of all Basic Rent, Additional Rent and other sums accrued or due and payable under this Lease with respect to the applicable Project as of the Lease Termination Date. "Economically Obsolete" shall mean (i) a Project occupied by Tenant which, for a period of the immediately preceding eight quarters, as of the end of any fiscal quarter, has a Rent Coverage Ratio of less than 1.25 to 1, as certified by a Responsible Officer of Tenant in writing to Landlord, having exercised reasonable business judgment in making its determination or (ii) a Project occupied by a sublessee permitted by this Lease pursuant to a sublease under which such sublessee is paying rent equal to less than 125% of the portion of Basic Rent allocable to such Project.

(c) In addition to the Substitution rights set forth in Sections 3.3(a) and (b), during the Term of this Lease, Tenant shall be allowed, provided that the Lockup Period has expired, and provided that (x) no Event of Default shall have occurred and be continuing and (y) the substitution complies with all REMIC (as hereinafter defined) or other securitization regulations applicable to the Loan, to make a Substitution pursuant to a Rejectable Substitution Offer with respect to a maximum of two (2) Projects, provided that Tenant complies with the provisions of this Section and the other provisions of this Lease. Landlord agrees that Tenant may request Landlord's consent to the right to make one additional Substitution pursuant to this Section 3.3(c), the granting or rejection of such request to be Landlord's sole and absolute discretion and subject to Lender's prior written consent. In the event that Tenant shall desire to utilize such right, Tenant shall deliver to Landlord (i) an irrevocable Rejectable Substitution

Offer to substitute a Substitute Project for the affected Project on the Lease Termination Date in accordance with Section 3.4, and (ii) the Substitution Documents. Within ninety (90) days of the date Landlord receives the items referenced in (i) and (ii) of this Section 3.3(c), Landlord shall deliver written notice of its election to either accept or reject Tenant's Rejectable Substitution Offer (with a failure to respond within such ninety (90) day period constituting an acceptance of such Rejectable Substitution Offer), provided that the Substitution satisfies the conditions of Section 3.4 (it being specifically understood that an acceptance of the Rejectable Substitution Offer shall not constitute satisfaction of any of the conditions set forth in Section 3.4). In the event of an acceptance or deemed acceptance of a Rejectable Substitution Offer, on the applicable Lease Termination Date, the Replaced Project shall (upon satisfaction of the conditions set forth in Section 3.4) be conveyed to Tenant or its designee in exchange for delivery of the Substitute Project, and Tenant shall pay all costs and expenses associated therewith, as outlined herein with respect to any other Substitution. If Landlord rejected a Rejectable Substitution Offer that satisfies the conditions for Substitution set forth herein under this Section 3.3(c), then this Lease shall terminate on the Lease Termination Date with respect to such Project in accordance with the provisions of Section 3.5.

(d) In the event that Landlord receives a Rejectable Substitution Offer, Landlord shall, within forty-five (45) days after receipt of the Substitution Documents, deliver to Tenant its written approval or disapproval of the matters contained in the Substitution Documents, which approval shall not be unreasonably withheld (with a failure to deliver notice within such forty-five
(45) day period constituting disapproval). An approval of the Substitution Documents shall not constitute an acceptance of the Rejectable Substitution Offer, and a disapproval of the Substitution Documents shall not constitute a rejection of the Rejectable Substitution Offer. An acceptance or rejection of the Rejectable Substitution Offer shall be accomplished only in accordance with Sections 3.3(a) and 3.3(b) above. If Landlord approves of the Substitution Documents (it being understood that such approval shall not constitute satisfaction of the conditions set forth in Section 3.4, but such approval shall estop Landlord from later objecting to items previously specifically approved in writing, but not those items arising subsequent to such approval), the parties shall proceed to Substitution, provided that Landlord ultimately accepts the Rejectable Substitution Offer and provided that Tenant ultimately satisfies the conditions of Section 3.4 for Substitution. If Landlord disapproves of the Substitution Documents (or any portion thereof), Tenant shall have up to thirty
(30) days to cure any matter to which Landlord has objected. If Landlord has not approved of such matter in writing within five (5) days of Tenant's cure thereof, Tenant shall not be allowed to make the Substitution.

(e) Tenant agrees that so long as any portion of the note secured by the Indenture is outstanding, Tenant shall deliver to Lender, concurrently with the delivery thereof to Landlord, a copy of any notice of termination of this Lease (in whole or in part) and of any Rejectable Offer or Rejectable Substitution Offer, together with all items required to be delivered in connection therewith and together with copies of all items required to be delivered pursuant to Sections 3.3 and 3.4.

3.4 Substitution.

(a) In the event that Tenant has made (and Landlord has accepted or is deemed to have accepted) a Rejectable Substitution Offer, as outlined in
Section 3.3, Tenant shall replace, on the Lease Termination Date (a "Substitution"), the affected Project (the "Replaced Project") with a Substitute Project upon satisfaction of the conditions set forth in this Section 3.4, and upon delivery to Landlord, if applicable, (with a copy to any assignee of this Lease, including Lender) of a certificate from a Responsible Officer of Tenant setting forth the determination of Tenant as outlined in Section 3.3. "Substitute Project" means a property which (i) has a Fair Market Value (as hereinafter defined) at least equal to the greater of that of the Replaced Project as of the date of the Substitution or as of the date of this Lease, (ii) the Improvements constituting a part of such Substitute Project have a remaining useful life and residual value substantially equivalent to, or better than, that of the Improvements constituting a part of the Replaced Project, (iii) is located in (A) the same state as the Replaced Project or (B) in another state acceptable to Landlord in Landlord's reasonable discretion (it being understood that Landlord shall not unreasonably withhold its consent to any state in which another Project is located, provided that Tenant shall pay any increased costs by reason of a Substitution in another jurisdiction) and (iv) is located in a market with similar characteristics and demographics as the Replaced Project. In the case of a Substitution as a result of a Major Casualty or Major Condemnation, the Fair Market Value of the Replaced Project and the remaining useful life and residual value of the Improvements constituting a part thereof shall be determined as of the date which is immediately prior to such Major Condemnation or Major Casualty (including, if construction is anticipated or being accomplished at such time with respect to such Replaced Project, the appraised value of the completed Project assuming that Completion of the Project has occurred). In the case of a Substitution as a result of a Project becoming Economically Obsolete, the Fair Market Value of the Replaced Project shall be equal to the appraised value as of the date hereof (including, if construction (including, without limitation, any renovation required under Section 9.1) is anticipated or being accomplished at such time with respect to such Replaced Project, the appraised value of the completed Project assuming that Completion of the Project has occurred). In the case of a Substitution pursuant to Section 3.3(c), the Fair Market Value of the Replaced Project shall be determined as of the date of Substitution (including, if construction (including, without limitation, any renovation required under Section 9.1) is anticipated or being accomplished at such time with respect to such Replaced Project, the appraised value of the completed Project assuming that Completion of the Project has occurred). Fee simple title to the Substitute Project must be conveyed to Landlord and Landlord will not accept a ground lease. At the time of substitution, a Substitute Project must be an operating Project which Tenant intends to continue to operate pursuant to and in accordance with Section 1.2 hereof.

(b) Notwithstanding any contrary provision hereof, in the event that Tenant has made (and Landlord has previously approved the Substitution Documents and has accepted or is deemed to have accepted) a Rejectable Substitution Offer with respect to a Project arising as a result of a Major Condemnation or Major Casualty, but Tenant fails to meet the conditions of Substitution set forth in Section 3.4(d) on or before the applicable Lease Termination Date, Tenant shall not be allowed to make such Substitution. In such event, this Lease shall continue

in full force and effect, Tenant shall be deemed to have made a Rejectable Offer on the initially-scheduled Lease Termination Date, and Landlord shall either accept or reject such deemed Rejectable Offer no later than sixty (60) days after the initially-scheduled Lease Termination Date. A failure by Landlord to either accept or reject such deemed Rejectable Offer shall be deemed acceptance. The Lease Termination Date in such event shall be the first Payment Date occurring not less than thirty (30) days after acceptance or rejection of such deemed Rejectable Offer. In the event that Tenant has made (and Landlord has previously approved the Substitution Documents) any other Rejectable Substitution Offer pursuant to the provisions of this Lease, but Tenant fails to meet the conditions of Substitution set forth in Section 3.4(d) on or before the applicable Lease Termination Date, Tenant shall not be allowed to make such Substitution. In such event, this Lease shall continue in full force and effect with respect to the applicable Project.

(c) The term "Fair Market Value" shall mean the value of a fee simple interest in the applicable Replaced Project or Substitute Project, unencumbered by this Lease and any Indenture (and in at least the condition required to be maintained pursuant to this Lease) and determined at the time in question. If Landlord is in agreement with the appraisals delivered by Tenant as a part of the Substitution Documents (which appraisals shall be by appraisers approved in advance by Landlord and Lender and, at the request of Landlord, shall provide that the party or parties engaging such appraiser shall be the Landlord or the Lender or both), such appraisals shall be utilized to determine Fair Market Value. If Landlord gives Tenant written notice of its disapproval of an appraisal delivered by Tenant (to be delivered by Landlord within the thirty
(30) day period referred to in the second line of Section 3.3(d) above), Fair Market Value shall be determined using Landlord's and Lender's respective standard valuation methods. Any such determination shall be prepared by a qualified, independent MAI appraiser who is both a member of the American Institute of Appraisers and actively engaged in the appraisal of real property in the area where such property is located. Any appraisal delivered by Tenant in connection with this Article 3 shall be dated no more than 120 days prior to the proposed initial Lease Termination Date and shall expressly provide that each of Landlord and Lender shall be entitled to rely thereon. For the purposes of this Lease, "Approved Appraiser" shall mean an appraiser meeting the criteria set forth above in this Section 3.4(c)(i) who (A) holds no interest, direct or indirect, in the Loan or the Project being appraised and (B) whose compensation is not affected by the value of the Project reflected in such appraisal. An appraiser shall not, in making its appraisal of the Replaced Project and the Substitute Project, attribute any value to any of Tenant's Personal Property.

(d) In the event that Tenant shall make a Rejectable Substitution Offer in compliance with the provisions of Sections 3.3 and 3.4, and Landlord shall have accepted (or be deemed to have accepted) such Rejectable Substitution Offer, Tenant shall be allowed to make such Substitution, provided that all of the following conditions precedent are satisfied in the reasonable judgment of Landlord and, as required by the Indenture, Lender:

(i) there shall be no Event of Default at the time of the Rejectable Substitution Offer or on the applicable Lease Termination Date;

(ii) so long as any portion of the loan secured by the Indenture (the "Loan") is outstanding, Landlord shall request promptly and as soon thereafter as is reasonably practicably obtain and deliver to Lender (at Tenant's expense) a written confirmation from each of Standard & Poor's Rating Group, Fitch Ratings, Inc. and Moody's Investors Service Inc. or any successor thereto, or any other nationally recognized credit rating agency(ies) which is rating securities issued in connection with any securitization which includes the Loan (the "Rating Agencies") that such Substitution will not result in a withdrawal, downgrade or qualification of the then current rating of any such securities which are in effect immediately prior to the Substitution;

(iii) so long as any portion of the Loan is outstanding, Lender and the Rating Agencies shall have received an opinion of counsel which, as required by the Indenture, is acceptable to the Rating Agencies, stating that any securitization vehicle formed in connection with a securitization which includes the Loan which has elected to be treated as a "real estate mortgage investment conduit" within the meaning of Section 860D of the Internal Revenue Code, as amended, ("REMIC") will not fail to maintain such REMIC status as a result of such Substitution and that the Substitution does not constitute a "significant modification" of the Loan under Section 1001 of the Internal Revenue Code, as amended, or otherwise cause a tax to be imposed on a "prohibited transaction" by any securitization vehicle electing to be treated as a REMIC;

(iv) so long as any portion of the Loan is outstanding, Landlord and Lender shall have received an opinion of counsel delivered by Tenant stating that the certificates, opinions and other instruments which have been or are therewith delivered to and deposited with Landlord and Lender or either thereof by Tenant and by any Guarantor conform to the requirements of this Lease;

(v) Tenant shall have delivered to Landlord and Lender an appraisal of the Substitute Project dated no more than one hundred twenty
(120) days prior to the Substitution by an appraiser which, as required by the Indenture, is acceptable to the Rating Agencies, indicating a Fair Market Value of the Substitute Project that is equal to or greater than the Fair Market Value of the Replaced Project determined in accordance with Section 3.4(a) of this Lease and using substantially the same methodology as used in the appraisal delivered to Lender in connection with the origination of the Loan;

(vi) Tenant shall have delivered to Landlord and Lender a current as-built survey for the Substitute Project satisfying the requirements set forth in Schedule H certified to the title insurance company, to Landlord, and to

Lender and its successors and assigns, prepared by a professional land surveyor licensed in the state in which the Substitute Project is located which, as required by the Indenture, is acceptable to the Rating Agencies and which, as required by the Indenture, would be reasonably satisfactory to a prudent lending institution making a loan similar to the Loan. Such survey shall reflect the same legal description which is included in the title insurance policy relating to such Substitute Project and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Project. The surveyor's seal shall be affixed to such survey, such survey shall show no encroachments or violations of any setback requirements and shall certify that the surveyed property is not located in a "one-hundred-year flood hazard area" (or, if the surveyed property is located in a "one-hundred-year flood hazard area", flood insurance in an amount equal to the full Replacement Cost of the Substitute Project or the maximum amount available through National Flood Program or any successor program, whichever is less, shall be provided if flood insurance is available under the National Flood Insurance Act;

(vii) Tenant shall have delivered to Landlord and Lender a Phase I environmental report addressed to Landlord and Lender and, if as a result of such report, facts are revealed that would reasonably necessitate a Phase II environmental report, a Phase II environmental report addressed to Landlord and Lender, each in form and substance reasonably satisfactory to Landlord and Lender (x) stating that the Substitute Project is in compliance with Environmental Laws and that no Hazardous Substances are present or have been Released or are threatened to be Released at, on, under, within or emanating to or from the Substitute Project, and (y) indicating that the Substitute Project is in compliance with this Lease, and, as required by the Indenture, is acceptable to the Rating Agencies and would be reasonably satisfactory to a prudent lending institution making a loan similar to the Loan;

(viii) Tenant shall have delivered a policy of owner's title insurance from a title insurer reasonably satisfactory to Landlord containing coverages which shall be equivalent to those contained in the policy for the Replaced Project (except that to the extent certain coverage was obtained for other Projects but was unavailable or prohibitively expensive in the state where the Replaced Project was located, the coverage for the Substitute Project shall include such coverage) and title exceptions of equivalent nature to those contained in the policy for the Replaced Project (it being specifically understood that the title exceptions may only include easements which do not interfere with any buildings, and in no event shall the title exceptions include any use or other restrictions unless the same have been approved by Landlord and, as required by the Indenture, Lender, in their sole

discretion), and a policy of lender's title insurance satisfying the requirements of the Lender as set forth in the Indenture;

(ix) Tenant shall have delivered to Landlord and Lender valid certificates of insurance and copies of related insurance policies indicating that the insurance requirements set forth in this Lease have been satisfied with respect to the Substitute Project and evidencing the payment of all premiums payable with respect thereto for the existing policy period;

(x) Tenant shall have caused to be delivered to Landlord and Lender annual operating and occupancy statements for the Substitute Project for the three (3) most recently completed fiscal years and a current operating statement for the Substitute Project, each certified by Tenant to Landlord, to Lender and their respective successors and assigns as being true and correct and a certificate from Tenant certifying that there has been no material adverse change in the financial condition of the Substitute Project since the date of such operating statements;

(xi) Tenant shall have delivered to Landlord and Lender a physical conditions inspection report with respect to the Substitute Project which is reasonably acceptable to Landlord and, as required by the Indenture, which is acceptable to the Rating Agencies and which would be reasonably satisfactory to a prudent lending institution making a loan similar to the Loan, and stating that the Substitute Project and its use comply in all material respects with all applicable Legal Requirements (including, without limitation, zoning, subdivision and building laws) and that the Substitute Project is in good condition and repair and free of damage and waste. If compliance with any Legal Requirements is not addressed by such report, compliance shall be confirmed by delivery to Landlord and Lender of a certificate of an architect licensed in the state in which the Substitute Project is located, a letter from the municipality in which such Substitute Project is located, a certificate of a surveyor that is licensed in the state in which the Substitute Project is located (with respect to zoning and subdivision laws), an ALTA 3.1 zoning endorsement to the title insurance policies delivered pursuant to clause (viii) above (with respect to zoning laws) or a subdivision endorsement to the title policies delivered pursuant to clause (viii) above (with respect to subdivision laws). If such physical condition report indicates that there are any items of deferred maintenance, Tenant shall have deposited into escrow with Lender, as required by the Indenture as long as any portion of the Loan is outstanding and otherwise with Landlord, an amount equal to 125% of the estimated cost of the deferred maintenance, together with an agreement to complete such deferred maintenance within six months thereafter, subject to Force Majeure (as hereinafter defined).

(xii) Landlord shall have received, and Lender shall have received a copy of, a deed conveying a fee estate in and to the Substitute Project to Landlord, and a letter from Landlord countersigned by a title insurance company acknowledging receipt of such deed (or deeds, as applicable), and agreeing to record the same in the real estate records for the county in which the Substitute Project is located, such deed (or deeds) containing the same types of warranty as in the deed (or deeds) Landlord received for the Replaced Project taking into account differing nomenclature in different states;

(xiii) Tenant shall have delivered to Landlord and Lender an amendment to this Lease (as of the date of the Substitution) subjecting the Substitute Project to this Lease and removing the Replaced Project from this Lease, together with a recordable amendment to the memorandum of this Lease in form reasonably acceptable to Landlord, and a consent of Tenant acknowledging that this Lease, as so amended, has been assigned to Lender in the same form as the consent of Tenant to the assignment to Landlord of the Lease with respect to the Replaced Project;

(xiv) Tenant shall have delivered to Landlord and Lender an amendment or supplement (as of the date of Substitution) to any Guarantor's guaranty of this Lease, executed by the appropriate Guarantor, and confirming that such guaranty, as amended or supplemented, remains in full force and effect;

(xv) Tenant shall have delivered to Landlord, Lender and the Rating Agencies a certification by Tenant relating to the Substitute Project containing representations and warranties as similar as possible to those made by Seller to Landlord in that certain Contract of Sale (the "Contract of Sale") dated of even date herewith, by and between Landlord, as purchaser, and Seller, as seller, relating to the Replaced Project and containing representations and warranties with respect to documents delivered by Tenant in connection with the Substitution which are as similar as possible to those made by Tenant to Landlord and Lender in Tenant's Certificate, as defined in and delivered pursuant to that certain Loan Agreement of even date herewith, between Landlord and Lender (the "Loan Agreement");

(xvi) Tenant shall have delivered, and shall have caused each Guarantor, if any, to deliver, to Landlord, Lender and the Rating Agencies, a certificate which
(1) confirms that no Event of Default exists at the time of the Rejectable Substitution Offer or on the applicable Lease Termination Date, (2) states that all conditions precedent relating to such Substitution set forth in this Lease and, as required by the Indenture, set forth in the Indenture, have been complied with, (3) states that the representations and

warranties contained in the closing certificate delivered by it pursuant to the Loan Agreement and in any Operative Documents (as defined in the Indenture and as amended in connection to the Substitution) to which it is a party are true and correct in all material respects on and as of the Lease Termination Date on which the Substitution is concluded, with respect to itself, the Operative Documents to which it is a party (including any amendment or supplement thereto in connection with such Substitution) and the Substitute Project, and (4) contains such other representations and warranties as Landlord or, as required by the Indenture, Lender or the Rating Agencies, may require, provided that such other representations and warranties are generally consistent with the representations and warranties given in connection with the execution and delivery of the Lease. If any such certificate cannot be given because it would be inaccurate, such certificate shall disclose the inaccuracy of such representation and warranty and such certificate shall be acceptable if the disclosure therein would be reasonably satisfactory to a prudent lending institution making a loan similar to the Loan. As required by the Indenture, any such certificate shall be in form and substance satisfactory to the Rating Agencies;

(xvii) Tenant shall have delivered to Landlord and Lender
(1) updates certified by Tenant of all organization documentation related to such entity and/or the formation, structure, existence, good standing and/or qualification to do business of such entity similar to that delivered to Lender in connection with the origination of the Loan; (2) good standing certificates, or certificates of qualification to do business in the jurisdiction in which the Substitute Project is located (if required in such jurisdiction) and (3) evidence of the authority of such entity to undertake the Substitution and any actions taken in connection with such substitution;

(xviii) Tenant shall have delivered, and shall have caused each Guarantor, if any, to deliver, to Landlord, Lender and the Rating Agencies (1) an opinion or opinions of counsel admitted to practice under the laws of the state in which the Substitute Project is located, which counsel and which forms of opinion are acceptable to Landlord and, as required by the Indenture, to the Rating Agencies and, as required by the Indenture, which would be reasonably satisfactory to a prudent lending institution making a loan similar to the Loan, stating that (A) the Operative Documents entered into by Tenant or by such Guarantor delivered pursuant to this Lease and the Indenture with respect to the Substitute Project are legal, valid, binding and enforceable in accordance with their terms, subject to the laws applicable to creditors' rights and equitable principles, and (B) that Tenant and each Guarantor is qualified to do business in good standing under the laws of the jurisdiction where the Substitute Project is located or that such entity is not required by applicable law to qualify to do business in such

jurisdiction, (2) an opinion of the respective counsel for Tenant and each Guarantor acceptable to Landlord and, as required by the Indenture, to the Rating Agencies and, as required by the Indenture, which would be reasonably satisfactory to a prudent lending institution making a loan similar to the Loan stating that the Operative Documents entered into by Tenant or by such Guarantor with respect to the Substitute Project were duly authorized, executed and delivered by such entity and that the execution and delivery of such Operative Documents and the performance by such entity of its respective obligations thereunder will not cause a breach of, or a default under, any agreement document or instrument to which it is a party or to which it or its properties are bound; and (3) as required by the Indenture, an opinion or counsel acceptable to the Rating Agencies stating that the Substitution and the related transactions do not constitute a fraudulent conveyance under applicable bankruptcy and insolvency laws;

(xix) Tenant shall have delivered to Landlord and Lender such additional documents, similar to those required in connection with the execution and delivery of this Lease and the Indenture, as Landlord or, as required by the Indenture, Lender may reasonably request or, as required by the Indenture, in such form as required by the Rating Agencies and to Lender, to enable them to determine compliance with the terms of this Lease and the Indenture;

(xx) As required by the Indenture, Tenant shall have caused Lender to receive such other and further approvals, opinions, documents and information in connection with the Substitution as the Rating Agencies may have requested; and

(xxi) All out-of-pocket expenses of Lender and, on an after-tax basis, all reasonable out-of-pocket expenses of Landlord shall be paid in connection with the Substitution, including, without limitation, title charges, transfer tax charges, recording charges, filing fees, taxes, mortgage and intangible taxes, documentary stamp taxes and other related expenses, reasonable legal fees and expenses, appraisal fees, survey costs, income taxes, if any, as a result of the Substitution, costs for Phase I (and, if necessary, Phase II) environmental reports, and all other costs necessary to provide documentation to Landlord and Lender meeting the requirements of Sections 3.3 and 3.4 of this Lease with respect to Substitution and at least equivalent to the documentation received by Landlord and Lender upon acquisition of the original Premises and the financing thereof and as the Rating Agencies may require. Tenant shall have paid all costs, expenses and fees, if any, of the Rating Agencies incurred in connection with the Substitution.

(xxii) Any report, document, instrument or opinion required to be delivered pursuant to this Section 3.4(d) if not acceptable to each of Landlord and Lender in their reasonable judgement, shall be deemed not to have been delivered hereunder.

(xxiii) If the Substitution is being made as a result of a Major Casualty or Major Condemnation, the Rent Coverage Ratio of the Substitute Project shall be equal to or greater than the lesser of (i) the Rent Coverage Ratio of the Replaced Project and (ii) the greater of (A) the Rent Coverage Ratio for the portfolio as set forth on Schedule J and (B) the Rent Coverage Ratio of all the Projects as of the end of the most recent fiscal quarter ending not less than 30 days prior to giving effect to the Substitution.

(xxiv) If the Substitution is being made other than in connection with a Major Casualty or Major Condemnation, the Rent Coverage Ratio of the Substitute Project shall be equal to or greater than the Rent Coverage Ratio of the Replaced Project.

(xxv) (A) If the Substitution is being made pursuant to
Section 3.3(b) or (c), the gross sales at the Substitute Project shall not have decreased for the previous twelve quarters (or such lesser period of at least four quarters as such Substitute Project shall have been open for business) by a percentage greater than the lesser of (i) the percentage decrease, if any, in the gross sales of the Replaced Project and
(ii) the percentage decrease, if any, in the gross sales at the Projects in the aggregate, in each case during the same period, or (B) if the Substitution is being made pursuant to Section 3.3(a), the gross sales at the Substitute Project shall not have decreased for the previous twelve quarters (or such lesser period of at least four quarters as such Substitute Project shall have been open for business) by a percentage greater than the percentage decrease, if any, in the gross sales of the Replaced Project during the same period.

(xxvi) Tenant shall have satisfied such other conditions reasonably required by the Lender.

(e) Landlord shall have received an indemnity against adverse tax consequences from the exchange in form and substance reasonably satisfactory to Landlord.

(f) Upon satisfaction of the conditions for Substitution set forth above, Landlord shall, on the applicable Lease Termination Date, convey title to the Replaced Project to Tenant subject only to the Permitted Exceptions (which shall not include any mortgage created by Landlord) and any other liens, charges, restrictions or encumbrances created by Tenant or any of its creditors, employees, contractors, agents or created by Landlord pursuant to the express terms hereof or with Tenant's consent, in exchange for the Substitute Project, which shall be transferred to Landlord subject only to the encumbrances listed in the title insurance policy referred to in Section 3.4(d) above.

(g) If a Substitute Project is substituted for a Replaced Project, the following modifications shall be made to the Schedules: (i) the legal description for the Substitute Project shall be substituted for the legal description of the Replaced Project on Schedule A; (ii) the Permitted Exceptions for the Substitute Project shall be substituted for the Permitted Exceptions of the Replaced Project on Schedule B; (iii) Schedule C shall not be revised; (iv) Schedule D shall not be revised; and (E) the Substitute Project shall be substituted for the Replaced Project in Schedule F, but the numbers in Schedule F shall not be revised.

(h) Upon a Substitution, the lien of any Indenture shall be released from the Replaced Project and recorded as a lien against the Substitute Project. In the event of such a Substitution, on the applicable Lease Termination Date, the Net Proceeds, if any, payable in connection with the Major Casualty or Major Condemnation (or the right to receive the same when made if payment therefor has not yet been made) shall, notwithstanding anything to the contrary contained in Section 3.2, be assigned and/or turned over to the Tenant on the closing of the title for the Substitute Project, provided that all amounts payable to Landlord in connection with such a Substitution have been paid.

3.5 Rejection of Rejectable Offer or Rejectable Substitution Offer.

(a) If the Landlord rejects a Rejectable Offer with respect to a particular Project by a written notice given to the Tenant within the time period set forth in Section 3.3, then this Lease shall terminate on the Lease Termination Date with respect to that Project (and the Basic Rent shall be reduced as set forth in Section 3.1(c)) and any Net Proceeds (other than those specifically relating to the Tenant's Personal Property), if any, payable in connection with a Major Casualty or Major Condemnation (or the right to receive the same when made if payment therefor has not yet been made) shall be assigned or paid and belong to the Landlord, and, in addition, the Tenant shall pay to the Landlord an amount equal to any deductible or self insurance amount in effect under the policy or policies insuring the risk relating to such Major Casualty or Major Condemnation, if any, all Basic Rent accrued as of such Lease Termination Date and all other amounts then accrued or due and payable by the Tenant under this Lease with respect to the applicable Project; provided that Tenant shall not be liable to Landlord or Lender for any Make Whole Premium. During such time as an Indenture encumbers a particular Project, no rejection of a Rejectable Offer with respect to that Project shall be effective unless countersigned by the Lender.

(b) If the Landlord rejects a Rejectable Substitution Offer with respect to a particular Project by a written notice given to the Tenant within the time period set forth in Section 3.3(a), (b) or (c) then this Lease shall terminate on the Lease Termination Date with respect to that Project (and the Basic Rent shall be reduced as set forth in Section 3.1(c)) and any Net Proceeds (other than those specifically relating to the Tenant's Personal Property), if any, payable in connection with a Major Casualty or Major Condemnation (or the right to receive the same when made if payment therefor has not yet been made) shall be assigned or paid and belong to the Landlord, and, in addition, the Tenant shall pay to the Landlord all Basic Rent accrued as of such Lease Termination Date and all other amounts then accrued or due and payable by the Tenant under this Lease with respect to the applicable Project; provided that

Tenant shall not be liable to Landlord or Lender for any Make Whole Premium. During such time as an Indenture encumbers a particular Project, no rejection of a Rejectable Substitution Offer with respect to that Project shall be effective unless countersigned by the Lender. It is specifically understood that a failure to meet the conditions for Substitution set forth in Section 3.4 is not a rejection of a Rejectable Substitution Offer, but such failure shall be handled in accordance with the provisions of Section 3.4(b).

3.6 Less than Major Condemnation or Casualty.(a) If, after a Condemnation or Casualty, Tenant is not permitted to give or, if permitted, does not give notice of its intention to terminate this Lease with respect to a particular Project as provided in Section 3.2 (and is not required to give such notice pursuant to Section 3.2), then this Lease shall continue in full force and effect and Tenant shall, at its expense, promptly rebuild, replace or repair the Premises in conformity with the requirements of Sections 2.5 and 3.8 so as to restore the applicable Project (in the case of Condemnation, as nearly as practicable) to the condition and fair market value thereof immediately prior to such occurrence (or if the Project was under renovation at such time, to the condition and fair market value thereof at the time of completion of renovation). Prior to any such rebuilding, replacement or repair, Tenant shall deliver its reasonable estimate of the cost thereof, which shall be subject to the approval of Landlord, which approval shall not be unreasonably withheld (the cost approved by Landlord is referred to as the "Restoration Cost").

(b) If the repair constitutes a Material Alteration, the Restoration Cost must be confirmed by an architect reasonably acceptable to Landlord (an "Architect"), and if the Restoration Cost is more than the amount of Net Proceeds, the Tenant shall deliver or cause to be delivered to Landlord or, if required by the Indenture, Lender (i) cash collateral in an amount equal to such excess, or (ii) if acceptable to Lender, an unconditional, irrevocable, clean sight draft letter of credit, in form and substance, and issued by a bank, acceptable to Landlord and Lender, in their respective reasonable discretion, in the amount of such excess, or (iii) evidence acceptable to Landlord and, if required by the Indenture, Lender, that the excess has been expended in performing the restoration work prior to any funds being drawn from the Net Proceeds.

(c) The Restoration Cost shall be paid first out of Tenant's own funds to the extent that the Restoration Cost exceeds the Net Proceeds payable in connection with such occurrence, after which expenditure Tenant shall be entitled to receive the Net Proceeds, which shall be disbursed from time to time upon Landlord, and if required by the Indenture, Lender being furnished with (i) evidence satisfactory to Landlord of the estimated Restoration Cost,
(ii) a fixed price or guaranteed maximum cost construction contract for restoration satisfactory to Landlord, (iii) prior to the commencement of restoration, all immediately available funds in addition to the Net Proceeds that in Landlord's judgment are required to complete the proposed restoration,
(iv) such architect's certificates, waivers of lien, contractor's sworn statements, title insurance endorsements, bonds, plats of survey, permits, approvals, licenses and such other documents and items as Landlord may reasonably require and approve in Landlord's discretion, and (iv) all plans and specifications for such restoration, such plans and specifications to be approved by Landlord prior to commencement of any work. Landlord may, at Tenant's expense,

retain or, if required by the Indenture, permit Lender to retain, a consultant to review and approve all requests for disbursements, which approval shall also be a condition precedent to any disbursement. No payment made prior to the final completion of the restoration shall exceed 90% of the value of the work performed from time to time; funds other than the Net Proceeds shall be disbursed prior to disbursement of such Net Proceeds; and at all times, the undisbursed balance of such Net Proceeds remaining in the hands of Landlord, or if required by the Indenture, Lender, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Landlord by or on behalf of Tenant for that purpose, shall be at least sufficient in the reasonable judgment of Landlord to pay for the cost of completion of the restoration, free and clear of all liens or claims for lien.

(d) Without limiting the generality of Section 2.1, the Basic Rent and the Additional Rent payable under the provisions of this Lease shall not be affected, altered or reduced by any Casualty or Condemnation (except as specifically set forth in Section 3.1 with respect to a termination of the Lease upon payment of the amounts required therein), and Tenant's obligation to continue to pay Basic Rent and Additional Rent shall continue notwithstanding any such Condemnation or Casualty.

(e) [Intentionally deleted.]

(f) Notwithstanding any other provision of this Section, if either Tenant or a Guarantor is then currently maintaining an Acceptable Credit Rating and in Tenant's reasonable judgment the cost of the Work (as hereinafter defined) is less than $100,000 with respect to any one casualty or partial condemnation (and the cost of all outstanding Work for all Projects is less than $250,000), such Work can be completed in less than one hundred twenty (120) days (subject to Force Majeure) and no Event of Default has occurred and is continuing and if allowed pursuant to the provisions of the Indenture, then Landlord, upon request by Tenant, shall permit Tenant to apply for and receive the Net Proceeds directly from the insurer or payor thereof (and Landlord shall advise such insurer or payor and Lender to pay over such Net Proceeds directly to Tenant), provided that Tenant shall promptly and diligently commence and complete such Work in a good and workmanlike manner.

(g) If an Event of Default shall have occurred and be continuing or if Tenant (i) shall fail to submit to Landlord for approval plans and specifications (if required pursuant to Section 3.6(b) hereof) for the Work (approved by the Architect and by all governmental authorities whose approval is required), (ii) after any such plans and specifications are approved by all such governmental authorities, the Architect, Landlord and Lender, shall fail to commence promptly such Work, (iii) after Lender or Landlord has released the Net Proceeds to the extent provided for under this Lease, shall fail to diligently prosecute such Work to completion, or (iv) materially fail in any other respect to comply with the Work obligations under this Section 3.6, then in addition to all other rights available under this Lease, at law or in equity, Landlord or Lender, or any receiver of the applicable Project or any portion thereof, upon fifteen (15) days' prior written notice to Tenant (except in the event of emergency in which case no notice shall be required), may (but shall have no obligation to) perform or cause to be performed such Work, and may take such other steps as either Landlord or Lender deems advisable (but such

performance shall not cure the default of Tenant). In addition, Tenant acknowledges that if an Event of Default shall have occurred and be continuing, Lender may apply any Net Proceeds towards payment of the Indenture, which payment shall not relieve Tenant of any of its obligations under this Lease. Tenant hereby waives, for Tenant and all others holding under or through Tenant, any claim, other than for gross negligence or willful misconduct (subject to the provisions of Section 10.17(b)), against Landlord and Lender and any receiver arising out of any act or omission of Landlord or Lender or such receiver pursuant hereto, and Landlord or Lender may apply all or any portion of the Net Proceeds (without the need to fulfill any other requirements forth in this
Section 3.6) to reimburse Landlord or Lender or such receiver, for all amounts incurred in connection with the Work, and any costs not reimbursed to such parties shall be paid by Tenant to Landlord (or such other party) on demand, together with interest thereon at the Rate from the date such amounts are advanced until the same are paid by Tenant.

3.7 Insurance.

(a) Tenant shall maintain insurance on each of the Projects of the following character:

(i) (A) all-risk property insurance covering each and every component of the Projects against physical loss or damage, including, but not limited to fire and extended coverage, collapse, windstorm, flood and earth movement in an amount at least equal to the greater of (1) the then replacement value of each Project without deduction for physical depreciation and (2) 100% of the allocated amount of the Loan with respect to each Project. Such insurance policy shall contain an agreed amount endorsement waiving any coinsurance penalty; (B) rent loss coverage or business interruption insurance in an amount sufficient to provide proceeds which will cover the actual amount of Basic Rent for a period of at least twelve (12) months.

(ii) "boiler and machinery" insurance with respect to damage (not insured against pursuant to Section 3.7(a)(i) hereof) to the boilers, pressure vessels or similar apparatus located on the Projects for risks normally insured against under boiler and machinery policies.

(iii) commercial general liability insurance with respect to the Projects written on an occurrence basis (not claims made basis) with a limit of not less than $2,000,000 per occurrence and at least $4,000,000 in the aggregate. Such coverage shall include, but shall not be limited to, premises/operations, explosion, collapse, underground hazards, hostile fire and limited sudden and accidental pollution, contractual liability, independent contractors, property damage, bodily injury, advertising injury and personal injury liability. Such insurance shall not contain an exclusion for punitive or exemplary damages when insurable by law.

(iv) (A) workers' compensation insurance in accordance with statutory provisions or qualified self-insurance covering accidental injury, illness or

death of an employee of Tenant while at work or in the scope of his employment with Tenant and (B) employer's liability in an amount not less than $1,000,000 or such greater amount as may be required by law. Such coverage shall not contain any occupational disease exclusion.

(v) excess or umbrella liability insurance in an amount not less than $10,000,000 written on an occurrence basis (i.e., not claims made basis) providing coverage limits in excess of the insurance limits in 3.7(a)(iii) and (iv) above for all operations of the Tenant. Such insurance shall follow the form of the primary insurance and drop down in case of exhaustion of underlying limits. Such insurance shall not contain an exclusion for punitive or exemplary damages where insurable under law.

(vi) if such Project or any part thereof is situated in an area now or subsequently designated as a "Zone 1 or Zone 2 Earthquake Zone" by the U.S. Geological Survey, earthquake insurance in an amount of at least $5,000,000 in the aggregate.

(vii) during any period during which construction is conducted on a Project and during which period the construction and materials are not covered by the existing policies, premium prepaid insurance policies covering such Project (which during construction shall be on an "All-Risk" perils, including theft, "Builder's Risk," "Completed Value" form) in amounts equal to the replacement costs of the Improvements (including construction materials and personal property on or off site) covering insurance risks no less broad than those covered under a Standard Multi Peril (SMP) policy form, which contains a 1987 Commercial ISO "Causes of Loss-Special Form," with coverage for such other expenses as Landlord, or, as required by the Indenture, Lender may reasonably require. Such insurance shall contain an agreed amount endorsement (such amount to include foundation and underground pipes) and bear a one hundred percent (100%) co-insurance clause. Said policies shall contain a permission to occupy endorsement.

(viii) business automobile coverage in an amount not less than $1,000,000 Combined Single Limit - Bodily Injury and Property Damage.

(ix) such other insurance, including without limitation terrorism insurance (subject to the provisions of the letter agreement of even date herewith between Tenant and Landlord), as may from time to time be reasonably required by Landlord, or, as required by the Indenture, by Lender in order to protect their respective interests, provided that such insurance is then customarily maintained by prudent owners of comparable properties.

(x) during any period when construction is conducted on a Project, worker's compensation, employers' liability, commercial auto liability, and

commercial general liability insurance (including contractual liability and completed operations coverage) for each general contractor written on a 1986 or 1993 standard "ISO" occurrence basis form or equivalent and excess umbrella coverage, carried during the course of construction, with coverage for blanket contractual, personal injury, bodily injury and property damage of not less than the amounts set forth below for single limit coverage, or such greater limits as may be required from time to time by Landlord, or, as required by the Indenture, Lender consistent with insurance coverage on properties similarly constructed, occupied and maintained: if the value of the work to be performed is less than $10,000, $1,000,000; if the value of the work to be performed is at least $10,000 but less than $50,000, $2,000,000; if the value of the work to be performed is at least $50,000 but less than $500,000, $5,000,000; and if the value of the work to be performed is $500,000 or more, $10,000,000.

(b) (i) All such insurance shall be issued by companies authorized to transact business in the state in which the applicable Project is located and having an Alfred M. Best Company rating of "A" or better and financial size category of not less than IX, and a Standard & Poor's rating of "BBB" or better as to claims paying ability; provided, however, that if the company providing the primary coverage is so rated, the company providing a layer of excess coverage may have an Alfred M. Best Company rating of "A-" or better. No liability insurance policy maintained by Tenant shall provide for a deductible or self-insured retention in excess of $100,000, except to the extent applicable law shall require that the insurance carrier shall be responsible for payment with respect to all claims covered (including amounts payable under the deductible), such policy shall reflect such obligation and the full amount of any deductible shall be collateralized by a letter of credit, the beneficiary of which is such insurance carrier. No casualty or other insurance policy maintained by Tenant (other than liability policies) shall provide for a deductible or self-insured retention in excess of (A) the greater of $250,000 or 5% of replacement value per location for windstorm damage at coastal Properties or (B) $100,000 per occurrence for all other covered perils, other than for flood.

(ii) Notwithstanding the preceding provisions of this Section 3.7(b), at any time that the Tenant shall maintain a Credit Rating of BBB from Standard and Poors' Rating Group and Baa2 from Moody's Investors Service Inc., or higher, Tenant shall be entitled to have deductibles or self-insured retentions described in the last sentence of Section 3.7(b)(i) so long as such risks retained do not exceed with respect to clause (A) of such Section 10% of replacement value per location and with respect to clause (B) of such Section $500,000. In addition, if Tenant shall have one or more blanket insurance policies with respect to the matters described in Section 3.7(a), such policies may have higher deductibles or self-insured retention than permitted by Section 3.7(b), but not in excess of $500,000, if the Tenant shall have posted for the benefit of the Landlord and Lender a Letter of Credit in the amount of the difference between (x) the deductible or self-insured retention provided in such policy and (y) the deductible or self-insured retention permitted by Section
3.7(b). Such Letter of Credit, notwithstanding anything to the contrary, may be issued by Bank of America, Citibank,

JPMorgan Chase or Wachovia so long as the long term unsecured debt obligations of such bank are rated at least "A" by Standard & Poor's Rating Group.

(c) Every such policy (other than any general public liability, auto liability or worker's compensation policy) shall bear a mortgagee's loss payable clause or a mortgagee endorsement in favor of the mortgagee or beneficiary (whether one or more, and together with its or their successors and assigns, the "Lender") under each mortgage, deed of trust or similar security instrument creating a lien on the interests of Landlord in the Premises (whether one or more, the "Indenture"), and any loss under any such policy shall be payable to the Lender which has a first lien on such interests
(if there is more than one first Lender, then to the trustee for such Lenders) to be held and applied pursuant to this Article 3.

(d) All such insurance (other than any worker's compensation policy) shall be endorsed to provide that:

(i) such insurance will not be canceled or amended except after thirty (30) days' written notice to Landlord and Lender and that it shall not be invalidated by any act or negligence of Landlord, Tenant or any person or entity having an interest in the Premises, nor by occupancy or use of the applicable Projects for purposes more hazardous than permitted by such policy, nor by any foreclosure or other proceedings relating to a Project, nor by change in title to or ownership of a Project;

(ii) Landlord and Lender are each an additional insured with the understanding that any obligation imposed upon the insured (including, without limitation, the liability to pay premiums, but excluding any obligation of the insured to cooperate with any insurer or any insurer's representative in the investigation, defense or settlement of any claim covered under such insurance) shall be the sole obligation of Tenant and not that of any other insured;

(iii) all insurance proceeds payable under any policy of property, sprinkler or flood insurance with respect to the Premises shall be paid to Lender (or if no Lender exists, to Landlord);

(iv) the interests of the Lender shall not be invalidated by any action or inaction of the Landlord, Tenant or any other person, and such insurance shall insure the Lender regardless of any breach or violation by the Tenant, the Landlord or any other person of any warranties, declarations or conditions contained in the policies relating to such insurance or application therefor;

(v) the interests of Landlord shall not be invalidated by any action or inaction of the Tenant or any other person, and such insurance shall insure the Landlord regardless of any breach or violation by the Tenant or any other

person of any warranties, declarations or conditions contained in the policies relating to such insurance or application therefor;

(vi) the insurer thereunder waives all rights of subrogation against the Lender and Landlord and waives any right of set-off and counterclaim and any other right of deduction, whether by attachment or otherwise;

(vii) such insurance shall be primary to Tenant without right of contribution from any other insurance carried by or on behalf of Tenant with respect to Tenant's operation only or Landlord or the Lender or any other person with respect to its interest in a Project;

(viii) all terms, conditions, insuring agreements and endorsements, with the exception of limits of liability, shall operate in the same manner as if there were a separate policy covering each insured.

(e) Tenant shall deliver to Landlord and Lender originals of the applicable insurance policies (without any necessity for request) or binding certificates evidencing renewal and original or duplicate certificates of insurance (without any necessity for request), satisfactory to and permitting reliance thereon by Landlord and Lender, evidencing the existence of all insurance which is required to be maintained by Tenant under this Lease, such delivery to be made (i) upon the execution and delivery hereof and (ii) at least thirty (30) days prior to the expiration of any such insurance. In the event of any transfer by Landlord of its interest in the Premises or any financing or refinancing of Landlord's interest in any Project, Tenant shall, upon not less than ten (10) days' prior written notice, deliver to Landlord or any Lender providing such financing or refinancing, as the case may be, certificates of all insurance required to be maintained by Tenant under this Lease naming such transferee or such Lender, as the case may be, as an additional named insured to the extent required herein effective as of the date of such transfer, financing or refinancing. Tenant shall not obtain or carry separate insurance concurrent in form or contributing in the event of loss with that required by this Section 3.7 unless Landlord is additionally named insured therein and unless there is a Lender endorsement in favor of Lender with loss payable as provided herein. Tenant shall immediately notify Landlord whenever any such separate insurance is obtained and shall deliver to Landlord and Lender the policies or certificates evidencing the same. Any insurance required under this Lease may be provided under blanket policies provided that the Premises and the applicable coverage applicable thereto are specified therein.

(f) Any loss under any property damage insurance required to be maintained by Tenant shall be adjusted by Landlord and Tenant pursuant to the provisions of Section 3.2(a), provided, that if an Event of Default shall have occurred and be continuing, Landlord shall have the sole right to make such adjustment and collection, but Tenant shall be entitled to any proceeds relating to Tenant's Personal Property (subject to Landlord's right to offset any amounts owed to Landlord under this Lease).

(g) If Tenant fails to maintain and deliver to Landlord the original policies and certificates of insurance required by this Lease, Landlord may, at its option, procure such

insurance, and Tenant shall reimburse Landlord in the amount of all such premiums thereon promptly, upon demand by Landlord, with interest thereon at the Rate from the date paid by Landlord to the date of repayment; provided, however, that this sentence shall not prevent any default under this Section 3.7 from becoming an Event of Default.

(h) (1) If required by Landlord, Tenant agrees that it shall deposit with Landlord, or, if directed by Landlord, to Lender (or its designee) (Landlord hereby irrevocably directs Tenant to make such deposits with Lender as long as the Indenture shall remain outstanding, and Tenant hereby grants a security interest in such account to Landlord and consents to the pledge of and the granting of a security interest in such account by Landlord to Lender) on each Payment Date, as Additional Rent, one twelfth (1/12) of the estimated insurance premiums necessary to pay for renewal of all insurance required to be maintained by Tenant hereunder (collectively, the "Estimated Premiums") at least thirty (30) days prior to expiration of any policy as reasonably estimated by Landlord. To the extent permitted by applicable law, neither Landlord nor Lender or its designee, as Depository, shall be required to maintain the Estimated Premiums in an account separate from other funds of such party or to deposit any such amounts in an interest-bearing account. Tenant shall deposit with Depository, prior to the date which is thirty (30) days prior to the due date of insurance premiums, such additional amount as may be necessary to provide Depository with sufficient funds in such deposit account to pay each such insurance premium at least thirty (30) days in advance of the due date thereof. Depository shall apply the aforesaid deposits and interest, if any, thereon for such purpose not later than the last day on which any such insurance premiums are due or disburse or cause Depository to disburse them to Tenant upon presentation of evidence of payment and a certificate of an officer of Tenant in form and substance satisfactory to Landlord. If, at any time, the amount of any insurance premiums are increased or Landlord or Lender receives information that such insurance premiums will be increased, or if Landlord shall determine in its reasonable judgement that the amounts of such deposit will be insufficient for the payments due, and if the monthly deposits then being made by Tenant for this purpose (if continued) would not make up a fund sufficient to pay such insurance premiums thirty (30) days prior to the due date, said monthly deposits thereupon shall be increased and Tenant immediately shall deposit with the Depository, on demand, sufficient moneys so that the moneys then on hand for the payment of said insurance premiums, plus the increased payments and such additional sums demanded, shall be sufficient so that the Depository shall have received from Tenant adequate amounts to pay such insurance premiums at least thirty (30) days before such insurance premiums become due and payable. In the event the amount of the funds deposited by Tenant exceeds the amount necessary to fully fund the Estimated Premiums, then Landlord shall decrease the amount required for subsequent deposits under this Section 3.7(h). For purposes of determining whether the Depository has on hand sufficient moneys to pay any particular insurance premium at least thirty (30) days prior to the due date therefor, deposits for each category of insurance premium shall be treated separately, it being the intention that the Depository shall not be obligated to use moneys deposited for the payment of an item not yet due and payable to the payment of an item that is due and payable. Notwithstanding the foregoing, it is understood and agreed that (i) to the extent permitted by applicable law, deposits provided for hereunder may be held by the Depository in a single bank account and commingled with other funds of the Depository, and (ii) the Depository may, if Tenant fails to make any deposit required hereunder, apply deposits made

for any one insurance premium for the payment of the same, any other insurance premium or any outstanding Basic Rent or Additional Rent. If an Event of Default shall have occurred and be continuing under this Lease, all deposits then held by the Depository shall be applied on account of any and all sums due under this Lease and Tenant shall forthwith pay the resulting deficiency in accordance with the terms hereof. If Landlord ceases to have any interest in any Project, Landlord shall direct the Depository to transfer to the person or entity who owns or acquires such interest in such Project and is the transferee of the Landlord's interest in this Lease, the deposits made pursuant to the provisions hereof. In addition, in the event that Lender (or a servicing agent on Lender's behalf) is the Depository, Lender shall have the right to transfer the deposits (or to cause its servicing agent to transfer such deposits) to any transferee of the Indenture or to the holder of any substitute Indenture. Upon any such transfer of the deposits, after acknowledgement of such transfer by the transferee and notice thereof to Tenant, the transferor shall be deemed to be released from all liability with respect thereto and Tenant agrees to look to the transferee solely with respect thereto, and the provisions hereof shall apply to each successive transfer of the said deposits. Tenant shall be deemed the owner of such deposits and shall pay any taxes associated therewith.

(2) Tenant shall not be required to make the deposits required by Section 3.7(h) so long as (i) Tenant shall pay all insurance premiums as the same become due and payable before delinquency, (ii) Tenant shall, upon request, furnish to Landlord receipts for payment of all insurance premiums or other evidence of such payment reasonably satisfactory to Landlord, (iii) no Event of Default shall have occurred and be continuing, (iv) Tenant has a Net Worth in excess of $100,000,000 and (v) Tenant is maintaining a Rent Coverage Ratio with respect to all Projects of at least 1.25:1. Tenant's obligation to make the deposits required by Section 3.7(h) shall immediately resume and shall continue
(x) in the event of the failure of any condition set forth in clauses (i), (ii) or (iii) above, until the termination or earlier expiration of this Lease, (y) in the event of the failure of the condition set forth in clause (iv) above, until such time as Tenant's Net Worth shall be equal to or greater than $150,000,000 and (z) in the event of the failure of the condition set forth in clause (v) above, until such time as Tenant's Rent Coverage Ratio with respect to all Projects is equal to or greater than 1.5:1.

(i) Notwithstanding anything in Section 3.7(h) to the contrary, Landlord shall waive the requirements of Section 3.7(h) so long as (i) no Event of Default shall have occurred and be continuing and (ii) Tenant shall have paid all premiums or Estimated Premiums at least thirty (30) days prior to the expiration date of any applicable policy and shall have supplied Landlord and Lender, in accordance with Section 3.7(e), evidence of such payment.

(j) The requirements of this Section 3.7 shall not be construed to negate or modify Tenant's obligations under Section 2.4.

3.8 Alterations.

(a) Tenant may, at its expense, make additions to and alterations of the Improvements, and construct additional Improvements (collectively, "Alterations"), provided that (1) the fair market value, residual value, utility and useful life of the applicable Project shall

not be reduced or lessened other than to a de minimis extent thereby or cause the Project to be characterized as "limited-use property," as defined in Rev. Proc. 2001-28, (2) such Alterations shall be expeditiously completed in a good and workmanlike manner, free and clear of liens and encumbrances, and in compliance with all applicable Legal Requirements and the requirements of all insurance policies required to be maintained by Tenant under this Lease, (3) Tenant shall not make any Alterations in violation of the terms of any restriction, easement, condition, covenant or other matter affecting title to or use of a Project and (4) no Material Alterations (as hereinafter defined), shall be made unless Landlord's prior written consent shall have been obtained, which consent shall not be unreasonably withheld, delayed or conditioned, unless an Event of Default shall have occurred and be continuing in which case such consent may be withheld by Landlord in its sole discretion. "Material Alteration" is defined as either (A) Structural Work (as hereinafter defined), or (B) a demolition of any material portion of the Improvements, or (C) Alterations which would materially and adversely affect the building systems or equipment, or (D) Work which involves the construction of a shared common or party wall on a property line which separates a Project from adjacent land, or (E) Work for which the Estimated Cost is in excess of $150,000 at any one time for any particular Project or which would cause Work then being conducted for all Projects to exceed $500,000 at any one time, excluding, for purposes of this clause (E) only, such other Work effected pursuant to standard renovation plans that have previously been approved by Landlord, and as required by the Indenture, Lender (it being understood that any request for such approval shall not be considered unless each of Landlord and Lender has received detailed plans and specifications, and other information with respect to the proposed renovations as may be reasonably requested). "Structural Work" is defined as Work which involves in any material respect any roof, load-bearing wall, structural beams, columns, supports, foundation or any other structural element of the Premises. "Estimated Cost" is defined as the estimated cost of materials, construction and labor (including architects, engineers or other professionals), as estimated by a licensed Architect (or if not required to be estimated by an Architect, as reasonably estimated by Tenant), which estimate together with a complete description of the Work and all related work shall be delivered to, and such estimate and description reasonably approved by, Landlord and, as required by the Indenture, Lender, before the commencement of any Work. In addition to the limitations set forth in (1) through (4) above, Tenant agrees that all Alterations, Material Alterations, Structural Work, restoration, repair and any other work which Tenant shall be required or permitted to do under the provisions of this Lease (hereinafter collectively called the "Work") shall be performed in each case subject to the following:

(i) Tenant shall not perform any Work which shall have a material adverse effect on the use or operation of any Project, as operated by Tenant as of the date hereof (except such adverse effect as shall occur during the period of time needed to complete the Work). Any Work when completed shall be of such a character as not to materially reduce the value or could reasonably be anticipated to materially reduce net operating income of the affected Project below its value immediately prior to the commencement of such Work or damage to such Project necessitating such Work or change.

(ii) Except with respect to adverse effects occurring during the period of time needed to complete the applicable Work, no Work shall be performed by Tenant if the same would materially reduce the usable square footage of the applicable Project, or would materially weaken, temporarily or permanently, the structure of the applicable Project or any part thereof, or reduce the permitted uses thereof under applicable zoning laws or impair other amenities of such Project.

(iii) No Material Alterations shall be commenced until plans and specifications (including layout, architectural, mechanical and structural drawings, where appropriate), prepared by an Architect shall have been submitted to and approved by Landlord (such approval not to be unreasonably withheld and such approval to be deemed denied if Landlord has not responded within 30 days of submission), and no such Work shall be undertaken except under the supervision of the Architect.

(iv) The reasonable cost and expense paid to third parties (including Landlord's asset manager or, as required by the Indenture, any servicer retained by Lender) of Landlord's and Lender's respective (A) review of any plans and specifications required to be furnished pursuant to this Lease and (B) reasonable review/supervision of any such Work shall be paid by Tenant to Landlord within ten (10) days after demand.

(v) All Work shall be commenced only after all required municipal and other governmental permits, authorizations and approvals shall have been obtained by Tenant, at its own cost and expense, and copies thereof delivered to Landlord. Landlord will, on Tenant's written request, promptly execute any documents necessary to be signed by Landlord to obtain any such permits, authorizations and approvals, provided that Tenant shall bear any expense or liability of Landlord in connection therewith; provided, however, that none of the foregoing shall, in any manner, result in a change in zoning or otherwise have a material adverse affect on the ability to use such Project as currently operated by Tenant.

(vi) If the Work shall constitute a Material Alteration, it shall not be commenced until Tenant shall have obtained and delivered to Landlord, and as required by the Indenture, Lender, either (A) a performance bond and a labor and materials payment bond (issued by a corporate surety licensed to do business in the state in which such Project is located and satisfactory to Landlord and, as required by the Indenture, Lender), each in an amount equal to the Estimated Cost of such Work and in form otherwise satisfactory to Landlord, and as required by the Indenture, Lender, or (B) such other security as shall be reasonably satisfactory to Landlord, and as required by the Indenture, Lender; provided, that if at the time the Work is commenced (w) either Tenant or a Guarantor then

maintains and continues to maintain until such Work is completed an Acceptable Credit Rating, (x) no Event of Default shall have occurred and be continuing, (y) the Estimated Cost of the Work with respect to a particular Project does not exceed $250,000 and (z) the aggregate Estimated Cost of all Work then being undertaken by Tenant with respect to all of the Projects does not exceed $500,000, then Tenant shall not be required to comply with this subsection (vi).

(vii) All Work shall be performed in a good and workmanlike manner, and in accordance with all Legal Requirements, as well as any plans and specifications therefor which shall have been approved by Landlord. All Work shall be commenced and completed in a commercially reasonable manner.

(viii) Subject to the terms of Section 2.6 hereof, the cost of all Work shall be paid promptly, in cash, so that the Premises and Tenant's leasehold estate therein shall at all times be free from (A) liens for labor or materials supplied or claimed to have been supplied to any Project or Tenant, and (B) chattel mortgages, conditional sales contracts, title retention agreements, security interest and agreements, and financing agreements and statements.

(ix) Upon completion of any Work, Tenant, at Tenant's expense, shall obtain certificates of final approval of such Work required by any governmental or quasi-governmental authority and shall furnish Landlord with copies thereof, and, if the Work constituted Material Alterations, together with "as-built" plans and specifications for such Work.

(x) Any Work shall be subject to inspection at any time and from time to time by any of Landlord or, as required by the Indenture, Lender, their respective architect(s), or their duly authorized construction representatives, and if any such party upon any such inspection shall be of the opinion that the Work is not being performed in accordance with the provisions of this Section 3.8 or the plans and specifications, or that any of the materials or workmanship are unsound or improper, Tenant shall correct any such failure and shall replace any unsound or improper materials or workmanship. Anything contained herein to the contrary notwithstanding, any different procedure for the performance of Work which may be required under any Indenture shall take precedence over and be in addition to the procedures provided for in this Lease.

(xi) Except as may be expressly provided to the contrary under this Lease with respect to Severable Alterations or with respect to Tenant's Personal Property, all Alterations installed in or upon any Project at any time during the Term shall become the property of Landlord (and shall not

constitute Tenant's Personal Property) and shall remain upon and be surrendered with the Premises unless Landlord, by notice to Tenant no later than ninety (90) days prior to the date the lease Term expires as set forth on Schedule C hereto (such date, the "Expiration Date"), elects to have the same removed or demolished by Tenant, in which event, the same shall be removed from the Project by Tenant prior to the termination of this Lease, at Tenant's expense. Tenant may expressly request in Tenant's written request for consent that Landlord determine its election prior to installation (which written request shall include the estimated cost of removal and restoration). Tenant shall immediately repair any damage to any Project caused by its removal of any of the Severable Alterations or Tenant's Personal Property or Alterations which remain the property of Tenant pursuant to the terms of this Section. All property permitted or required to be removed by Tenant at the end of the Term remaining in any Project after Tenant's removal shall be deemed abandoned and may, at the election of Landlord, either be retained as Landlord's property or may be removed from such Project by Landlord at Tenant's expense. The provisions of this
Section shall survive the expiration or earlier termination of the Term.

(b) Tenant may, at its cost and expense, install, or place upon or reinstall, or replace and remove from any Project any Tenant's Personal Property. Subject to and conditioned upon compliance with the provisions of
Section 3.8(a) above, Tenant may make Alterations or undertake construction which requires sharing the use of existing facilities and utilities, provided that reciprocal easement agreements and joint use agreements allocate ownership, use and expenses to the reasonable satisfaction of Landlord, and provided that the same comply with the provisions of Section 3.10. No such construction shall impair the structural and functional integrity of any Project as an independent commercial property, in compliance with Legal Requirements, at the time the Alterations are made or at the end of the Term of this Lease.

3.9 Severable Alterations. Alterations that (1) are readily removable without causing damage to a Project by more than a minimal extent, (2) will not reduce the value, useful life or utility of the applicable Project other than to a de minimis extent if removed, and (3) are not required for the lawful occupancy of the applicable Project are sometimes referred to herein as "Severable Alterations". Title to Severable Alterations will remain in Tenant and shall be treated for purposes of this Lease as Tenant's Personal Property unless the cost thereof shall have been paid or financed by Landlord. If Tenant does not purchase the applicable Project upon termination of this Lease with respect to such Project, Landlord shall have the right to purchase any or all such Severable Alterations for fair market value at the termination of this Lease, such fair market value to be determined by following the appraisal procedure set forth in Section 3.4(c)(i). It is specifically understood that the F&E shall not, in any event, be considered to be Severable Alterations.

3.10 Easements.

(a) Landlord agrees from time to time during the Term of this Lease, at the request of Tenant, without additional consideration (1) to sell, assign, convey, or otherwise transfer an interest in any Project of a nature described in this Section 3.10 to any Person legally empowered to take such interest under the power of eminent domain which Person has indicated that it intends to so do, (2) to grant easements, licenses, rights of way and other rights and privileges in the nature of easements, of such nature, extent and duration as Tenant may reasonably request, provided that such easements, licenses, rights of way and other rights and privileges are customarily granted by prudent operators, managers or owners of properties similar to the Projects;
(3) to release or relocate existing easements and appurtenances which are for the benefit of any Project; (4) to dedicate or transfer unimproved portions of a Project for road, highway or other public purposes; (5) to execute petitions to have a Project annexed to any municipal corporation or utility district; (6) to execute amendments to any covenants and restrictions affecting a Project; and
(7) to execute and deliver any instrument necessary or appropriate to confirm or effect such grants, releases, dedication, transfer, petition or amendment to any person in each of the foregoing instances, the same to be without consideration, but only if, in each of the foregoing instances (i) such grant, release, dedication, transfer, petition or amendment is not detrimental to the proper conduct of business of Tenant on the applicable Project, (ii) such grant, release, dedication, transfer, petition or amendment does not materially impair the effective use of the Project for its intended purposes or materially and adversely affect its value, useful life or utility, (iii) Tenant reasonably considers the consideration, if any, being paid for such grant, release, dedication, transfer, petition or amendment to be fair and adequate, (iv) for so long as this Lease is in effect, Tenant will perform all obligations, if any, of Landlord under the applicable instrument, and (v) Landlord and Lender shall have received (W) a certificate from the appropriate officer of Tenant certifying as to the satisfaction of the conditions described in clauses (i) through (iv) above, (X) a duly authorized undertaking of Tenant and each Guarantor, in form and substance reasonably satisfactory to Landlord, to the effect that Tenant will remain obligated under this Lease, and Guarantor will remain obligated under its guaranty of Tenant's obligations under this Lease, to the same extent as if such grant, release, dedication, transfer, petition amendment had not been made, and (Y) such instruments, certificates (including evidence of authority), surveys, title insurance policy endorsements, and

opinions of counsel reasonably acceptable to Landlord, as Landlord may reasonably request. Any easement that imposes any obligation or liability on Landlord shall expressly provide that it is without recourse to Landlord (except to the extent of Landlord's interest in the Project), and that any lien arising by virtue of the nonperformance of obligations under such easement shall be subordinate to the lien of any Indenture. As required by the Indenture, the grant of any such easement and the taking of any other action pursuant to this
Section 3.10, shall be subject to Lender's consent, which consent shall not be unreasonably withheld or delayed. Tenant shall be responsible for the payment of all costs and expenses paid to third parties (including the reasonable costs and expenses of Landlord and Lender) incurred in connection with this Section 3.10. Subject to the provisions of Sections 3.2 and 3.6, any consideration received for the grants, releases, dedications, transfers, petitions or amendments outlined in this Section shall be the property of Landlord.

(b) Without limiting the generality of any other provision of this Lease requiring payments of Additional Rent, if any Project is presently, or should at sometime in the future be, affected by an easement agreement, Tenant agrees during the Term of this Lease (i) to perform all of the duties and obligations of Landlord under such easement agreement (including, without limitation, paying any and all costs, charges and assessments imposed thereunder), (ii) to comply with all of the terms, conditions, covenants, provisions, restrictions and agreements set forth in such easement agreement,
(iii) that any obligation or liability arising under any such easement agreement shall be nonrecourse to Landlord (except to the extent of Landlord's interest in the Project and this Lease), (iv) that any lien against the Project arising by virtue of the nonperformance of obligations under such easement agreement shall be subordinate to the lien of any Indenture; and (v) to indemnify, defend and hold the Indemnified Parties harmless from and against every, any and all demands, claims and assertions of liability, or action relating to Tenant's failure to comply with the obligations set forth in this Section 3.10(b). Landlord agrees that it shall not (except as may be required by any governmental agency or in connection with any condemnation proceeding) enter into any easement without the prior written consent of Tenant, which consent shall not be unreasonably withheld or delayed.

3.11 Fixtures and Equipment. Tenant acknowledges that the F&E is the property of Landlord and that Landlord has granted, and may hereafter grant, a security interest therein to Lender. Tenant hereby represents and warrants to Landlord that the F&E is free and clear of any and all liens, security interests or other encumbrances as of the date hereof, other than the lien and security interest of the Indenture. Tenant hereby agrees to maintain the F&E in good condition and repair, reasonable wear and tear excepted. In no event shall any of the Landlord's F&E be discarded or removed from a Project unless such F&E is replaced by similar F&E with a value and utility, not less than, by more than a de minimis amount, the value and utility of the replaced F&E.

3.12 Right of First Offer.

(a) If Landlord desires to sell or offer for sale all of the Premises to any unaffiliated third party, Landlord shall first provide Tenant in writing all of the material economic terms and conditions of the proposed sale, including, without limitation, the price (the

"Offered Terms") and the requirements for compliance with or satisfaction of any transfer, assignment and assumption obligations under any loan then outstanding, and shall offer Tenant the opportunity to purchase such interest for the same purchase price and otherwise on substantially the same terms and conditions as such Offered Terms (other than representations and warranties that may be offered as an inducement to certain third parties). Tenant shall have the right to accept the Offered Terms by written notice to the Landlord given within thirty (30) Days after Tenant's receipt of the Offered Terms; provided, however, that the Tenant shall have satisfied any transfer, assignment and assumption obligations and any other requirements of Landlord in connection therewith under any loan then outstanding prior to Tenant's consummation of such purchase. If Tenant does not accept the Offered Terms within thirty (30) Days after receipt of the Offered Terms from the Landlord (with silence being deemed a rejection of such offer), Tenant shall be deemed to have rejected the Offered Terms and the Landlord may enter into a contract to sell such interest during the twelve (12) month period beginning on the date of the expiration of the applicable period, provided, that a sale resulting from such offer shall be consummated on substantially the same terms as the Offered Terms (other than representations and warranties that may be offered as an inducement to certain third parties) (it being agreed that any sale at a price that is equal to or greater than 95% of the purchase price contained in the Offered Terms shall be considered to be substantially the same terms as to price). If such sale is not consummated within such twelve (12) month period, the provisions of this Section 3.12 shall again apply in respect of any proposed offer of any such interest in such Project to an unaffiliated third party whether made during such twelve (12) month period or thereafter.

(b) Notwithstanding anything contained to the contrary in this Section 3.12, Tenant shall not have the right of first offer under Section 3.12(a) (i) while an Event of Default has occurred and is continuing; (ii) following a retention of a Project by the Landlord in connection with a rejection of a Rejectable Offer or a Rejectable Substitution Offer; (iii) at any time after the expiration or earlier termination of this Lease; (iv) in connection with a foreclosure or deed in lieu thereof delivered in connection with the exercise of remedies under the Indenture; or (v) in connection with a conveyance by Lender or its designee subsequent to a foreclosure or deed in lieu thereof.

ARTICLE 4.

4.1 Assignment and Subletting.

(a) Tenant shall not be permitted to transfer or assign this Lease (whether directly or indirectly, including without limitation by any indirect transfer effected through a Subject Transfer (as hereinafter defined); provided, however, that so long as no Event of Default has occurred and is continuing, Tenant may assign its interest in this Lease with the prior written consent of Landlord and Lender (such consent not to be unreasonably withheld) or pursuant to Section 4.1(d). No assignment permitted hereunder shall (a) relieve Tenant of any of its obligations, liabilities or duties hereunder, which shall be and remain those of a principal and not a guarantor, (b) cause any portion of the Premises to be tax-exempt use property within the

meaning of Section 168(h) of the Internal Revenue Code of 1986, as amended, or
(c) be to an assignee that is bankrupt or insolvent as of the effective date of such assignment.

(b) The Tenant may sublease all or any part of the Premises at any time on such terms and conditions as Tenant may desire in its sole discretion, without the consent of Landlord; provided, however, that (i) any such sublease shall be expressly subject and subordinate to this Lease and the Indenture and shall not release Tenant from any of its obligations or liabilities under this Lease; (ii) no such sublease may be entered into if an Event of Default has occurred and is continuing; (iii) any sublessee shall not be bankrupt or insolvent at the inception of the sublease and shall be permitted to use the Premises only as permitted by Section 1.2; (iv) any such sublease shall be for a term that does not extend beyond the Primary Term or any Extended Term, Wintergreen Extended Term or FMV Extended Term that has been irrevocably elected; (v) the subtenant is not a tax-exempt entity within the meaning of
Section 168(h) of the Internal Revenue Code of 1986, as amended. Tenant shall supply copies of any sublease to Landlord upon request.

(c) Landlord and Lender shall not unreasonably withhold execution and delivery of a subordination, non-disturbance and attornment agreement in the form attached to this Lease as Exhibit I (a "Non-Disturbance Agreement"), in connection with a sublease by Lessee complying with Section 4.1(b), provided (i) such sublease is for an entire Project and for a term of not less than five (5) years, (ii) the rent payable under such sublease is equal to the greater of (A) the fair market rental value of such Project or (B) the Basic Rent allocable to such Project (such amount to be determined by multiplying the annual Basic Rent by a fraction, the numerator of which is the amount allocated to such Project in Schedule G, and the denominator of which is the aggregate amount allocated in Schedule G to all Projects then subject to this Lease), (iii) the terms of such sublease shall not be contrary to the terms of this Lease, (iv) either (A) the subtenant has an Acceptable Credit Rating, or (B) Tenant has an Acceptable Credit Rating and the subtenant (1) is a national or regional retailer that operates a portfolio of not less than ten (10) stores, (2) has a net worth of not less than $50,000,000 and (3) has a debt to cash flow ratio of not more than 3.5 to 1 for each of the three (3) preceding fiscal years of subtenant, (v) the subtenant is obligated to provide financial reporting similar to the reporting requirements applicable to Tenant or a Guarantor hereunder and (vi) the subtenant shall have acknowledged that neither Landlord nor Lender shall be liable to subtenant for any act or omission of Tenant. Lessor and Lender shall execute and deliver the Non-Disturbance Agreement with respect to such sublease within twenty (20) Business Days after request by Tenant so long as (x) Tenant pays all reasonable costs and expenses (including reasonable attorneys' fees and expenses) in connection therewith, (y) no Event of Default has then occurred and is continuing and (z) the Tenant shall have delivered a certificate to the Lessor and the Lender confirming compliance with this Section 4.1.

(d) Any Subject Transfer (as hereinafter defined) shall require the prior written consent of each of Landlord and Lender; provided, however, that such consent shall not be required if immediately after giving effect to the Subject Transfer, (a) Tenant shall have a credit rating at least equal to its credit rating on the day preceding the Subject Transfer, (b) Tenant or any surviving or successor entity shall assume in writing the obligations under this Lease, (c) no

Event of Default shall have occurred and be continuing, and (d) Tenant shall have delivered a certification that all conditions set forth above in this subparagraph (d) have been satisfied. For the purposes of this Section 4.1(d) "Subject Transfer" shall mean the sale, assignment or other transfer, in a single transaction or a series of related transactions, of 50.1% or more of the outstanding common stock of Tenant (without regard to any sale, assignment, gift or other transfer to any spouse or direct descendant of any holder of such common stock as of the date hereof) to any "person" or "group" within the meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended.

(e) Neither this Lease nor the Term hereby demised shall be mortgaged or pledged by Tenant, nor shall Tenant mortgage or pledge its interest in any sublease of any portion of the Premises or the rentals payable thereunder. Any such mortgage or pledge, any sublease made other than as expressly permitted by this Section 4.1, and any assignment of Tenant's interest under this Lease made other than as expressly permitted by this Section 4.1, shall be void.

(f) Without implying any authority of Tenant to assign this Lease or sublet any Projects (other than as set forth herein), if this Lease is assigned pursuant to the provisions hereof, or if any Project or any part thereof is sublet or occupied by any person or entity other than Tenant, Landlord may, after an Event of Default has occurred and is continuing, collect rent from the assignee, subtenant or occupant, and apply the net amount collected to the Basic Rent and Additional Rent herein reserved, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, subtenant or occupant as Tenant, or a release of Tenant from the further performance by Tenant of the terms, covenants, and conditions on the part of Tenant to be observed or performed under this Lease, and, subsequent to any assignment or subletting, Tenant's liability under this Lease shall continue notwithstanding any subsequent modification or amendment hereof or the release of any subsequent tenant under this Lease from any liability, to all of which Tenant hereby consents in advance.

ARTICLE 5.

5.1 Conditional Limitations; Default Provisions.

(a) Any of the following occurrences or acts shall constitute an "Event of Default" under this Lease:

(i) if Tenant shall (1) fail to pay any Basic Rent, Additional Rent or other sum as and when required to be paid by Tenant under this Lease, and such failure shall continue for two (2) Business Days (with respect to Basic Rent or 5 Business Days (with respect to Additional Rent or any other sum) after delivery of written notice from Landlord (or Lender) to Tenant that such payment was not received when due, or (2) fail to observe or perform any other provision of this Lease (other than those referred to in clauses (vii) and (ix) of this
Section 5.1(a)) and such failure shall continue for thirty
(30) days after written notice to Tenant of such failure

(provided, that in the case of any such failure which is capable of being cured but cannot be cured by the payment of money and cannot with diligence be cured within such 30-day period, if Tenant shall commence promptly to cure the same and thereafter prosecute the curing thereof with diligence, the time within which such failure may be cured shall be extended for such period as is necessary to complete the curing thereof with diligence, but in no event to exceed one hundred eighty
(180) days from the date of such failure; or;

(ii) if any representation or warranty of Tenant, Seller or Guarantor set forth herein, in the Contract of Sale or in any notice, certificate, demand, request or other document or instrument delivered to Landlord in connection with this Lease shall prove to be incorrect in any material respect as of the time when the same shall have been made; or

(iii) if Tenant or any guarantor of Tenant's obligations under this Lease (a "Guarantor") shall file a petition in bankruptcy or for reorganization or for an arrangement, administration, liquidation or receivership pursuant to any federal or state law (or any other law governing a Guarantor), or shall be adjudicated a bankrupt or become insolvent or shall make an assignment for the benefit of creditors or shall admit in writing its inability to pay its debts generally as they become due, or if a petition or answer proposing the adjudication of Tenant or a Guarantor as a bankrupt or its reorganization pursuant to any federal or state bankruptcy, liquidation, voluntary administration, administration, receivership, moratorium or trust law or any similar federal or state law shall be filed in any court and Tenant or such Guarantor shall consent to or acquiesce in the filing thereof or such petition or answer shall not be discharged or denied within ninety (90) days after the filing thereof; or

(iv) if a receiver, trustee, administrator or liquidator of Tenant or any Guarantor or of all or substantially all of the assets of Tenant or such Guarantor or of any Project or Tenant's estate therein shall be appointed in any proceeding brought by Tenant or a Guarantor, or if any such receiver, trustee or liquidator shall be appointed in any proceeding brought against Tenant or a Guarantor and shall not be discharged within ninety (90) days after such appointment, or if Tenant or a Guarantor shall consent to or acquiesce in such appointment; or

(v) if any Project shall have been left unoccupied and unattended for a period of thirty (30) days (other than as permitted by
Section 1.2(b)); or

(vi) if Tenant or a Guarantor shall dissolve or otherwise fail to maintain its legal existence; or

(vii) if Tenant shall default under Section 4.1(a), 4.1(b) or 4.1(d) or Schedule K of this Lease; or

(viii) if any Guarantor shall default under the provisions of its guaranty; or

(ix) if Tenant shall fail to maintain any insurance required to be maintained by Tenant in accordance with the terms and conditions of Section 3.7 of this Lease or the letter of even date herewith from Tenant to Landlord relating to insurance; or

(x) if Tenant shall default under Sections 7.2 and/or 7.3 of this Lease.

(xi) Any event that but for the giving of notice or the passage of time would be an Event of Default shall be a "Default."

(b) If an Event of Default shall have occurred and be continuing Landlord shall be entitled to all remedies available at law or in equity. Without limiting the foregoing, Landlord shall have the right to give Tenant notice of Landlord's termination of the Term of this Lease. Upon the giving of such notice, the Term of this Lease and the estate hereby granted shall expire and terminate on such date as fully and completely and with the same effect as if such date were the date herein fixed for the expiration of the Term of this Lease, and all rights of Tenant under this Lease shall expire and terminate, but Tenant shall remain liable as hereinafter provided.

(c) If an Event of Default shall have happened and be continuing, Landlord shall have the immediate right, whether or not the Term of this Lease shall have been terminated pursuant to Section 5.1(b), to re-enter and repossess the Premises and the right to remove all persons and property therefrom by summary proceedings, ejectment, any other legal action or in any lawful manner Landlord determines to be necessary or desirable, so long as Landlord is proceeding in accordance with applicable law and, if required under applicable law, under authority of a court of proper jurisdiction. Landlord shall be under no liability by reason of any such re-entry, repossession or removal. No such re-entry, repossession or removal shall be construed as an election by Landlord to terminate this Lease unless a notice of such termination is given to Tenant pursuant to Section 5.1(b).

(d) At any time or from time to time after a re-entry, repossession or removal pursuant to Section 5.1(c), whether or not the Term of this Lease shall have been terminated pursuant to Section 5.1(b), Landlord may (but shall be under no obligation to) relet any or all of the Projects for the account of Tenant, in the name of Tenant or Landlord or otherwise, without notice to Tenant, for such term or terms and on such conditions and for such uses as Landlord, in its absolute discretion, may determine. Landlord may collect any rents payable by reason of such reletting. Landlord shall not be liable for any failure to relet any of the Projects or for any failure to collect any rent due upon any such reletting.

(e) No expiration or earlier termination of the Term of this Lease pursuant to Section 5.1(b), by operation of law or otherwise, and no re-entry, repossession or removal

pursuant to Section 5.1(c) or otherwise, and no reletting of the Premises pursuant to Section 5.1(d) or otherwise, shall relieve Tenant of its liabilities and obligations under this Lease, all of which shall survive such expiration, termination, re-entry, repossession, removal or reletting.

(f) In the event of the expiration or earlier termination of the Term of this Lease or re-entry or repossession of the Premises or removal of persons or property therefrom by reason of the occurrence of an Event of Default, Tenant shall pay to Landlord all Basic Rent, Additional Rent and other sums required to be paid by Tenant, in each case together with interest thereon at the Rate from the due date thereof to and including the date of such expiration, termination, re-entry, repossession or removal; and thereafter, Tenant shall, until the end of what would have been the Term of this Lease in the absence of such expiration, termination, re-entry, repossession or removal and whether or not any Projects shall have been relet, be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed current damages: (i) all Basic Rent, Additional Rent and other sums which would be payable under this Lease by Tenant in the absence of any such expiration, termination, re-entry, repossession or removal, less (ii) the net proceeds, if any, of any reletting effected for the account of Tenant pursuant to Section 5.1(d), after deducting from such proceeds all expenses of Landlord in connection with such reletting (including, without limitation, all repossession costs, brokerage commissions, reasonable attorneys' fees and expenses (including fees and expenses of appellate proceedings), employees' expenses, alteration costs and expenses of preparation for such reletting). Tenant shall pay such liquidated and agreed current damages on the dates on which Basic Rent would be payable under this Lease in the absence of such expiration, termination, re-entry, repossession or removal, and Landlord shall be entitled to recover the same from Tenant on each such date.

(g) At any time after any such expiration or earlier termination of the Term of this Lease or re-entry or repossession of the Premises or removal of persons or property thereon by reason of the occurrence of an Event of Default, whether or not Landlord shall have previously collected any liquidated and agreed current damages pursuant to Section 5.1(f), Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord on demand, as and for liquidated and agreed final damages for Tenant's default and in lieu of all liquidated and agreed current damages beyond the date of such demand as outlined in Section 5.1(f) above (it being agreed that it would be impracticable or extremely difficult to fix the actual damages, and the liquidated and agreed final damages reasonably approximate to the actual damages Landlord would sustain on account of a Tenant Default or Event of Default, and the same are not intended to be a penalty), an amount equal to the excess, if any, of (a) the aggregate of all Basic Rent, Additional Rent and other sums which would be payable under this Lease, in each case from the date of such demand (or, if it be earlier, the date to which Tenant shall have satisfied in full its obligations under Section 5.1(f) to pay liquidated and agreed current damages) for what would be the then-unexpired Term of this Lease in the absence of such expiration, termination, re-entry, repossession or removal, discounted at a rate equal to the then yield on U.S. Treasury obligations of comparable maturity to the Term (the "Treasury Rate") over (b) the then fair rental value of the Premises for what would be such then unexpired Term of this Lease, discounted at the Treasury Rate for the same period (such excess being hereinafter referred to as "Liquidated Damages"). For purposes of determining value pursuant to this
Section 5.1(g), the following shall apply: (a) determinations of fair rental value shall be made by an MAI appraiser

(engaged by Landlord) who is a member of the American Institute of Appraisers, with copies of such determinations and supporting analysis to be provided to Tenant; and (b) all determinations of Liquidated Damages shall be binding on Tenant in the absence of manifest error. If any law shall limit the amount of liquidated final damages to less than the amount above agreed upon, Landlord shall be entitled to the maximum amount allowable under such law.

5.2 Bankruptcy or Insolvency.

(a) In the event that Tenant shall become a debtor in a case filed by or against debtor under Chapter 7 of the Bankruptcy Code and Tenant's trustee or Tenant shall elect to assume this Lease for the purpose of assigning the same or otherwise, such election to assume may be made only if the provisions of Sections 5.2(b) and 5.2(d) are satisfied as if the election to assume were made in a case filed under Chapter 11 of the Bankruptcy Code. If Tenant or Tenant's trustee shall fail to elect to assume this Lease within 60 days after the entry of the order for relief in the debtor's case or such additional time as provided by the court within such 60-day period, this Lease shall be deemed to have been rejected. Immediately thereupon Landlord shall be entitled to possession of the Premises without further obligation to Tenant or Tenant's trustee and this Lease upon the election of Landlord shall terminate, but Landlord's right to be compensated for damages (including, without limitation, liquidated damages pursuant to any provision hereof) or the exercise of any other remedies in any such bankruptcy proceeding shall survive, whether or not this Lease shall be terminated.

(b) In the event that Tenant shall become a debtor in a case under Chapter 11 of the Bankruptcy Code, or in a case filed under Chapter 7 of the Bankruptcy Code which is converted to Chapter 11, Tenant's trustee or Tenant, as debtor-in-possession, as the case may be, must elect to assume this Lease within one hundred twenty (120) days from the date of the entry of the order for relief in the debtor's case or Tenant's trustee or Tenant, as debtor-in-possession, as the case may be, shall be deemed to have rejected this Lease. In the event that Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, has failed to perform any of Tenant's obligations under this Lease within the time periods (excluding grace periods) required for such performance, no election by Tenant's trustee or the debtor-in-possession to assume this Lease, whether under Chapter 7 or Chapter 11, shall be permitted or effective unless each of the following conditions has been satisfied:

(1) Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, has cured all Events of Default under this Lease, or has provided Landlord with Assurance (as hereinafter defined) that it will cure all Events of Default susceptible of being cured by the payment of money within ten
(10) days from the date of such assumption and that it will cure all other Events of Default under this Lease which are susceptible of being cured by the performance of any act promptly after the date of such assumption.

(2) Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, has compensated Landlord, or has provided Landlord with Assurance that within ten (10) days from the date of such assumption it will compensate Landlord, for any actual pecuniary loss incurred by Landlord arising from any Event of Default as indicated in any

statement of actual pecuniary loss sent by Landlord to Tenant's trustee or Tenant as the debtor-in-possession, as the case may be.

(3) Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, has provided Landlord with Assurance of future performance of each of the obligations under this Lease, and shall also (i) deposit with Landlord, as security for the timely payment of rent under this Lease, an amount equal to one (1) advance installment (in addition to the installment then due as a result of Basic Rent being payable in advance pursuant to subitem (ii) below) of Basic Rent (at the rate then payable) which shall be applied to installments of Basic Rent in the inverse order in which such installments shall become due provided all the terms and provisions of this Lease shall have been complied with, (ii) agree that from and after such date all Basic Rent shall be due and payable in advance (rather than in arrears) on each Payment Date, and (iii) pay in advance to Landlord on the date each installment of Basic Rent is payable a pro rata share of Tenant's annual obligations for Additional Rent and other sums pursuant to this Lease, such that Landlord shall hold funds sufficient to satisfy all such obligations as they become due. The obligations imposed upon Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, by this Section shall continue with respect to Tenant or any assignee of this Lease after the conclusion of the debtor's bankruptcy case.

(4) The assumption of this Lease will not breach or cause a default under any provision of any other lease, mortgage, financing arrangement or other agreement by which Landlord is bound.

(ii) For purposes of this Section 5.2, Landlord and Tenant acknowledge that "Assurance" shall mean no less than: Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, has and will continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure Landlord that sufficient funds will be available to fulfill the obligations of Tenant under this Lease, and (x) there shall have been deposited with Landlord, or the Bankruptcy Court shall have entered an order segregating, sufficient cash payable to Landlord to fulfill the obligations of Tenant under this Lease, and/or (y) Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, shall have granted a valid and perfected first lien and security interest and/or mortgage in property of Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, acceptable as to value and kind to Landlord, to secure to Landlord the obligation of Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, to cure the Events of Default under this Lease, monetary and/or non-monetary, within the time periods set forth above.

(c) In the event that this Lease is assumed in accordance with Section 5.2(b) and thereafter Tenant is liquidated or files or has filed against it a subsequent petition under Chapter 7 or Chapter 11 of the Bankruptcy Code, Landlord may, at its option, terminate this Lease and all rights of Tenant under this Lease by giving Tenant notice of its election to so terminate within thirty
(30) days after the occurrence of any such event.

(d) If Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, has assumed this Lease pursuant to the terms and provisions of Sections 5.2(a) or 5.2(b) for the

purpose of assigning (or elects to assign) this Lease, this Lease may be so assigned only if the proposed assignee (the "Assignee") has provided adequate assurance of future performance (as hereinafter defined) of all of the terms, covenants and conditions of this Lease to be performed by Tenant. Landlord shall be entitled to receive all cash proceeds of such assignment. As used herein "adequate assurance of future performance" shall mean no less than that each of the following conditions has been satisfied:

(i) The Assignee has furnished Landlord with either (1) (x) a copy of a credit rating of Assignee which Landlord reasonably determines to be sufficient to assure the future performance by Assignee of Tenant's obligations under this Lease and (y) a current financial statement of Assignee audited by a certified public accountant indicating a net worth and working capital in amounts which Landlord reasonably determines to be sufficient to assure the future performance by Assignee of Tenant's obligations under this Lease, or (2) a guarantee or guarantees, in form and substance satisfactory to Landlord, from one or more persons with a credit rating and net worth equal to or exceeding the credit rating and net worth of Tenant as of the date hereof.

(ii) The Assignee has obtained all consents or waivers from others required under any lease, mortgage, financing arrangement or other agreement by which Landlord is bound to permit Landlord to consent to such assignment.

(iii) The proposed assignment will not release or impair any guaranty of the obligations of Tenant (including the Assignee) under this Lease.

(e) When, pursuant to the Bankruptcy Code, Tenant's trustee or Tenant as the debtor-in-possession, as the case may be, shall be obligated to pay reasonable use and occupancy charges for the use of the Premises, such charges shall not be less than the Basic Rent, Additional Rent and other sums payable under this Lease.

(f) Neither the whole nor any portion of Tenant's interest in this Lease or its estate in the Premises shall pass to any trustee, receiver, assignee for the benefit of creditors, or any other person or entity, by operation of law or otherwise under the laws of any state having jurisdiction of the person or property of Tenant unless Landlord shall have consented to such transfer. No acceptance by Landlord of rent or any other payments from any such trustee, receiver, assignee, person or other entity shall be deemed to constitute such consent by Landlord nor shall it be deemed a waiver of Landlord's right to terminate this Lease as a result of any transfer of Tenant's interest under this Lease without such consent.

(g) In the event of an assignment of Tenant's interests pursuant to this Section 5.2, the right of Assignee to extend the Term of this Lease for an Extended Term, Wintergreen Extended Term or FMV Extended Term beyond the then Term of this Lease shall be extinguished.

5.3 Additional Rights of Landlord.

(a) No right or remedy under this Lease shall be exclusive of any other right or remedy, but shall be cumulative and in addition to any other right or remedy under this Lease or now or hereafter existing. Failure to insist upon the strict performance of any provision hereof or to exercise any option, right, power or remedy contained herein shall not constitute a waiver or relinquishment thereof for the future. Receipt by Landlord of any Basic Rent, Additional Rent or other sums payable under this Lease with knowledge of the breach of any provision hereof shall not constitute waiver of such breach, and no waiver by Landlord of any provision hereof shall be deemed to have been made unless made in writing duly executed by Landlord. Landlord shall be entitled to injunctive relief in case of the violation, or attempted or threatened violation, of any of the provisions hereof, or to a decree compelling performance of any of the provisions hereof, or to any other remedy allowed to Landlord by law or equity.

(b) Tenant hereby waives and surrenders for itself and all those claiming under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have to redeem any portion of the Premises or to have a continuance of this Lease after termination of Tenant's right of occupancy by order or judgment of any court or by any legal process or writ, or under the terms of this Lease, or after the termination of the Term of this Lease as herein provided, and (ii) the benefits of any law which exempts property from liability for debt or for distress for rent.

(c) If Tenant shall be in default in the observance or performance of any term or covenant on Tenant's part to be observed or performed under any of the provisions of this Lease, then, without thereby waiving such default, Landlord may, but shall be under no obligation to, take all action, including, without limitation, entry upon any or all of the Projects to perform the obligation of Tenant under this Lease immediately and without notice in the case of an emergency and upon 30 days written notice to Tenant in other cases (unless, within such 30 days Tenant shall have provided evidence to Landlord that Tenant has commenced and is diligently pursuing a cure of such default). All expenses incurred by Landlord in connection therewith, including attorneys' fees and expenses (including those incurred in connection with any appellate proceedings), together with interest thereon at the Rate from the date any such expenses were incurred by Landlord until the date of payment by Tenant, shall constitute Additional Rent and shall be paid by Tenant to Landlord upon demand.

(d) If Tenant shall be in default in the performance of any of its obligations under this Lease, Tenant shall pay to Landlord or Lender, as appropriate, on demand, all expenses incurred by Landlord or Lender as a result thereof, including reasonable attorneys' fees and expenses (including those incurred in connection with any appellate proceedings). If Landlord or Lender shall be made a party to any litigation commenced against Tenant and Tenant shall fail to provide Landlord or Lender with counsel reasonably approved by Landlord or Lender, as appropriate, and pay the expenses thereof, Tenant shall pay all costs and reasonable attorneys' fees and expenses in connection with such litigation (including fees and expenses incurred in connection with any appellate proceedings).

5.4 Waivers. If an Event of Default has occurred and is continuing, Tenant waives, to the extent permitted by law, the service of notice of Landlord's intention to re-enter as provided for in any statute, or to institute legal proceedings to that end. To the extent permitted by law, Tenant waives any and all right of redemption in case Tenant shall be dispossessed by a judgment or by warrant of any court or judge. The terms "enter", "re-enter", "entry" or "re-entry" as used in this Lease are not restricted to their technical legal meanings.

ARTICLE 6.

6.1 Notices and Other Instruments. All notices, consents, approvals and requests required or permitted under this Lease shall be given in writing and shall be effective for all purposes if hand delivered or sent by (i) certified or registered United States mail, postage prepaid, return receipt requested, or
(ii) expedited prepaid delivery service, either overnight delivery service of a nationally recognized courier, commercial or United States Postal Service, with proof of attempted delivery, addressed as follows:

(i) With respect to the Landlord:

Havertacq 11 LLC
c/o GE Capital Asset Management Attention:Robert Nowicki Haverty Sale/ Leaseback Asset Manager GE Capital Real Estate 1528 Walnut Street
Philadelphia, PA 19102 Fax: (215) 772-0361

with a copy to:

U.S. Realty Advisors, LLC Attention: David M. Ledy 1370 Avenue of the Americas, 29th Floor New York, NY 10019
Fax: (212)581-4050

with a copy to:

GE Capital Real Estate 292 Long Ridge Road
Stamford, CT 06927
Attention: General Counsel/Haverty Portfolio Fax: 203-357-6768

with a copy to:

Paul D. Walker, Esq.

Dewey Ballantine LLP

333 South Grand Street Suite 2600
Los Angeles, CA 90071-1530

with a copy to:

Havertacq 11 LLC
c/o GE Capital Asset Management Attention: Haverty Sale/Leaseback Asset Manager GE Capital Real Estate 1528 Walnut Street
Philadelphia, PA 19102

(ii) With respect to the Tenant:

Haverty Furniture Companies, Inc. 780 Johnson Ferry Road Suite 800
Atlanta, GA 30342
Attention: Chief Financial Officer and Real Estate Manager

with a copy to:

Robert H. West, Esq.

Smith, Gambrell & Russell, LLP

Promenade II, Suite 3100 1230 Peachtree Street, NE
Atlanta, Georgia 30309

Such address may be changed by any party in a written notice to the other parties hereto in the manner provided for in this Section. A notice shall be deemed to have been delivered: in the case of hand delivery, at the time of delivery; in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day; or in the case of expedited prepaid delivery, upon the first attempted delivery on a Business Day. A party receiving a notice which does not comply with the technical requirements for notice under this Section may elect to waive any deficiencies and treat the notice as having been properly given.

6.2 Estoppel Certificates, Financial Information.

(a) Tenant shall at any time and from time to time during the Term of this Lease (but in no circumstances more often than two (2) times per calendar year unless in connection with a sale or refinancing of all or any of the Projects) upon not less than ten (10) days prior written request by Landlord, promptly execute, acknowledge and deliver to Landlord or to any prospective purchaser, assignee or mortgagee or third party designated by Landlord, a certificate stating: (i) that this Lease is unmodified and is a valid, legal and binding obligation of Tenant in force and effect (or if there have been modifications, that this Lease is in force and effect as

modified, and identifying the modification agreements); (ii) the date to which Basic Rent and Additional Rent has been paid; (iii) whether there is any existing default by the Tenant in the payment of Basic Rent, whether there is an existing default by the Tenant in the payment of any Additional Rent beyond any applicable grace period, and whether there is any other existing default or Event of Default by either party hereto, and, if there is any such default, specifying the nature and extent thereof and the action taken to cure such default; (iv) whether there are any actions or proceedings pending against the Premises before any governmental authority to condemn any Project or any portion thereof or any interest therein and whether, to the knowledge of Tenant, any such actions or proceedings have been threatened; (v) whether there exists any material unrepaired damage to any Project from fire or other casualty; (vi) whether, to the knowledge of Tenant, there is any existing default by Landlord under this Lease; (vii) any offsets or defenses to the payment of Basic Rent or Additional Rent; (viii) that no actions, whether voluntary or involuntary or otherwise, are pending against Tenant under the bankruptcy laws of the United States or any state; and (ix) other items that may be reasonably requested. Any such certificate may be relied upon by any actual or prospective mortgagee or purchaser of a Project.

(b) Tenant shall deliver to Landlord and to any Lender (A) within 90 days after the end of each calendar quarter and within 120 days after each calendar year a statement of Tenant's EBITDAR with respect to each Project for the previous calendar year, certified by the chief financial officer, treasurer or chief accounting offices of Tenant and (B) copies of all financial statements, reports, notices and proxy statements sent by Tenant to its stockholders or to the Securities and Exchange Commission; provided, however, that if such statements and reports do not include the following information, Tenant shall deliver to Landlord and to Lender the following:

(i) Within one hundred twenty (120) days after the end of each fiscal year of Tenant, a balance sheet of Tenant and its consolidated subsidiaries as at the end of such year and a statement of profits and losses of Tenant and its consolidated subsidiaries for such year setting forth in each case, in comparative form, the corresponding figures for the preceding fiscal year in reasonable detail and scope and audited by independent certified public accountants of recognized national standing selected by Tenant; and within ninety (90) days after the end of each fiscal quarter of Tenant (except for the fourth fiscal quarter) a balance sheet of Tenant and its consolidated subsidiaries as at the end of such quarter and statements of profits and losses of Tenant and its consolidated subsidiaries for such quarter setting forth in each case, in comparative form, the corresponding figures for the similar quarter of the preceding year, in reasonable detail and scope, and certified by the chief financial officer of Tenant, the foregoing financial statements all being prepared in accordance with generally accepted accounting principles, consistently applied;

(ii) Within ninety (90) days after the end of each fiscal year of Tenant, Project-level statements of profits and losses as at the end of such year, setting forth, in comparative form, the corresponding figures for the preceding year, in reasonable detail and scope, certified by the chief financial officer or treasurer of Tenant, and prepared in accordance with generally accepted accounting principles.

(iii) With reasonable promptness, such additional information (including copies of public reports filed by Tenant) regarding the business affairs and financial condition of Tenant as Landlord may reasonably request.

(c) Upon request of Landlord, and upon concurrent compliance with the provisions of Section 6.2(d) below, Tenant shall enter into an agreement with any Lender pursuant to which Tenant shall agree:

(i) that in the event that any such Lender, or any purchaser at a foreclosure sale, shall acquire title to a Project, Tenant shall attorn to such Lender or such purchaser, as the case may be, as its new Landlord and this Lease shall continue as a direct lease between Tenant and such Lender or purchaser, as the case may be, with respect to the Premises upon the terms and conditions set forth herein except that such Lender or purchaser, as the case may be, shall not be liable to Tenant for any actions or omissions of Landlord prior to the date such Lender or purchaser, as the case may be, acquired title to the applicable Project;

(ii) Tenant shall not enter into any agreement with Landlord for the termination of this Lease unless Tenant receives the written consent of the Lender to such termination;

(iii) no rejection by Landlord of any Rejectable Offer pursuant to this Lease shall be effective unless Tenant receives the written consent of the Lender to such rejection, which consent Lender shall be required to provide if the Loan is paid in accordance with the terms thereof;

(iv) no rejection or acceptance by Landlord of any Rejectable Substitution Offer pursuant to this Lease shall be effective unless Tenant receives the written consent of the Lender to such rejection or acceptance, which consent Lender shall be required to provide if the Loan is paid in accordance with the terms thereof;

(v) no consent to the release of Tenant from liability under this Lease upon assignment of this Lease or sublease of any Project shall be effective unless Tenant shall receive the written consent of such Lender; and

(vi) no subordination, amendment or modification of this Lease shall be effective unless Tenant receives the written consent of the Lender thereto and written evidence in writing from the Rating Agencies that any such action shall not result in a withdrawal, qualification or downgrade of the current ratings for any securities issued in connection with any securitization or other secondary market transaction in which the indebtedness secured by the Indenture is included.

(d) Upon receipt of a request from Landlord for the agreement described in Section 6.2(c) above, Tenant's obligations under Section 6.2(c) above shall be conditioned upon such Lender entering into a non-disturbance and attornment agreement which shall provide that unless an Event of Default then exists under this Lease, Lender shall not join Tenant as a defendant in any action to foreclose upon the interest of Landlord in the Premises and, upon the Lender's foreclosure of Landlord's interest in the Premises by judicial proceedings or otherwise,

such Lender shall not be entitled to, nor shall it seek to terminate this Lease or Tenant's interest in the Premises, provided, that, Tenant, from and after the date of such succession, attorns to such Lender, pays to such Lender all items of Basic Rent, Additional Rent and other items accruing from and after such date and otherwise remains in compliance with all other terms and provisions of this Lease. Tenant hereby acknowledges that the Subordination, Non-disturbance and Attornment Agreement of even date herewith, among Tenant, Landlord and Lender constitutes such an agreement. In the event that Tenant shall execute a separate document for the benefit of a Lender relating to subordination, attornment or non-disturbance, such document shall control to the extent that it conflicts with the provisions of this Section 6.2(d).

ARTICLE 7.

7.1 Environmental Warranty. Tenant represents and warrants to Landlord and, as hereby required by Landlord, Lender:

(a) Tenant complies and at all times has been in full compliance with, and each of the Projects complies and has at all times been in full compliance with, in all material respects, all Environmental Laws;

(b) Tenant and each of the Projects has obtained and is in compliance with, all permits, licenses, authorizations, registrations and other governmental consents ("Environmental Permits") required by applicable Environmental Laws, and has made all appropriate filings for the issuance or renewal of such Environmental Permits;

(c) no written notices, complaints or claims of violation or non-compliance with Environmental Laws or potential liability under Environmental Laws or relating to environmental matters have been received by Tenant and, no federal, state or local environmental investigation or proceeding is pending or, to Tenant's knowledge, threatened with regard to any Project or any use thereof or any alleged violation of Environmental Laws with regard to any Project;

(d) none of the Projects, or any portion thereof, has been used by Tenant or by any prior owner for the generation, manufacture, storage, handling, use, transfer, treatment, recycling, transportation, processing, production, refinement or disposal of any Hazardous Substance other than in connection with the customary operation and maintenance of a Project and in commercially reasonable quantities as a consumer thereof, subject to, in any event, compliance with Environmental Laws;

(e) no underground storage tanks or surface impoundments have been installed in any Project by Tenant or by any other person or entity, and, except as otherwise set forth in any Phase I environmental report delivered to Landlord in connection with its acquisition of the Projects, there exists no Hazardous Substance contamination at, on, under, or within any Project, whether originating on or off the applicable Project;

(f) except as otherwise specifically set forth in the Phase I environmental reports delivered to Landlord in connection with its acquisition of the Projects, no Hazardous

Substances (including, without limitation, asbestos) are present or have been Released or are threatened to be Released at, on, under, within or emanating to or from any of the Projects or any portion thereof; and

(g) "Environmental Laws" shall mean and include the Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss.ss. 6901-6987, as amended by the Hazardous and Solid Waste Amendments of 1984 ("RCRA"), the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.ss. 9601-9657, ("CERCLA"), the Hazardous Materials Transportation Act of 1975, 49 U.S.C. ss.ss. 1801-1812, the Toxic Substances Control Act, 15 U.S.C. ss.ss. 2601-2671, the Clean Air Act, 42 U.S.C. ss.ss. 7401 et seq., the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss.ss. 136 et seq., and all other present and future federal, state, local and other governmental statutes, laws (including without limitation principles of common and decisional law), ordinances, rules, orders, statutes, decrees, judgments, injunctions, codes, regulations, permits, licenses, registrations, approvals and requirements, and authorizations of any Governmental Authority, relating to the environment, pollution, waste management, human health and safety as it relates to Hazardous Substances, natural resources or the regulation or control of or imposing liability or standards of conduct concerning Hazardous Substances (including without limitation manufacture, distribution in commerce, use and Release), as any of the foregoing may have been from time to time amended, supplemented or supplanted. "Hazardous Substance" shall mean collectively, (a) any petroleum (including crude oil or any fraction thereof), flammable explosive, radioactive material, radon gas, friable asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls, (b) any hazardous waste, hazardous material, hazardous substance, toxic substance, contaminant or pollutant, including, without limitation, those defined or regulated as such under any Environmental Law, and (c) any other chemical or other material (including products), substance or waste which is now or hereafter prohibited, limited or regulated under any Environmental Law. "Release" shall mean the release, deposit, disposal, migration or leak of any Hazardous Substance into or upon or under any land or water or air, or otherwise into the environment, including, without limitation, by means of burial, disposal, discharge, emission, injection, spillage, leakage, seepage, leaching, dumping, pumping, pouring, escaping, emptying, placement and the like.

7.2 Environmental Covenants. Tenant covenants and agrees that:

(a) During the Term of this Lease it (i) shall comply, and cause each of the Projects to comply, with all Environmental Laws applicable to the Projects, (ii) shall not use and shall prohibit the use of each of the Projects for regulated activities (other than in connection with the customary operation and maintenance of a Project and in commercially reasonable quantities as a consumer thereof, subject to, in any event, compliance with Environmental Laws),
(iii) shall not install or knowingly permit the installation on any of the Projects of any underground storage tanks or surface impoundments, (iv) shall not knowingly permit the presence, or Release or threatened Release under, within or emanating to or from any Project or any portion thereof or any Hazardous Substance (it being understood that Tenant shall not be obligated to remove existing non-friable asbestos unless hereafter required pursuant to any Legal

Requirement or unless such non-friable asbestos is hereafter disturbed by renovation, casualty or other event, in which event the non-friable asbestos shall be removed and provided further, that any existing non-friable asbestos shall be maintained in accordance with prudent industry standards, including an appropriate operations and maintenance program), and (v) shall cause any alterations of any of the Projects to be done in a way so as to not expose the persons working on or visiting the applicable Project to Hazardous Substances and in connection with any such alterations shall remove any Hazardous Substances present upon any Project which are not in compliance with Environmental Laws or which present a danger to persons working on or visiting the applicable Project.

(b) If any investigation, site monitoring, containment, cleanup, removal, restoration or other remedial work of any kind or nature (collectively, the "Remedial Work") is required at the Projects pursuant to an order or directive of any Governmental Authority (as hereinafter defined) or under any applicable Environmental Law, or in Landlord's opinion, after notice to Tenant, is reasonably necessary to prevent future liability under any applicable Environmental Law, because of or in connection with the current or future presence or Release, or threatened Release on, at, under, within or emanating to or from any Project or any portion thereof of any Hazardous Substance, Tenant shall (at Tenant's sole cost and expense), or shall cause such responsible third parties to, promptly commence and diligently prosecute to completion all such Remedial Work. In all events, such Remedial Work shall be commenced within thirty (30) days (or such shorter period as may be required under any applicable Environmental Law) after the earlier to occur of Tenant's knowledge that Remedial Work is required under applicable Environmental Laws or any written demand reasonably made therefor by Landlord; however, Tenant shall not be required to commence such Remedial Work within the above-specified time periods if (x) prevented from doing so by any Governmental Authority, (y) commencing such Remedial Work within such time periods would result in Tenant or such Remedial Work violating any Environmental Law or (z) Tenant is contesting in good faith and by appropriate proceedings the applicability of the relevant Environmental Laws in accordance with Section 2.6 of this Lease; provided, that such contest shall not (I) create or materially increase the risk of any civil or criminal liability of any kind whatsoever on the part of Landlord or (II) permit or materially increase the risk of the spread, Release or threatened Release of any Hazardous Substance into the air, soil, ground water, surface water, or soil vapor on, at, under, within or emanating from any Project or any portion thereof during the pendency of such contest. "Governmental Authority" shall mean any federal, state, regional or local government or political subdivision thereof and any Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

(c) All Remedial Work shall be performed by contractors, and under the supervision of an environmental consultant, each approved in advance by Landlord. All costs and expenses reasonably incurred in connection with such Remedial Work and Landlord's or Lender's reasonable monitoring or review of such Remedial Work which Lender or Landlord may, but are not obligated to, do (including reasonable attorneys' fees and disbursements and administrative and similar costs of Lender and Landlord, but excluding internal overhead) shall be paid by Tenant. If Tenant does not timely commence and diligently prosecute to completion the Remedial Work, then Landlord or, as required by the Indenture, Lender, may (but shall not

be obligated to) cause such Remedial Work to be performed. Tenant agrees to bear and shall pay or reimburse Landlord or Lender, as the case may be, on demand for all advances and expenses (including reasonable attorneys' fees and disbursements and administrative and similar costs of Landlord or Lender, but excluding internal overhead) reasonably relating to or incurred by Landlord or Lender in connection with such Remedial Work (including, without limitation, the monitoring, reviewing or performing any such Remedial Work). Tenant shall provide Landlord with copies of all reports, including laboratory data, prepared in connection with any Remedial Work.

(d) Except with the prior written consent of Landlord and, as required by the Indenture, Lender, which consent shall not be unreasonably withheld or delayed, Tenant shall not commence any Remedial Work or enter into any settlement agreement, consent decree or other compromise relating to any Hazardous Substances or Environmental Laws. Landlord's and Lender's prior written consent with respect to the commencement of Remedial Work shall not be required, however, if the presence, Release or threatened Release of Hazardous Substances on, at, under, within, or about, or emanating to or from a Project poses an immediate threat to the health, safety or welfare of any person or is of such a nature that an immediate remedial response is necessary, or if Lender or Landlord, as applicable, fails to respond to any notification by Tenant under this Section 7.2 within sixty (60) Business Days from the date of such notification. In such event, Tenant shall notify Lender and Landlord as soon as practicable of any action taken.

(e) Upon reasonable prior notice, Landlord and, as required by the Indenture, Lender and their agents, representatives and employees shall have the right at all reasonable times and during normal business hours, except to the extent such access is limited by applicable law, to enter upon and inspect, at Landlord's and/or Lender's sole cost and expense except as set forth below, all or any portion of a Project; provided, however, that such inspections shall not unreasonably interfere with the operation thereof. Either of Landlord or Lender, at its sole expense, except as provided in Section 7.2(f) hereof, may retain an environmental consultant to conduct and prepare reports of such inspections. The inspection rights granted to Landlord and Lender in this Section shall be in addition to, and not in limitation of, any other inspection rights granted to Landlord or Lender in this Lease, and shall expressly include the right to conduct soil borings and other customary environmental tests, assessments and audits in compliance with applicable Legal Requirements or other causes set forth in Section 7.2(b); provided that the environmental consultant performing such tests, assessments and audits shall maintain adequate insurance to cover any damage caused thereby (failing which Landlord or Lender, as applicable shall cause to be repaired any such damage).

(f) Tenant agrees to bear and shall pay or reimburse Landlord or, as required by the Indenture, Lender, on demand for all expenses (including reasonable attorneys' fees and disbursements and administrative and similar costs of Lender or Landlord, but excluding internal overhead) reasonably relating to or incurred by Lender or Landlord in connection with the inspections, tests and reports described in this Section 7.2(e) in the following situations:

(i) If Lender or Landlord, as applicable, has reasonable grounds to believe at the time any such inspection is ordered, that there exists an Environmental Violation (as hereinafter defined) or that a Hazardous Substance is present on, at, under, within or emanating to or from any Project, or is migrating to or from adjoining property, except under conditions permitted by applicable Environmental Laws and not prohibited by this Lease;

(ii) If any such inspection reveals an Environmental Violation or that a Hazardous Substance is present on, to, under, within or emanating to or from a Project or is migrating to or from adjoining property, except under conditions permitted by applicable Environmental Laws and not prohibited by this Lease; or

(iii) If an Event of Default exists at the time any such inspection is ordered.

(g) To the extent that Tenant has knowledge thereof, Tenant shall promptly, but not more than five (5) days after acquiring such knowledge, provide notice to Landlord and Lender of:

(i) any proceeding or investigation commenced or threatened by any Governmental Authority with respect to the presence, Release or threatened Release of any Hazardous Substance on, at, under, within or emanating to or from any Project;

(ii) any proceeding or investigation commenced or threatened by any Governmental Authority, against Tenant (or its subtenants or assignees) or Landlord, with respect to the presence, Release or threatened Release of Hazardous Substances from any property not owned by Landlord, including, but not limited to, proceedings under CERCLA;

(iii) all claims made or any lawsuit or other legal action or proceeding brought by any Person against (A) Tenant (or its subtenants or assignees) or Landlord or any Project or any portion thereof, or (B) any other party occupying such Project or any portion thereof, in any such case relating to any loss or injury allegedly resulting from any Hazardous Substance or relating to any violation or alleged violation of or liability arising under Environmental Law;

(iv) the discovery of any occurrence or condition on a Project or on any real property adjoining or in the vicinity of such Project, which reasonably could be expected to lead to such Project or any portion thereof being in violation of any Environmental Law or subject to any restriction on ownership, occupancy, transferability or use under any Environmental Law (collectively, an "Environmental Violation") or which might subject Landlord, Lender or Tenant (or its subtenants or assignees) to an Environmental Claim. "Environmental Claim" shall mean any notice, claim, administrative, regulatory or judicial action, suit, lien, order, consent decree or judgment, demand alleging or asserting liability or responsibility for investigatory costs, legal or other fees, costs of legal proceedings, cleanup costs, remediation costs, mitigative action,

corrective action, removal costs, response costs, damages to natural resources, personal injuries, contribution, indemnification, cost recovery, compensation, injunctive relief, losses, fines, or penalties (whether civil or criminal) arising out of, based on or resulting from
(i) the presence or Release or threatened Release of any Hazardous Substance at the Projects or (ii) any Environmental Law or (iii) any alleged injury or threat of injury to health, safety or the environment from Hazardous Substances; and

(v) the commencement and completion of any Remedial Work.

(h) Tenant will promptly transmit to Landlord and Lender copies of any citations, orders, notices or other communications received by Tenant from any Person with respect to the notices described in Section 7.2(g) hereof.

(i) Landlord and, as required by the Indenture, Lender may, but are not required to, join and participate in, as a party if they so determine, any legal or administrative proceeding or action concerning any Project or any portion thereof under any Environmental Law, if, in Landlord's or Lender's reasonable judgment, the interests of Landlord or Lender, as applicable, will not be adequately protected by Tenant. Tenant agrees to bear and shall pay or reimburse Landlord and Lender, on demand for all reasonable expenses (including reasonable attorneys' fees and disbursements and administrative and similar costs of Lender and Landlord, but excluding internal overhead) relating to or incurred by Landlord or Lender in connection with any such action or proceeding.

7.3 Environmental Indemnity. Tenant agrees to indemnify, reimburse, defend, and hold harmless the Indemnified Parties for, from, and against all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs and expenses, including, without limitation, interest, penalties, punitive and consequential damages, costs of any Remedial Work, reasonable attorneys' fees, disbursements and expenses, and reasonable consultants' fees, disbursements and expenses and administrative and similar costs of the Indemnified Parties, but excluding internal overhead), asserted against, resulting to, imposed on, or incurred by the Indemnified Parties, directly or indirectly, in connection with any of the following:

(a) events, circumstances, or conditions which are alleged to, or do,
(1) relate to the presence or Release or threatened Release on, at, under, within or emanating to or from any of the Projects or portion thereof of any Hazardous Substance, (2) form the basis of any violation or alleged violation, of, or liability or alleged liability under, any Environmental Law by Tenant (or any subtenants or assignees), Landlord or Lender or with respect to any such Projects, or (3) constitute Environmental Violations;

(b) any pollution, loss or damage to property or natural resources or threat to human health or safety or the health or safety of other living organisms, or the environment that is related in any way to Tenant's (or any subtenants' or assignees') or any previous owner's or operator's management, use, control, ownership or operation of any Project, including, without limitation, all onsite and offsite activities involving Hazardous Substances, and whether occurring, existing or arising prior to or from and after the date hereof;

(c) any Environmental Claim against any person or entity whose liability for such Environmental Claim Tenant, Seller or Landlord has or may have assumed or retained either contractually or by operation of law;

(d) any Remedial Work required to be performed pursuant to any Environmental Law or the terms hereof; or

(e) the breach of any environmental representation, warranty or covenant set forth in this Lease, (collectively, "Indemnified Environmental Losses"), INCLUDING IN EACH CASE, WITHOUT LIMITATION, WITH RESPECT TO EACH OF THE INDEMNIFIED PARTIES, AS THE CASE MAY BE, TO THE EXTENT SUCH INDEMNIFIED ENVIRONMENTAL LOSSES RESULT FROM THE STRICT OR ABSOLUTE LIABILITY OF SUCH INDEMNIFIED PARTY OR ITS NEGLIGENCE, EXCEPT IN EACH CASE, TO THE EXTENT THAT THEY RESULT SOLELY FROM THE INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (SUBJECT TO THE PROVISIONS OF SECTION 10.17(b)).

7.4 Waiver of Surety Defenses.

TENANT HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL DEFENSES AVAILABLE TO A GUARANTOR OR SURETY, WHETHER THE WAIVER IS SPECIFICALLY HEREIN ENUMERATED OR NOT. TENANT WAIVES ANY AND ALL RIGHTS WHICH TENANT HAS OR MIGHT HAVE UNDER SECTION 49-25 AND 49-26 OF THE VIRGINIA CODE ANNOTATED (1989), AS AMENDED.

7.5 Survival

The indemnity obligations of the Tenant and the rights and remedies of the Landlord under this Article 7 shall survive the termination of this Lease for an indefinite period of time.

ARTICLE 8.

8.1 Holdover

If the Tenant shall continue to occupy a Project after the Expiration Date or earlier termination of this Lease, then Tenant shall be in default under the Lease and deemed to be a holdover tenant, the tenancy of which shall be from month to month upon the same provisions and conditions set forth in this Lease, except that the monthly Basic Rent for the holdover period shall be an amount equal to the Applicable Percentage of the monthly Basic Rent that is, or would be, payable during the Extended Term or Wintergreen Extended Term pursuant to Schedule D, whether or not the Primary Term shall have been extended pursuant to the terms of this Lease. "Applicable Percentage" means (a) one hundred twenty-five percent (125%) for the first ninety (90) days for such holdover tenancy and (b) one hundred fifty percent (150%) thereafter. This Article 8 does not amount to a waiver of the Landlord's right of reentry or any other right granted under Article 5 and shall not constitute a consent to any holdover by Tenant.

ARTICLE 9.

9.1 Deferred Maintenance The parties acknowledge that certain of the Projects require deferred maintenance as described on Schedule L hereto (the "Deferred Maintenance"). Tenant shall complete all Deferred Maintenance no later than October 5, 2002. If Tenant has not completed all such Deferred Maintenance to the reasonable satisfaction of Landlord prior to such date, on October 5, 2002 Tenant shall deposit into a Required Repairs Account, for the benefit of Landlord, which account may be pledged to Lender (and Tenant hereby consents to such pledge), an amount equal to 125% of the cost of such Deferred Maintenance, which amount Tenant agrees shall be $46,912.50. Tenant shall provide evidence to Landlord and, as required by the Indenture, Lender of its performance pursuant to this Section 9.1, at which time, so long as no Event of Default shall have occurred and be continuing, any amount deposited into the Required Repairs Account shall be released to the Tenant.

9.2 Deferred Maintenance Work. Tenant agrees the Deferred Maintenance work which Tenant shall be required or permitted to do under the provisions of this Lease shall be performed in each case subject to the following:

(a) All Deferred Maintenance shall be commenced only after all required municipal and other governmental permits, authorizations and approvals shall have been obtained by Tenant, at its own cost and expense. Landlord will, on Tenant's written request, promptly execute any documents necessary to be signed by Landlord to obtain any such permits, authorizations and approvals, provided that Tenant shall bear any liability or reasonable expense of Landlord in connection therewith.

(b) All Deferred Maintenance shall be performed in a good and workmanlike manner, and in accordance with all Legal Requirements. All Deferred Maintenance shall be commenced and completed promptly.

(c) Subject to the terms of Section 2.6 hereof with respect to contests, the cost of all Deferred Maintenance shall be paid promptly, in cash, so that the Project and Tenant's leasehold estate therein shall at all times be free from (i) liens for labor or materials supplied or claimed to have been supplied to any Project or Tenant, and (ii) chattel mortgages, conditional sales contracts, title retention agreements, security interest and agreements, and financing agreements and statements.

(d) Upon completion of any Deferred Maintenance, Tenant, at Tenant's expense, shall obtain certificates of final approval of such Deferred Maintenance required by any governmental or quasi-governmental authority and shall furnish Landlord and Lender with copies thereof, and together with "as-built" plans and specifications for such Deferred Maintenance.

(e) Any Deferred Maintenance shall be subject to inspection at any reasonable time and from time to time by any of Landlord or, as required by the Indenture, Lender, their respective architect(s), or their duly authorized construction representatives, and if any such party upon any such inspection shall be of the reasonable opinion that the Deferred Maintenance

is not being performed in accordance with the provisions of this Article 9 or the plans and specifications, or that any of the materials or workmanship are unsound or improper, Tenant shall correct any such failure and shall replace any unsound or improper materials or workmanship.

(f) Except as may be expressly provided to the contrary under this Lease with respect to Tenant's Personal Property, all Deferred Maintenance installed in or upon any Project at any time during the Term shall become the property of Landlord and shall remain upon and be surrendered with the Project.

ARTICLE 10.

10.1 No Merger. There shall be no merger of this Lease or of the leasehold estate hereby created with the fee estate in any Project by reason of the fact that the same person acquires or holds, directly or indirectly, this Lease or the leasehold estate hereby created or any interest herein or in such leasehold estate as well as the fee estate in the applicable Project or any interest in such fee estate.

10.2 Surrender.

(a) Upon the expiration or earlier termination of this Lease, Tenant shall surrender the Premises to Landlord in the condition in which the Premises were originally received from Landlord, except as repaired, rebuilt, restored, altered or added to as permitted or required hereby and except for ordinary wear and tear. Tenant shall remove from the Premises on or prior to such expiration or termination all Severable Alterations and all Tenant's Personal Property and shall repair any damage caused by such removal. Property not so removed shall become the property of Landlord, and Landlord may cause such property to be removed from the Premises and disposed of, but the cost of any such removal and disposition and of repairing any damage caused by such removal shall be borne by Tenant. Landlord shall credit the net proceeds of a disposition of such property actually realized by Landlord against such costs to be borne by Tenant, provided that the Lease termination giving rise to such disposition was not caused by an Event of Default. If Tenant abandons Tenant's Personal Property, it shall become the property of Landlord as outlined above. The fair market value of the Tenant's Personal Property shall be determined by the mutual agreement of Landlord and Tenant, and if the parties cannot agree, by appraisal by an unrelated third-party appraiser. The provisions of this Section shall survive the termination or expiration of this Lease. Simultaneously with such surrender, Tenant shall deliver to Landlord:

(i) to the extent maintained by Lessee in the ordinary course of its business, originals of all transferable operating licenses, other licenses, certificates of occupancy, other certificates, permits, authorizations and approvals relating to the use and occupancy of the each Project;

(ii) to the extent in the possession or control of Tenant (x) plans and specifications for all mechanical, electrical and HVAC systems pertaining to each Project and

(y) as-built drawings, blueprints, operating and repair manuals, engineering logs and preventative maintenance records relating to each Project or any Alteration;

(iii) maintenance contracts, warranties or claims related to each Project;

(iv) keys to each Project and all locks located therein in the possession or control of Tenant;

(v) such other papers and documents in the possession or control of Tenant as may be necessary for the ownership or the proper operation of each Project; and

(vi) if and when required by Landlord, an instrument signed by Tenant which shall be sufficient to transfer to Landlord all right, title and interest of Tenant in and to all of the items described in subparagraphs (i) through (v) above, and which shall be satisfactory to Landlord in all other respects.

10.3 Separability; Binding Effect.

(a) Each provision hereof shall be separate and independent and the breach of any provision by Landlord shall not discharge or relieve Tenant from any of its obligations under this Lease. Each provision hereof shall be valid and shall be enforceable to the extent not prohibited by law. If any provision hereof or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. All provisions contained in this Lease shall be binding upon, inure to the benefit of, and be enforceable by, the successors and assigns of Landlord to the same extent as if each such successor and assign were named as a party hereto. All provisions contained in this Lease shall be binding upon the successors and assigns of Tenant and shall inure to the benefit of and be enforceable by the permitted successors and assigns of Tenant in each case to the same extent as if each such successor and assign were named as a party hereto.

(b) If any right or option provided in this Lease would, in the absence of the limitation imposed by this sentence, be invalid or unenforceable as being in violation of the rule against perpetuities or any other rule of law relating to the vesting of an interest in or the suspension of the power of alienation of property, then such right or option shall be exercisable only during the period which shall end 21 years after the date of death of the last survivor of the descendants of Franklin D. Roosevelt, the former President of the United States, Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the founder of the Standard Oil Company (but excluding Michael Rockefeller (the son of Nelson A. Rockefeller) and any descendant of said Michael Rockefeller), alive on the date of the execution, acknowledgment and delivery of this Lease.

10.4 Table of Contents and Headings. The table of contents and the headings of the various Sections and Schedules of this Lease have been inserted for reference only and

shall not to any extent have the effect of modifying the express terms and provisions of this Lease.

10.5 Counterparts. This Lease may be executed in two or more counterparts and shall be deemed to have become effective when and only when one or more of such counterparts shall have been signed by or on behalf of each of the parties hereto (although it shall not be necessary that any single counterpart be signed by or on behalf of each of the parties hereto, and all such counterparts shall be deemed to constitute but one and the same instrument), and shall have been delivered by each of the parties to each other.

10.6 Recording of Lease. Tenant will execute, acknowledge, deliver and cause to be recorded or filed in the manner and place required by any present or future law a memorandum of this Lease and all other instruments, including, without limitation, financing statements, continuation statements, releases and instruments of similar character, which shall be reasonably requested by the Landlord. Tenant shall be responsible for all costs and expenses in connection with the recording of this Lease or a memorandum hereof. Upon the termination of this Lease, Tenant shall execute, acknowledge, deliver and cause to be recorded or filed in the appropriate manner and place any and all instruments evidencing the termination of this Lease and sufficient to discharge of record any memorandum of this Lease.

10.7 Rating of the Transaction. During the Term of the Lease, Tenant will, at Landlord's request, and as required by the Indenture, reasonably cooperate in good faith with Landlord and Lender (at Lender's expense for any third party out-of-pocket costs) in (i) effecting any secondary market transaction relating to the Loan (including satisfying the market standards for publicly issued securities rated by each of the Rating Agencies which involve credit lease loans) and (ii) implementing all requirements imposed by the Rating Agencies involved in any such secondary market transaction including, without limitation,

(a) to provide, or use its reasonable efforts to cause to be provided by Guarantor, as applicable, such financial and other information with respect to the Premises, Tenant and Guarantor, together with appropriate verification of such information through letters of auditors, if customary; provided, however, that such information with respect to Guarantor shall not include any confidential non-public information it being understood, however, that in the event Guarantor ceases to be a public company, Guarantor shall provide its audited financial statements, on a confidential basis, to Lender and any applicable Rating Agencies and proposed purchasers or participants;

(b) to permit such site inspections and other similar due diligence investigation of the Premises by Landlord, or, as required by the Indenture, by Lender or the Rating Agencies, as may be reasonably requested by Landlord or Lender, or as may be requested by any of the Rating Agencies;

(c) to provide additional or updated appraisals, market studies, environmental reviews and reports, and engineering reports which are customary in secondary market transactions and which shall be reasonably acceptable to Landlord and, as required by the Indenture, Lender, and, as required by the Indenture, shall be acceptable to the Rating Agencies,

provided that the foregoing shall only be required to the extent that any such third party due diligence reports which were delivered in connection with the origination of the Loan referenced therein additional information recommended or required to be obtained or provided in connection therewith which has not been so obtained or provided to Landlord or Lender;

(d) to cause counsel to render opinions with respect to the Premises, Tenant or Guarantor, and to make, and use its reasonable efforts to cause to be made by Guarantor, as applicable, such representations and warranties, as are customarily provided in secondary market transactions, which shall be reasonably acceptable to Landlord and, as required by the Indenture, Lender, and, as required by the Indenture, shall be acceptable to the Rating Agencies, to the extent that such matters were not included in the opinions and representations and warranties contained in certificates or Operative Documents delivered by Tenant or Guarantor in connection with the origination of the Loan and, with respect to such representations and warranties, consistent with the facts covered thereby as they exist on the date thereof; and

(e) to execute modifications, and use reasonable efforts to cause Guarantor to execute modifications, to any Operative Documents to which Tenant or Guarantor is a party, acceptable to the Rating Agencies; provided, however, that (i) any such modification shall be subject to Landlord's prior approval, and (ii) neither Tenant nor Guarantor shall be required to modify any such Operative Documents in any way which would change the economic terms of such Operative Documents (such as the amount and timing of payment of Basic Rent, Stipulated Loss Values and purchase prices under this Lease or of any purchase options under this Lease), or which would impose additional financial covenants on Tenant, Subtenant or Guarantor or which, in the reasonable judgment exercised in good faith by Tenant, Subtenant or Guarantor, as applicable, would materially impair the rights of or materially increase the obligations of Tenant, Subtenant or Guarantor under such Operative Documents.

10.8 No Brokers. Each of the Landlord and the Tenant represents and warrants to the other that it has not dealt with any broker in connection with the purchase and leasing of the Premises other than as provided in the Contract of Sale, and indemnifies the other against the claims of brokers claiming through it.

10.9 Governing Law. This Lease has been executed, delivered and accepted in the State of New York and the terms and provisions of this Lease shall be governed by the laws of the State of New York (without giving effect to the conflict of laws rules and principles of such state), and the United States of America, except the rights and remedies with respect to a particular Project shall be governed by the laws of the state in which the Project is located. To the fullest extent permitted by law, Tenant hereby unconditionally and irrevocably waives any claim to assert that the law of any jurisdiction other than New York or the law of the State in which the applicable Project is located, as applicable, governs this Lease. Tenant hereby consents and will submit to the jurisdiction and venue of New York Courts and the United States Southern District of New York in connection with any action or proceeding arising out of or relating to this Lease, other than with respect to a particular Property.

10.10 Waiver of Jury Trial. LANDLORD AND TENANT HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS LEASE OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY TENANT AND LANDLORD AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LANDLORD AND TENANT ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

10.11 Conveyance by Landlord. The word "Landlord" as used in this Lease means only the owner for the time being of the Premises, so that, if there is a transfer of an owner's interest, the transferor shall be and hereby is entirely freed and relieved of all covenants and obligations of the Landlord under this Lease, except any obligations which accrued prior to the date of transfer, and it shall be deemed and construed, without further agreement between the parties or between the parties and the transferee of the Premises, that the transferee has assumed and has agreed to carry out any and all of the Landlord's covenants and obligation under this Lease from and after the date of transfer.

10.12 Intent; Relationship of the Parties. This agreement is intended to be a lease for all purposes. Nothing contained in this Lease shall be construed in any manner to create any relationship between the Landlord and the Tenant other than the relationship of landlord and tenant. Without limitation, the Landlord and the Tenant shall not be considered partners or co-venturers or lender or borrower for any purpose on account of this Lease.

10.13 Representation by Counsel. Tenant and Landlord each acknowledge that it was represented by counsel in connection with the negotiation and execution of this Lease, and any presumption to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Lease.

10.14 Access to Premises. The Tenant will permit the Landlord, any Lender or prospective Lender or purchaser, and their duly authorized representatives to enter upon the Premises and to inspect the same at any and all reasonable times, upon five (5) Business days' advance written notice, and at any time in the case of an emergency without the giving of notice, and for any purpose reasonably related to the rights of the Landlord and any Lender under this Lease. Landlord and Lender shall, in exercising such rights of access, cause no unreasonable interference with Tenant's business or Tenant's guests. Notwithstanding the foregoing, Landlord agrees that it will not exercise the foregoing right of access for any particular Project more than once in any calendar year except (a) during such time as an Event of Default has occurred and is continuing, or (b) in the event of a sale, financing, refinancing or securitization of any Indenture relating to the Project or the Premises, or (c) if Landlord has reasonable grounds to believe that a Project is in violation of Legal Requirements (including Environmental Laws) or that a Project is not being maintained in accordance with the requirements of this Lease or (d) as otherwise expressly provided in this Lease.

10.15 Showing. During the fifteen (15) month period preceding the date on which the Term shall be scheduled to terminate or fully expire, Landlord, if accompanied by a representative of Tenant and subject to the rights of any subtenant not affiliated with Tenant, may show the Premises to prospective tenants or purchasers at such reasonable times during normal business hours as Landlord may select upon reasonable prior notice to Tenant, provided that Landlord does not materially interfere with Tenant's normal business operations.

10.16 True Lease. This Lease is intended as, and shall constitute, an agreement of lease, and nothing herein shall be construed as conveying to the Tenant any right, title or interest in or to the Premises nor to any remainder or reversionary estates in the Premises held by any Person, except, in each instance, as a Tenant. Under no circumstances shall this Lease be regarded as an assignment of all of Landlord's interests in and to the Premises; instead Landlord and Tenant shall have the relationship between them of landlord and tenant, pursuant to the provisions of this Lease. In no event shall Tenant or any affiliate of Tenant claim depreciation, amortization or interest deductions as owner of any Project or as borrower on the Loan for United States federal, state or local income tax purposes (except as to Alterations not financed by Landlord). Landlord and Tenant agree that this Lease is a true lease and as such the Landlord shall be treated as the owner and lessor of the Projects and the Tenant as the lessee thereof and that this Lease does not represent a financing arrangement. Each party shall reflect the transaction represented hereby in all applicable books, records and reports (including tax filings) in a manner consistent with "true lease" treatment rather than "financing" treatment.

10.17 Landlord's Consent and Standards.

(a) Whenever Landlord is allowed or required to give its consent or approval of any matter under this Lease or to deliver any estoppel or other instrument, Tenant's sole remedy for Landlord's failure to give such consent or approval or deliver such instrument in accordance with the applicable provision of this Lease shall be to compel such approval or delivery. In no event and under no circumstance shall Tenant be entitled to any monetary damages for such failure or to terminate or otherwise modify this Lease. However, if Tenant shall bring such an action to compel consent, approval or delivery, the prevailing party in such action shall be entitled to reimbursement for its reasonable attorneys' fees; provided, however, that with respect to any attorneys' fees to be reimbursed by Landlord, such fees and Tenant's right to recover the same shall be junior and subordinate to the Indenture, and in no event shall Tenant be entitled to offset any amounts due under this Lease to recover such fees.

(b) Under no circumstance shall Landlord or any Indemnified Party be deemed to have acted negligently, grossly negligently or willfully merely by Landlord's or such Indemnified Party's ownership of the Premises, and in no event shall any occurrence relating to any Project, whether negligent, grossly negligent or willful, be imputed to Landlord or any Indemnified Party by reason of Landlord's or such Indemnified Party's interest in such Project, it being understood that all obligations with respect to the Premises are the responsibility of Tenant under this Lease. In order to have acted negligently, grossly negligently or willfully, Landlord or any Indemnified Party must have committed an affirmative act.

10.18 Quiet Enjoyment. Landlord covenants that, so long as Tenant shall faithfully perform the agreements, terms, and covenants and conditions hereof, Tenant shall and may peaceably and quietly have, hold and enjoy the Premises for the Term hereby granted without molestation or disturbance by or from Landlord.

10.19 Force Majeure. The term "Force Majeure", as used in this Lease, shall mean delays caused by acts of God, strikes and other similar events beyond the control of Tenant. However, the duration of any delay excused by Force Majeure shall be limited to the actual amount of time caused by the event giving rise to the Force Majeure. In addition, no performance by Tenant under this Lease shall be excused by Force Majeure unless the requirement for performance set forth in this Lease specifically states that it is subject to Force Majeure.

10.20 [INTENTIONALLY OMITTED]

10.21 Tenant's Acknowledgement of Indemnities

TENANT ACKNOWLEDGES THAT THIS LEASE PROVIDES FOR INDEMNIFICATION OF LANDLORD BY TENANT PURSUANT TO SECTIONS 2.4, 3.10 AND 7.3.

10.22 Limitation on Landlord's Liability. IT IS EXPRESSLY UNDERSTOOD
AND AGREED BY AND AMONG THE PARTIES HERETO, FOR THEMSELVES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, THAT NOTHING HEREIN CONTAINED SHALL BE CONSTRUED AS CREATING ANY LIABILITY OF LANDLORD OR ANY BENEFICIARY OF LANDLORD OR ANY OF THEIR RESPECTIVE AFFILIATES

OR ANY OF THEIR RESPECTIVE MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, VENTURERS, TRUSTEES, BENEFICIARIES, EMPLOYEES OR AGENTS (COLLECTIVELY, THE "LANDLORD PARTIES"), INDIVIDUALLY OR PERSONALLY, FOR BREACH OF ANY REPRESENTATION OR WARRANTY OR TO OBSERVE OR PERFORM ANY AGREEMENT OR COVENANT, EITHER EXPRESS OR IMPLIED, CONTAINED HEREIN, ALL SUCH LIABILITY, IF ANY, BEING EXPRESSLY WAIVED BY TENANT AND BY EACH AND EVERY PERSON NOW OR HEREAFTER CLAIMING BY, THROUGH OR UNDER TENANT, AND THAT, SO FAR AS ANY LANDLORD PARTY, INDIVIDUALLY OR PERSONALLY, IS CONCERNED, TENANT AND ANY PERSON CLAIMING BY, THROUGH OR UNDER TENANT HERETO SHALL LOOK SOLELY TO THE RIGHT, TITLE AND INTEREST OF LANDLORD IN THE PREMISES FOR THE PERFORMANCE OF ANY OBLIGATION UNDER THIS LEASE AND THE SATISFACTION OF ANY LIABILITY ARISING THEREFROM.

[END OF TEXT]

IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed as of the date first above written. The parties intend that this document satisfies all requirements under Virginia law relating to leasehold deeds.

LANDLORD:

HAVERTACQ 11 LLC

By: General Electric Capital Corporation,
its Manager

By: ------------------------
Name: Stephen Benko
Title: Authorized Signatory

TENANT:

HAVERTY FURNITURE COMPANIES, INC.

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                           )ss.
COUNTY OF
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Subscribed and sworn to before me this ____ day of ______________, 2001, by ________________, as _____________, of _____.

          -----------      )
                           )ss.
COUNTY OF
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Subscribed and sworn to before me this ____ day of ______________, 2001, by ________________, as _____________, of _____.