Lease Agrmt

Easy Gardener, Inc.
1750 Seventeenth Street Easy Gardener, Inc.[LOGO] Paris, KY 40361
Phone: 859-987-5389, ext. 214
Fax: 859-987-0428
e-mail: tomb@easygardener.net


June 21, 2002


Ms. Sarah Leer P.O. Box 606 Paris, KY 40361


RE: Lease Agreement Dated October 22, 2001
Leased Premises - 1714 Main Street, Paris, KY


Dear Ms. Leer:


This letter, upon your undersigned agreement, is intended to amend and hereby amends the Lease Agreement dated October 22, 2001 (the "Lease") between Sarah Leer ("Landlord") and Easy Gardener, Inc. ("Tenant"), and in consideration of the terms and conditions hereinafter set forth, Landlord and Tenant agree as follows:


1. Article II of the Lease provides, in part, that the initial term of the
Lease shall commence on the earliest to occur of (a) the date which Tenant
takes possession, or (b) the date on which Landlord's Improvements have
been substantially completed and the Demised Premises have been inspected
and accepted in writing by Tenant as being in good condition and repair.
Further, Article II provides that the Landlord shall use best efforts to
have the improvements completed on or before December 31, 2001


2. Article II of the Lease further provides that if the applicable
governmental authority requires a sprinkler system to be installed in the
Demised Premises, then the rent may be adjusted in such amount as is
agreed upon between Landlord and Tenant; provided, however, if the
Landlord is unwilling to commit to make the required capital expenditures
for the sprinkler system, or if the Landlord and Tenant are unable to
agree on the increase in rent, then either party may terminate the Lease
by giving written notice of intent to terminate to the other party.


3. Landlord and Tenant further acknowledge the following:


a. That as of this date, which is over five months since the
anticipated completion date of Landlord's Improvements, Tenant has
not taken possession of the Demised Premises, nor has Landlord
completed Landlord's Improvements as described in Exhibit "B"
attached to the Lease;


b. That the Landlord's Improvements, as set forth on Exhibit "B" to the
Lease, which have not been completed are specifically set forth in
the attached "List of Uncompleted Landlord Improvements Required
Under Exhibit B to Lease";


c. That as of this date, the applicable government authority has
required a sprinkler system to be installed in the Leased Premises;


d. That there is no agreement between Landlord and Tenant for an
increase in rent under the Lease in order to assist Landlord with
the capital cost required for installation of a sprinkler system for
the Demised Premises; and


e. That except for the agreement of Landlord and Tenant as hereinafter
set forth, Tenant has the right to terminate the Lease due to
Landlord's failure to timely meet Landlord's obligations under
Article II with respect to the substantial completion of Landlord's
Improvements and the delivery of possession of the Demised Premises.


4. Landlord hereby represents and warrants to Tenant that Landlord has
committed to make the required capital expenditures for installation of a
sprinkler system, at Landlord's sole expense, and that Landlord has
already contracted for the sprinkler system improvements, with Landmark
Sprinkler, Inc., Lexington, Kentucky. Moreover, Landlord represents and
warrants that the uncompleted Landlord Improvements contained in the
attached list, and the installation of the sprinkler system, and the
delivery of the Demised Premises will be completed on or before August 14,
2002.


5. In consideration of the Landlord's commitment to install the sprinkler
system and Landlord's representations and warranties, as hereinabove set
forth, as of this date Tenant waives its right to terminate the Lease
under Article II of the Lease as set forth above. Provided, however, if
Tenant determines that Landlord is not making good faith efforts to meet
the Landlord's obligations as set forth in the Lease and this letter
amendment, or that it is not possible for such obligations to be completed
on or before August 14, 2002, or that the obligations of Landlord are not
fully completed and inspected and accepted in writing by Tenant as being
in good condition and repair on or before August 14, 2002, then Tenant
shall have the right to give written notice to Landlord to declare the
Lease and this letter amendment terminated, and thereupon the Lease and
this letter amendment shall be terminated and after which neither party
shall have any further obligation to the other.


6. Except as herein amended, the Lease remains in full force and effect, and
upon Landlord's timely delivery of the Demised Premises with all of
Landlord's Improvements, including the sprinkler system, properly
installed and completed on or before August 14, 2002, Tenant shall


commence the payment of rent for the first twelve months of the Lease at
the rate of $11,062.50 per month.


If the foregoing terms and conditions are acceptable to you, please sign where indicated below and return one copy to me no later than June 21, 2002. If the executed letter is not returned by that date, then the Lease Agreement is automatically terminated for the above-described breaches of the Landlord.


If you have any questions about any aspects of this letter, please contact the undersigned.


Sincerely,


/s/ Thomas E. Bensberg, Jr.


Thomas E. Bensberg, Jr. Plant Manager


The undersigned Landlord, Sarah Leer, agrees to the foregoing terms and conditions as set forth in the foregoing letter to me dated June 21, 2002.


/s/ Sarah Leer 6/21/02 - ------------------------ Sarah Leer Date


LEASE AGREEMENT


THIS LEASE AGREEMENT ("Lease") is made and entered into this 22nd day of October, 2001, by and between SARAH LEER, with a business mailing address at P.O. Box 606, Paris, Kentucky 40361 ("Landlord") and EASY GARDNER, INC., a Delaware corporation, with its principal office and place of business at 3022 Franklin Avenue, P.O. Box 21025 Waco, Texas 76702-1025 ("Tenant").


W I T N E S S E T H:
- - - - - - - - - -


ARTICLE 1. DEMISED PREMISES


Landlord, for and in consideration of the rents, covenants and conditions hereinafter contained to be performed and observed by Tenant, does hereby demise and lease to Tenant a portion of the real property and improvements thereon (the "Real Property"), together with rights, easements and appurtenances thereto, buildings, fixtures and other improvements (the "Improvements"), all located at 1714 Main Street, Paris, Bourbon County, Kentucky. The Real Property and the Improvements leased hereunder contain approximately 59,000 square feet of useable space as shown in the diagram attached hereto as Exhibit "A" and said leased property constitutes a part of the real property more particularly described in Exhibit "A-1," attached hereto and incorporated herein. The Real Property and the Improvements leased hereunder, and all rights, easements and appurtenances thereto are hereinafter called the "Demised Premises," subject nevertheless to the following (collectively, hereinafter referred to as "Permitted Encumbrances"): (i) the existing state of the title to the Demised Premises as of the commencement of the term of this Lease, including a mortgage in favor of Kentucky Bank, provided said state of title does not interfere with Tenant's use and enjoyment of the Demised Premises hereunder; (ii) any state of facts which a physical inspection of the Demised Premises might show; and (iii) all zoning regulations and other laws and regulations now in effect or hereafter adopted by any governmental authority having jurisdiction over the Demised Premises.


ARTICLE 2. TERM


The initial term of this Lease shall commence on the earliest to occur of the following: (a) the date which Tenant takes possession of the Demised Premises, or (b) the date on which Landlord's improvements (as hereinafter defined) have been substantially completed and the Demised Premises have been inspected and accepted in writing by Tenant as being in good condition and repair (the "Term Commencement Date", which date shall be confirmed in writing by the parties hereto), and shall end at midnight on June 30, 2006, unless sooner terminated by Landlord or Tenant under the terms and conditions hereafter set forth (collectively, the "Expiration Date").


Landlord's Improvements. Landlord, at Landlord's expense, shall cause the following improvements to be made to the Demised Premises and shall use Landlord's best efforts to have said improvements completed on or before _Dec 31, 2001: See attached Exhibit "B" , "Landlord's Warehouse Improvements." Tenant acknowledges that it has reviewed and approved Landlord's improvement plans as to design, location, and quality of materials, and Landlord shall not change said improvement plans without the consent of Tenant, which consent shall not be unreasonably withheld or delayed.


Early Termination due to loss of Variance. Landlord and Tenant acknowledge that a variance has been granted by the Division of Building Code Enforcement to allow use of the Demised Premises for storage purposes for a period of twelve (12) months after the Term Commencement Date without requiring the installation of a fire sprinkler system in the storage facility. In the event that said variance is not extended by the Division of Building Code Enforcement for months 13 through 57 of this Lease, or any part thereof, and Landlord is required to install a sprinkler system in the Demised Premises to meet Code, then, due to the capital costs which Landlord shall be required to incur to install the fire sprinkler system, the rent payable hereunder shall be increased an the amount to be agreed upon by Landlord and Tenant; provided, however, in the event Landlord is unwilling to commit to make the required capital expenditures within thirty (30) days after either party's receipt of notice that a fire sprinkler system is required to be installed, or in the event Landlord and Tenant are unable to agree on the increase in rent within said thirty (30) day period, then either party hereto may terminate this Lease by giving written


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notice of intent to terminate to the other party on or before the expiration of said thirty (30) day period.


Except as expressly provided to the contrary in this Lease, all obligations of Landlord and Tenant shall commence on the Term Commencement Date.


ARTICLE 3. RENT AND OTHER PAYMENTS


Except as expressly provided otherwise in this Lease, the accrual of rent and charges hereunder shall begin with the Term Commencement Date. In the event that the Term Commencement Date shall occur other than on the first day of the month, then the first and last payments of rent and other charges shall be adjusted for the proportionate fraction of the whole month. All other monthly rental payments shall be made and are due and payable on the first day of each month.


Beginning with the Term Commencement Date, Tenant does hereby covenant and agree to pay to Landlord, in advance, without notice or demand, at Landlord's address shown above, or at such other place as Landlord may direct in writing, rent as follows:


(i) Rent (months 01-12): The sum of One hundred thirty-two thousand seven hundred fifty Dollars ($132,750.00) annually or Eleven thousand sixty two Dollars and Fifty Cents ($11,062.50) per month, which monthly sum shall be paid in advance, on the first day of each and every month ("Due Date").


(ii) Rent (months 13-_): Provided the early termination events set forth in Article 2(ii) hereof have not occurred, the sum of One hundred six thousand two hundred Dollars ($106,200.00) annually or Eight thousand eight hundred fifty Dollars ($8,850.00) per month, which monthly sum shall be paid in advance of the first day of each and every month beginning with month thirteen (13) hereunder. Provided further, however, the rent payable for the second through the fifth Lease Years may be increased to the rent amount agreed upon by the parties if Landlord is required to install a sprinkler system and neither party terminates this Lease as provided under Article 2 hereof.


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(iii) Interest on Late Payments: In the event Tenant fails to pay the monthly rent or any other payments in full within thirty (30) days after due, such obligation shall automatically, and without limitation to Landlord's other remedies hereunder, accrue interest at the rate of twelve percent (12%) per year for so long as the overdue amount remains unpaid from the day on which such amount was first due and payable.


ARTICLE 4. USE OF PREMISES


Tenant agrees to use the Demised Premises as a storage lot for plant food spikes and other consumer products, packaging and raw materials, production and material handling machinery, company files and records, and other materials related to Tenant's business, and Tenant may park and store such vehicles and equipment as are reasonably necessary to conduct Tenant's business; provided, however, that Tenant may change or alter such use provided Tenant is not in default of this Lease and Tenant shall have first received Landlord's written consent to Tenant's change in use, which consent shall not be unreasonably withheld.


Tenant's use of the Demised Premises shall comply with all federal, state, county, and city laws, ordinances and regulations and all title conditions and restrictions applicable to the Demised Premises.


ARTICLE 5. LANDLORD'S RIGHT OF ENTRY AND INSPECTION


Landlord and its agents, employees or contractors shall have the right to enter upon the Demised Premises at all reasonable times to inspect the Demised Premises and post such reasonable notices as Landlord may desire to protect the rights of Landlord. Landlord shall also have the right to show the Demised Premises to any prospective purchaser and/or tenant (who is not a competitor of Tenant or a party who might gain a business or proprietary advantage by viewing Tenant's operations)at reasonable times during business hours on twenty-four (24) hour prior notice to Tenant.


ARTICLE 6. UTILITIES AND TRASH REMOVAL


Beginning with the Term Commencement Date, Tenant shall pay for: (i) all fuel, gas, oil, heat, water, sewer, electricity,


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power and communication services and other utilities which may be furnished to or used in or about the Demised Premises during the term of this Lease and any renewals or holdovers thereof; and (ii) the removal and disposal of all trash and refuse from the Demised Premises during the term of this Lease and all renewals and holdovers thereof.


ARTICLE 7. ASSIGNMENT


Tenant may not assign this Lease, or any interest therein, except with the prior written consent of Landlord. If Tenant does assign its interest in the Demised Premises, the assignee shall first be obliged in writing to likewise assume all of the obligations of Tenant under this Lease; and Tenant shall, for the full term of this Lease, or any holdover term, continue to be liable with such assignee for the payment of rents and the performance of all obligations required by Tenant under this Lease.


If this Lease is assigned to any person or entity pursuant to the provisions hereof or the provisions of the Bankruptcy Code, 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code"), any and all monies or other considerations payable or otherwise to be delivered in connection with any such assignment shall be paid or delivered to Landlord, shall be and remain the exclusive property of Landlord, and shall not constitute property of Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any and all monies or other considerations constituting Landlord's property under the preceding sentence not paid or delivered to Landlord shall be held in a separate account by the trustee or the debtor-in-possession in trust for the benefit of Landlord and be promptly paid or delivered to Landlord.


Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. ss.101 et seq., shall be deemed without further act or deed to have assumed all of the obligations arising under this Lease on and after the date of such assignment. Any such assignee shall, upon demand, execute and deliver to Landlord an instrument confirming such assumption.


Tenant shall not be entitled to sublet all or any portion of the Demised Premises to any subtenant or subtenants except with the prior written consent of Landlord.


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ARTICLE 8. REAL ESTATE TAXES AND ASSESSMENTS


Landlord shall promptly pay to the appropriate governmental agencies before the same become delinquent all real property taxes, school district taxes, assessments (general or special), impositions, and all other claims or charges arising out of Landlord's fee interest in the Demised Premises during the term of this Lease.


ARTICLE 9. COVENANT OF TITLE AND QUIET ENJOYMENT


Tenant, upon paying the rents and keeping and performing the covenants of this Lease to be performed by Tenant, shall peacefully and quietly hold, occupy and enjoy said Demised Premises, subject to all Permitted Encumbrances, during the initial term of this Lease or any renewal thereof.


ARTICLE 10. NONDISTURBANCE AND ESTOPPEL CERTIFICATES


This Lease shall automatically be subject and subordinate to the lien of any mortgage which Landlord may at any time place upon the Demised Premises and to all terms, conditions and provisions thereof, to all advances made, and to any renewals, extensions, modifications or replacements thereof. Provided, however, that if this Lease is in full force and effect and there are no defaults thereunder on the part of Tenant, Tenant's right of possession to the Demised Premises and Tenant's rights arising out of this Lease shall not be affected or disturbed by Landlord's mortgagee in the exercise of any of its rights under any mortgage or the note secured thereby. In the event that Landlord's mortgagee, or any other person, acquires title to the Demised Premises pursuant to the exercise of any rights or remedies under a mortgage, then so long as Tenant is not in default under the terms of this Lease, this Lease shall not be terminated or affected by said foreclosure or sale, or any such proceedings, and the mortgagee shall agree that any sale of the Demised Premises pursuant to the exercise of any rights or remedies under any mortgage, or otherwise, shall be made without affecting this Lease and the rights of Tenant hereunder. Tenant agrees to attorn to the mortgagee or such other person as its new Landlord, and this Lease shall continue in full force and effect as a direct Lease between Tenant and such


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mortgagee or such other person, upon all the terms, covenants and agreements set forth in this Lease. The parties hereto agree to execute or obtain execution of such reasonable documents as may be necessary to insure compliance with the subordination and nondisturbance provisions of this Article 10, including, but not limited to, a nondisturbance agreement executed by Tenant and any such mortgagee setting forth the provisions of this Article 10.


Upon request in writing from Landlord, Tenant agrees to promptly, but not later than ten (10) days thereafter, execute, acknowledge and deliver to Landlord, or to the holder of any mortgage lien on the Demised Premises, a statement in writing satisfactory to Landlord or the holder of the mortgage, certifying the facts stated therein, which if true may include, but shall not be limited to, all or any part of the following information: (i) this Lease constitutes the entire agreement between Landlord and Tenant, is unmodified (or if there has been a modification, that the Lease, as modified) and is in full force and effect; (ii) the dates to which the rent and other charges hereunder have been paid; (iii) the Commencement Date of the Lease; (iv) Tenant is occupying the Demised Premises; and (v) Tenant knows of no default under the Lease by Landlord and there is no offset or counterclaim which Tenant has against Landlord, provided that such facts are true and ascertainable.


ARTICLE 11. MAINTENANCE, REPAIRS AND ALTERATIONS OF PREMISES AND
COMPLIANCE WITH LAWS AND ORDINANCES


Tenant shall, at all times during the initial term of this Lease or any renewal or holdover term, comply with all federal, state, county and city statutes, laws and ordinances and all rules, regulations and orders of any duly constituted authority, present or future, affecting or respecting the improvements, use or occupancy of the Demised Premises by Tenant, or the business at any time thereon transacted by Tenant or any assignee or sublessee of Tenant. Tenant, at Tenant's cost, shall at all times keep the Demised Premises, the improvements thereof, and all appurtenances, in a clean, safe, aesthetically pleasing manner and sanitary condition, free of any nuisance, hazard or unreasonable accumulation of trash, garbage, debris, ice and snow. Further, Tenant agrees not to cause or permit any wastes, trash, garbage, noxious odor, debris, ice, snow or other nuisance emanating from


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the Demised Premises or Tenant's operation to flow into or to be blown (except in the normal course of business), placed or remain upon adjacent property.


Tenant shall, during the entire Lease term, and any extensions or holdovers thereof, at its own cost and expense, keep, replace and maintain in good condition and repair, ordinary wear and tear excepted, the Demised Premises and all improvements at any time erected thereon, including, but not limited to, the heating, cooling, plumbing, electric and lighting fixtures located in the Demised Premises. In addition, Tenant shall, during the entire term of this Lease and any extensions and holdovers, use all reasonable precaution to prevent waste, damage or injury to said improvements and the Demised Premises. Notwithstanding the foregoing, and except for damages caused by Tenant or its agents, Landlord shall be responsible for all structural repairs and maintenance including but not limited to the repair of the walls, roof, gutters, floor, and storm and sanitary sewers (provided said sewers are located on Landlord's property); and in this regard, Tenant shall notify Landlord of any roof leak (or other required Landlord repair) to the extent that said leak (or other required Landlord repair) causes more than one hundred (100) square feet of floor space to be unusable for storage. Any roof leak (or other required Landlord repair) which has not been repaired within sixty (60) days of written notice from Tenant shall result in reduction of rent payment (until said repairs are successfully performed) in proportion to the total unusable space compared to the assumed total of fifty-nine thousand square feet of useable space. Further, Tenant shall be entitled to a rent reduction, as provided in this paragraph, if any repairs performed and completed by Landlord hereunder shall fail to restore to Tenant, for a minimum consecutive period of sixty (60) days, the lost useable space which caused Tenant to first give notice to Landlord of required repairs hereunder.


All repairs and maintenance required by either party hereunder shall be performed as expeditiously as possible, weather conditions and other events of force majeur permitting.


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ARTICLE 12. MECHANIC'S LIEN


If, because of any act or omission of Tenant or anyone claiming by, through or under Tenant, any mechanic's lien or order or claim for the payment of money is filed against the Demised Premises or any part of it, or Landlord's interest therein, or Landlord (whether or not such lien or order is valid or enforceable as such), Tenant shall, at Tenant's sole expense, cause the same to be cancelled and discharged of record within forty-five (45) days after the date of filing thereof by payment, bonding, or otherwise, as provided by law, and shall also indemnify and save Landlord harmless from and against any and all costs, expenses, claims, losses, liability or damages, including reasonable attorneys' fees, resulting from such lien or order or Tenant's failure to release the same.


ARTICLE 13. TRADE FIXTURES, MACHINERY AND EQUIPMENT


Landlord agrees that, so long as Tenant is not in default under the Lease, all trade fixtures, machinery, equipment, furniture or other personal property of whatever kind and nature kept or installed on the Demised Premises by Tenant or Tenant's assignees or sublessees shall not become the property of Landlord or a part of the Demised Premises and may be removed by Tenant or its assignees or sublessees, in their discretion, at any time and from time to time during the entire term of the Lease and any renewals. Further, provided Tenant is not in default under this Lease, Landlord agrees to execute and deliver any reasonable consent or waiver forms submitted by any vendors, lessors, chattel mortgagees or holders or owners of any trade fixtures, machinery, equipment, furniture or other personal property kept or installed on the Demised Premises, setting forth the fact that Landlord has waived its contractual or statutory liens in favor of such vendor, lessor, chattel mortgagee or holder or owner. Finally, provided Tenant is not in default under this Lease, Landlord shall further acknowledge that the property covered by such consent or waiver forms is personal property and is not to become a part of the realty, and that such property may be removed from the Demised Premises by the vendor, lessor, chattel mortgagee or other similar holder or owner free and clear of any claim or lien of Landlord.


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ARTICLE 14. REMOVAL OF TRADE FIXTURES


Except as otherwise provided in this Lease, Tenant shall have the right to remove its trade fixtures and equipment on or before the expiration of this Lease or any extensions or renewals thereof. Provided Tenant is not in default under that Lease, Tenant or any assignee or sublessee is hereby expressly given the right at any time during the term of this Lease or any extension thereof and for a period of thirty (30) days after the termination of this Lease, or any extension thereof, by lapse of time or otherwise, to enter upon and remove from said Demised Premises any trade fixtures, equipment, furniture and appliances of Tenant or any assignee or sublessee. In the event Tenant removes any such trade fixtures and furniture, Tenant shall repair any damage to the Demised Premises occasioned by the removal thereof.


All of Tenant's trade fixtures, equipment, material and other personal property not removed from the Demised Premises within forty-five (45) days after expiration or termination of this Lease shall be conclusively presumed to have been abandoned by Tenant, and title thereto shall pass to Landlord under this Lease as by a bill of sale, unless such removal has been delayed or hampered by Landlord, in which event, Tenant's abandonment of such pr ...