LEASE AGREEMENT

Exhibit 10.1

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 406 OF THE S ECURITIES A CT OF 1933, AS AMENDED .

L EASE A GREEMENT

T HIS L EASE is executed this 3rd day of August, 2007, by and between D UKE R EALTY L IMITED P ARTNERSHIP , an Indiana limited partnership (“ Landlord ”), and R ESTORATION H ARDWARE , I NC ., a Delaware corporation (“ Tenant ”).

W ITNESSETH :

ARTICLE 1

LEASE OF PREMISES

Section 1.01 Basic Lease Provisions and Definitions .

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[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 406 OF THE S ECURITIES A CT OF 1933, AS AMENDED .

L IST OF E XHIBITS

Section 1.02 Leased Premises . Landlord hereby leases to Tenant and Tenant leases from Landlord, subject to all of the terms and conditions set forth herein, the entirety of the Leased Premises.

Section 1.03 Rentable Areas; Final Measurement of Leased Premises . Prior to Substantial Completion of the Leased Premises, Landlord shall cause the project architect (“ Landlord’s Architect ”) to calculate the rentable square footage of the Leased Premises, as constructed, in accordance with customary industrial standards using exterior wall dimensions, as promulgated by the Building Owners and Managers Association “Standard Method of Measuring Floor Area in Industrial Buildings” 2001. Following such remeasurement, (x) the rentable square footage calculated by Landlord’s Architect pursuant to the terms of this Section 1.03 shall be binding and conclusive upon the parties, and (y) all amounts, percentages and figures appearing or referred to in this Lease based upon rentable square footage (or Rentable Area) shall be modified in accordance with such determination; provided, however, that such remeasurement shall not modify or affect the Minimum Annual Rent payable by Tenant during the initial Lease Term.

ARTICLE 2

TERM AND POSSESSION

Section 2.01 Term . The term of this Lease (“ Lease Term ”) shall be the period of time specified in the Basic Lease Provisions commencing on the Commencement Date and ending on the end of the one hundred eightieth (180th) month thereafter (the “ Expiration Date ”). Following the Commencement Date, Landlord and Tenant shall promptly execute a Letter of Understanding in the form attached hereto as Exhibit C , wherein the parties shall specify the Commencement Date, the Expiration Date, and any changes to the Minimum Annual Rent and corresponding Monthly Rental Installment schedules pursuant to Section 2.02C below.

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Section 2.02 Construction .

A. Landlord Work .

(i) Turnkey Work . Upon Lease execution, Landlord and Tenant have approved the preliminary drawings for the site plan, floor plan and the Building structure (the “ Preliminary Drawings ”) attached hereto as Exhibit D . On or before the thirtieth (30th) day following the date hereof, Landlord shall prepare and submit to Tenant a set of construction drawings (the “ Turnkey Construction Drawings ”) covering all work, except for the Allowance Work (defined below), to be performed by Landlord in constructing the interior and exterior improvements (the “ Turnkey Work ”), which shall be based on the scope of work attached hereto as Exhibit E (the “ Scope of Work ”). Without limiting the foregoing, the Turnkey Work shall include, and Landlord shall be responsible for, the construction of Enterprise Parkway to the points of ingress and egress to and from the Leased Premises shown on the Preliminary Drawings. Tenant shall have ten (10) days after receipt of the Turnkey Construction Drawings in which to review the Turnkey Construction Drawings and to give to Landlord written notice of Tenant’s approval of the Turnkey Construction Drawings or its requested changes to the Turnkey Construction Drawings. Tenant shall have the right to request changes to the Turnkey Construction Drawings and Landlord shall implement such changes as the parties mutually agree upon. If Tenant fails to approve or request changes to the Turnkey Construction Drawings within ten (10) days after its receipt thereof, Tenant shall be deemed to have approved the Turnkey Construction Drawings and the same shall thereupon be final. If Tenant requests any changes to the Turnkey Construction Drawings, Landlord shall make those changes which are requested by Tenant and shall within ten (10) days of its receipt of such request submit the revised portion of the Turnkey Construction Drawings to Tenant. Tenant may not thereafter disapprove the revised portions of the Turnkey Construction Drawings unless Landlord has failed to incorporate the comments of Tenant in a manner acceptable to Tenant and, subject to the foregoing, the Turnkey Construction Drawings, as modified by said revisions, shall be deemed to be final upon the submission of said revisions to Tenant. Without limiting the foregoing, following the completion of the Turnkey Construction Drawings in accordance with this Section 2.02A (i), Tenant agrees to confirm Tenant’s consent thereto in writing within three (3) business days following Landlord’s written request therefor.

(ii) Allowance Work . In addition to the Turnkey Work, Landlord has agreed to make certain improvements to the Leased Premises described in the List of Allowances attached hereto as Exhibit F (the “ Allowance Work ”). Tenant shall have the right to reallocate funds between the Allowance line items shown on Exhibit F and to otherwise apply the Allowance toward any costs incurred by Tenant in connection with the construction of, and the installation of MHE Equipment (as hereinafter defined) in, the Leased Premises. Within thirty (30) days following the date hereof, Tenant will confer with Landlord’s space planner to develop a space plan for the Allowance Work that is reasonably acceptable to Tenant and Landlord (the “ Space Plan ”). Within twenty (20) days after Landlord’s receipt of the Space Plan, Landlord shall prepare and submit to Tenant a set of construction drawings (the “ Allowance Construction Drawings ”) covering all work to be performed by Landlord in constructing the Allowance Work in accordance with the Space Plan. Tenant shall have ten (10) days after receipt of the Allowance Construction Drawings in which to review the Allowance Construction Drawings and to give Landlord written notice of Tenant’s approval of the Allowance Construction Drawings or its requested changes thereto. Tenant shall have the right to request changes to the Allowance Construction Drawings and Landlord shall implement such changes as the parties mutually agree upon. If Tenant fails to approve or request changes to the Allowance Construction Drawings within ten (10) days after its receipt of the Allowance Construction Drawings, then Tenant shall be deemed to have approved the Allowance Construction Drawings and the same shall thereupon be final. If Tenant requests any changes to the Allowance Construction Drawings, Landlord shall make those changes which

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are requested by Tenant and shall within ten (10) days of its receipt of such request submit the revised portion of the Allowance Construction Drawings to Tenant. Tenant may not thereafter disapprove the revised portions of the Allowance Construction Drawings unless Landlord has failed to incorporate the comments of Tenant in a manner acceptable to Tenant and, subject to the foregoing, the Allowance Construction Drawings, as modified by said revisions, shall be deemed to be final upon the submission of said revisions to Tenant. After the Allowance Construction Drawings have been completed in accordance with this Section 2.02A(ii) , Tenant agrees to confirm Tenant’s consent thereto in writing within three (3) business days following Landlord’s written request therefor.

Following Tenant’s approval (or deemed approval) of the Allowance Construction Drawings, Landlord shall solicit competitive bids from at least three (3) subcontractors for each major trade (excluding any contractors also used for the Turnkey Work). Landlord and Tenant shall review the bids jointly and Landlord shall select the subcontractors mutually agreed upon by both parties. Promptly following the selection of a subcontractor for each major trade, Landlord shall deliver to Tenant a statement of the cost to construct and install all of the Allowance Work (the “ Cost Statement ”). The Cost Statement shall include design fees and general conditions, but shall not include any construction management or contractor fees. Tenant agrees to approve or reject the Cost Statement in writing within five (5) business days following Landlord’s written request therefor. If Tenant rejects the Cost Statement, Landlord and Tenant shall promptly meet to discuss changes to the Allowance Construction Drawings that shall be necessary to reduce the cost of the Allowance Work to an amount approved by Tenant.

Tenant shall be responsible for the cost to construct and install the Allowance Work only to the extent that the Cost Statement, taking into account any increases or decreases to the Allowance Work resulting from any Change Orders (as hereinafter defined), exceeds Five Million Five Hundred Ten Thousand Two Hundred Nine Dollars ($5,510,209.00) (the “ Allowance ”). If, following Tenant’s approval (or deemed approval) of the Allowance Construction Drawings, the Cost Statement shows that the cost to construct and install the Allowance Work will exceed the Allowance (such excess being herein referred to as the “ Excess Allowance Work Costs ”), then Tenant shall pay the Excess Allowance Work Costs to Landlord as set forth herein. At such time as Landlord’s costs and expenses incurred in connection with the construction and installation of the Allowance Work exceed the Allowance, Landlord will have the right to invoice Tenant on a monthly basis for the portion of the Excess Allowance Work Costs actually incurred by Landlord during the prior month plus a ten percent (10%) construction management fee thereon, and Tenant shall pay to Landlord the amount set forth in such invoice within ten (10) days following receipt of such invoice. Tenant’s failure to deliver the payments required in this paragraph shall entitle Landlord to stop the construction and installation of the Allowance Work until such payment is received, and such delay shall constitute a Tenant Delay hereunder. In addition, all delinquent payments shall accrue interest at fifteen percent (15%) per annum. Notwithstanding anything in this Lease to the contrary, in the event the Allowance shall exceed the Cost Statement (taking into account any increases or decreases to the Allowance Work resulting from any Change Orders), then the Minimum Annual Rent and corresponding Monthly Rental Installment schedules set forth in Section 1.01 above shall be reduced to reflect such decrease, as such costs have been quantified in the Cost Statement approved by Tenant, plus a five percent (5%) construction management fee. For purposes of calculating such reduction in the Minimum Annual Rent, Landlord shall multiply the positive difference between the Allowance and the Cost Statement plus five percent (5%) by 0.0795. [Example: Assume $400,000 savings. Then, $400,000 × 1.05 = $420,000 × 0.0795 = $33,390 Minimum Annual Rent savings.]

(iii) The Turnkey Work and the Allowance Work together shall be collectively referred to herein as the “ Landlord Work .” The Turnkey Construction Drawings and Allowance Construction Drawings together shall be collectively referred to herein as the “ Construction Drawings .” Landlord shall construct in a good workmanlike manner all of the Landlord Work and supply all work,

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labor, materials and equipment necessary to complete the Landlord Work in accordance with the Construction Drawings, which shall include, without limitation, the installation of landscaping, parking lots, driveways and all improvements as shown on the Construction Drawings for the benefit of the Leased Premises. Landlord shall use commercially reasonable speed and diligence to Substantially Complete the Landlord Work on or before the Projected Commencement Date.

B. Schedule . The Landlord Work shall be constructed by Landlord in a good and workmanlike manner, in compliance with the Construction Drawings and all laws, codes, and ordinances applicable to the Leased Premises, and in accordance with the schedule attached hereto as Exhibit G (the “ Project Schedule ”). Landlord shall apply for and obtain as expeditiously as possible, at its sole cost and expense, all permits, licenses and certificates necessary for the construction of the Landlord Work and for the occupancy of the Leased Premises by Tenant (including, without limitation, temporary and final certificates of occupancy), provided, Tenant shall be responsible for the installation of office furniture, racking, and warehouse equipment to the extent required to obtain the temporary and/or final occupancy permit for the Leased Premises. Landlord and Tenant will coordinate the installation of Tenant’s MHE Equipment and warehouse equipment pursuant to Section 2.02E .

C. Change Orders .

(i) Tenant shall have the right from time to time to request changes to the Construction Drawings by way of written change order (each, a “ Change Order ,” and collectively, “ Change Orders ”). Landlord shall prepare and submit to Tenant within ten (10) days a memorandum setting forth the impact on cost and schedule, if any, resulting from said Change Order (the “ Change Order Memorandum of Agreement ”), with such cost including any additional design fees and, if the applicable Change Order increases the cost to complete the Turnkey Work, a ten percent (10%) construction management fee. Tenant shall, within three (3) business days following Tenant’s receipt of the Change Order Memorandum of Agreement, either (a) execute and return the Change Order Memorandum of Agreement to Landlord, or (b) retract its request for the Change Order. Landlord shall not be obligated to commence any work set forth in a Change Order until such time as Tenant has delivered to Landlord the Change Order Memorandum of Agreement executed by Tenant. The increase in the cost to construct the Turnkey Work, if any, resulting from the Change Order, as set forth in the Change Order Memorandum of Agreement, shall be herein referred to as the “ Excess Turnkey Change Order Costs .” Landlord shall invoice Tenant on a monthly basis for the portion of the Excess Turnkey Change Order Costs actually incurred by Landlord during the prior month and Tenant shall pay to Landlord the amount set forth in such invoice within ten (10) days following receipt of such invoice.

(ii) Notwithstanding anything in this Lease to the contrary, in the event the actual cost of the Turnkey Work is reduced as a result of a Change Order to the Turnkey Work, as set forth in the Change Order Memorandum of Agreement, then the Minimum Annual Rent and corresponding Monthly Rental Installment schedules set forth in Section 1.01 above shall be modified to reflect such decrease, as such costs have been quantified in the applicable Change Order Memorandum of Agreement executed by Tenant. For purposes of calculating a reduction in the Minimum Annual Rent due to Change Orders to the Turnkey Work, Landlord shall multiply the net savings resulting from the Change Order, plus five percent (5%), by 0.0795. [Example: Assume $400,000 savings. Then, $400,000 × 1.05 = $420,000 × 0.0795 = $33,390 Minimum Annual Rent savings.]

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[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 406 OF THE S ECURITIES A CT OF 1933, AS AMENDED .

D. Warranty .

(i) Landlord hereby warrants that the Landlord Work (including, without limitation, the slab of the Leased Premises and all systems and equipment, including heating, ventilation and air conditioning, electrical, sprinkler and life safety, plumbing, and dock equipment, but specifically excluding the roof) shall be, for a period of one (1) year after the Commencement Date, and that the roof shall be, for a period of ten (10) years after the Commencement Date, free from defects in materials and workmanship (“ Landlord’s Warranty ”). The Landlord’s Warranty shall be absolute and unconditional subject only to routine maintenance (except as to Landlord’s obligations herein), casualty, ordinary wear and tear, and repairs and replacements necessitated by Tenant’s negligence or willful misconduct. Landlord hereby further warrants that the Landlord Work shall substantially and materially conform to the Construction Drawings. The Landlord’s Warranty covers all materials, labor and equipment for replacement and repairs but do not cover consequential damages, such as lost profits or opportunity, incurred by Tenant. Tenant will notify Landlord following actual discovery of any potential problems which may be covered by Landlord’s Warranty, but no delay in providing such notice shall affect or limit Landlord’s Warranty. Landlord also warrants that the recharge wells required for the Darby Watershed shall be in good condition and repair for a period of three (3) years after the Commencement Date.

(ii) In addition to the foregoing, Landlord shall obtain from all contractors and material suppliers providing labor or materials in connection with the development of the Leased Premises such warranties and guarantees as are customary in the construction and development of similar premises in the market area of the Leased Premises (collectively, “ Contractor Warranties ”). Without limiting the generality of the foregoing, the Contractor Warranties shall specifically include a ten (10) year “no dollar limit” material manufacturer’s roof warranty. Landlord shall enforce, for the benefit of Tenant, at Landlord’s sole cost and expense (and not as Additional Rent hereunder), during the Lease Term, all Contractor Warranties. Landlord shall provide Tenant with copies of all Contractor Warranties and Landlord shall consult with Tenant as to the application and restrictions applicable to all such Contractor Warranties. Tenant shall not take any action which to Tenant’s knowledge shall invalidate any of the Contractor Warranties and shall provide Landlord with written notice of all warranty claims. Tenant will notify Landlord as soon as reasonably practicable following actual discovery of any potential problems which may be covered by the Contractor Warranties, but no delay in providing such notice shall affect or limit Landlord’s enforcement of any such Contractor Warranties.

(iii) Without limiting Landlord’s duty to perform (or to enforce the performance of) repairs under any Landlord’s Warranty or Contractor Warranties, the timing of the performance of any repairs will be mutually agreed to by Landlord and Tenant so as to minimize the disruption to Tenant’s business operations.

E. Coordination of Tenant’s Work and Early Occupancy . Tenant agrees to coordinate with Landlord regarding the installation of Tenant’s phone and data wiring and any other trade related fixtures (including the “ MHE Equipment ” delineated in the MHE Plan attached hereto as Exhibit H ) that Tenant desires to install in the Leased Premises prior to Substantial Completion. If and to the extent permitted by applicable governmental laws and ordinances, Tenant, Tenant’s contractors, subcontractors and agents shall have the right to enter into portions of the Leased Premises prior to the Commencement Date in accordance with the phased early occupancy schedule attached hereto as Exhibit I in order to install fixtures (such as the MHE Equipment and conveyor), and otherwise prepare such portions of the Leased Premises for occupancy, which right shall expressly exclude making any structural modifications which would interfere with the performance of the Landlord Work. During any entry prior to the Commencement Date, (a) Tenant, Tenant’s contractors, subcontractors and agents shall comply with all terms and conditions of this Lease other than the obligation to pay Minimum Annual Rent, Additional Rent and utilities; provided, Tenant shall pay its equitable share of any utility cost in connection with the MHE Equipment and conveyor, (b) Tenant, Tenant’s contractors, subcontractors and agents shall not interfere with Landlord’s completion of the Landlord Work, (c) Tenant shall cause its personnel and contractors to comply in all material respects with the terms and conditions of Landlord’s rules of conduct

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attached hereto as Exhibit J , and (d) Tenant shall not begin operation of its business (including any storage of Tenant’s product in the Building). Tenant acknowledges that Tenant shall be responsible for obtaining all applicable permits and inspections relating to any such entry by Tenant; provided that Landlord shall cooperate with Tenant in obtaining such permits and inspections. Landlord shall also cooperate with Tenant’s rack vendor in obtaining any permits necessary for the installation of racks in the Leased Premises.

F. Late Completion . Notwithstanding anything to the contrary contained in the Lease, if Substantial Completion of the Leased Premises is delayed beyond the Projected Commencement Date as a result of Tenant Delay (as hereinafter defined), then, for purposes of determining the Commencement Date (for rent commencement), Substantial Completion shall be deemed to have occurred on the date that Substantial Completion would have occurred but for such Tenant Delay. Without limiting the foregoing, Landlord shall use commercially reasonable speed and diligence to Substantially Complete the Landlord Work on or before the Projected Commencement Date. Notwithstanding the foregoing, Landlord’s obligation to perform the Landlord Work on a timely basis shall be subject to the following additional terms and provisions:

(i) In the event the Commencement Date has not occurred within ten (10) days after the Projected Commencement Date, as such date may be extended by Completion Delays (as hereinafter defined), then Landlord shall pay to Tenant the sum of Five Hundred Thousand Dollars ($500,000.00) as liquidated damages for such delay.

(ii) In addition to the payment required pursuant to Section 2.02F(i) above, in the event that the Commencement Date has not occurred within ten (10) days after the Projected Commencement Date, as such date may be extended by Completion Delays, Tenant shall receive one day of free Minimum Annual Rent and Additional Rent from and after the Commencement Date for each day the Commencement Date is delayed beyond such ten (10) day period as liquidated damages for such delay.

If Landlord contends that a Completion Delay has occurred, then Landlord shall notify Tenant in writing or telephonically at (415) 945-3496 (Ken Dunaj) within five (5) days of the event which constitutes such Completion Delay (a “ Delay Notice ”). Landlord’s failure to so notify Tenant shall be deemed a waiver of Landlord’s right to assert any such Completion Delay; provided, however, that in the event a Completion Delay is not reasonably ascertainable or determinable by Landlord in five (5) days ( i.e. , such as from cumulative unusual weather conditions), Landlord shall have thirty (30) days in which to notify Tenant of such Completion Delay.

G. Definitions . For purposes of this Lease: (a) “ Completion Delays ” means (i) Tenant Delays (as defined below) or (ii) delays attributable to force majeure events (as defined in Section 17.04 below) (collectively, a “ Completion Delay ”); (b) the Leased Premises shall be deemed to be “ Substantially Completed ” (or any grammatical variation thereof) at such time as (i) Landlord shall certify in writing to Tenant that said Leased Premises have been completed in substantial accordance with the Construction Drawings subject only to minor punch list items ( i.e. , such unfinished items as shall not impair Tenant’s ability to use the Leased Premises in the manner intended by the Lease) to be mutually agreed to and identified by Tenant and Landlord during a joint inspection of the Leased Premises prior to Substantial Completion, (ii) Landlord shall have obtained all necessary governmental approvals and inspections, all systems are fully operational, and sufficient utilities are available to service the Leased Premises and are connected to mains and all meters are set and activated, (iii) the project architect, shall certify in writing to Tenant pursuant to and in accordance with form AIA-G704, or other form reasonably acceptable to Landlord as to those same matters in (i) and (ii) immediately preceding, and (iv) the

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issuance of a temporary certificate of occupancy. At such time as the last of the foregoing requirements shall have been satisfied, Landlord shall deliver possession of the Leased Premises to Tenant for occupancy; (c) “ Tenant Delay ” shall mean any actual delay in the Substantial Completion of the Leased Premises to the extent caused by Tenant, including, without limitation, (i) Tenant’s failure to meet any time deadlines specified herein (including deadlines in the Project Schedule), (ii) delays attributable to Change Orders, (iii) the performance of any other work in the Leased Premises by any person, firm or corporation employed by or on behalf of Tenant, or any failure to complete or delay in completion of such work, specifically including, but not limited to, Tenant’s installation of office furniture, racking and warehouse equipment, and (iv) Landlord’s inability to obtain a temporary occupancy permit for the Leased Premises because of the need for completion of all or a portion of improvements being installed in the Leased Premises directly by Tenant, specifically including, but not limited to, Tenant’s installation of office furniture, racking and warehouse equipment.

Section 2.03 Surrender of the Leased Premises . Upon the expiration or earlier termination of this Lease, Tenant shall, at its sole cost and expense, immediately (a) remove Tenant’s Property (as defined in Section 8.01 below) from the Leased Premises, and repair any damage caused by any such removal, (b) surrender the Leased Premises to Landlord in broom-clean condition and in good order, condition and repair, reasonable wear and tear and damage due to casualty or condemnation excepted, (c) remove from the Leased Premises (i) Tenant’s Property (as defined in Section 8.01 below), and (ii) any alterations required to be removed pursuant to Section 7.04 below, and (d) repair any damage caused by any such removal and restore the Leased Premises to the condition existing upon the Commencement Date reasonable wear and tear and damage due to casualty or condemnation excepted. All of Tenant’s Property that is not removed within ten (10) business days following ‘Landlord’s written demand therefor (following the expiration or earlier termination of this Lease) shall be conclusively deemed to have been abandoned and Landlord shall be entitled to dispose of such property at Tenant’s cost without incurring any liability to Tenant. This Section 2.03 shall survive the expiration or any earlier termination of this Lease.

Section 2.04 Holding Over . If Tenant retains possession of the Leased Premises after the expiration or earlier termination of this Lease without Landlord’s permission, then Tenant shall be a tenant at sufferance at a rental rate equal to one hundred fifty percent (150%) the Monthly Rental Installments for the Leased Premises in effect upon the date of such expiration or earlier termination and otherwise upon the terms, covenants and conditions herein specified, so far as applicable. Acceptance by Landlord of rent after such expiration or earlier termination shall not result in a renewal of this Lease, nor shall such acceptance create a month-to-month tenancy. In the event a month-to-month tenancy is created by operation of law, either party shall have the right to terminate such month-to-month tenancy upon thirty (30) days’ prior written notice to the other, whether or not said notice is given on the rent paying date. Notwithstanding the foregoing, in the event Tenant provides Landlord with at least six (6) months’ prior written notice of its intent to holdover possession (a “ Holdover Notice ”), then Tenant shall have the right to holdover beyond the expiration of the Lease Term as to all of the Leased Premises for a period not to exceed three (3) months, as identified in the Holdover Notice; provided, however, that Tenant shall have no such right if, at the time of the delivery of the Holdover Notice, Landlord has entered into a lease with a replacement tenant for the Leased Premises and requires immediate possession of the Leased Premises upon the expiration of the Lease Term in order to deliver possession thereof to the replacement tenant in accordance with the terms of its lease, or has executed a term sheet or letter of intent for the leasing of the Leased Premises to a replacement tenant and requires immediate possession of the Leased Premises upon the expiration of the Lease Term in order to commence the construction of interior improvements therein for such replacement tenant. Any permitted holdover by Tenant pursuant to a Holdover Notice shall be at the rental rate last due in this Lease, plus Additional Rent, and shall otherwise be on the terms and conditions herein specified, so far as applicable; provided, however, that in no event

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shall Tenant be permitted to deliver an additional Holdover Notice nor shall any renewal or expansion option or other similar right or option contained in this Lease be deemed applicable to any such tenancy. Except as expressly set forth herein, this Section 2.04 shall in no way constitute a consent by Landlord to any holding over by Tenant upon the expiration or earlier termination of this Lease, nor limit Landlord’s remedies in such event.

ARTICLE 3

RENT

Section 3.01 Base Rent . Tenant shall pay to Landlord as Minimum Annual Rent for the Leased Premises the sum specified in the Basic Lease Provisions, payable in equal consecutive Monthly Rental Installments, in advance, without demand, deduction or offset, beginning on the Commencement Date and on or before the first day of each and every calendar month thereafter during the Lease Term. The Monthly Rental Installment for any partial calendar months shall be prorated based on the number of days during the month this Lease was in effect in relation to the total number of days in such month.

Section 3.02 Additional Rent . Except as otherwise expressly provided, Tenant is responsible for all commercially reasonable costs, charges and expenses incurred by Landlord in connection with operating and maintaining the Leased Premises during the Lease Term including, but not limited to: Real Estate Taxes (as contemplated in this Section 3.02 and Section 17.22 hereof); insurance premiums (but not insurance deductibles or self-insured amounts retained by Landlord); utilities; expenses for maintenance, repair and replacement of driveways and parking areas, including snow and ice removal; costs of trash removal; landscaping costs; management fees (not to exceed one percent (1%) of the Minimum Annual Rent); costs incurred under the recorded documents and owners’ association affecting the Leased Premises and shown on Exhibit K hereto, and costs incurred under any other recorded documents or owners’ association affecting the Leased Premises (including the CCRs referenced below) and approved by Tenant in writing, which approval shall not be unreasonably withheld, conditioned or delayed; repairs and maintenance to those portions of the Leased Premises as contemplated in Section 7.02B below; and all other costs and expenses, reasonably necessary in maintaining the Leased Premises in good order, condition and repair as a warehouse distribution center) (collectively, “ Operating Expenses ”); provided, however, that Operating Expenses shall not include those costs, charges or expenses as set forth on Exhibit L attached hereto. Tenant acknowledges receipt of the CCRs set forth on Exhibit K hereto, which are intended to be recorded in connection with the development of the Park (the “ CCRs ”). Tenant hereby approves the form and substance of such CCRs. Landlord agrees that the Leased Premises, as designed and constructed in accordance with this Lease, shall be deemed to comply with the CCRs (or Landlord hereby waives any element of noncompliance). Promptly following the Commencement Date, Landlord shall assign to Tenant the membership interests of Landlord in the Association (as defined in the CCRs, but excluding the “Class B Member” or “Developer” rights under Section 9.3 of the CCRs) for the Lease Term (including any “Extension Terms,” as hereinafter defined) in accordance with, and as contemplated by, Section 9.1 of the CCRs, and Tenant shall thereafter have the rights of a Member (as defined in the CCRs) in the Association.

A. Uncontrollable Expenses . Notwithstanding anything in this Lease to the contrary, Tenant will be responsible for Real Estate Taxes, including the reasonable costs and expenses of contesting the validity or amount of Real Estate Taxes; fees or charges imposed by any governmental entity; insurance premiums; utilities; association dues and costs imposed by covenants or easements (subject to the limitations contained above in this Section 3.02 ), and snow removal costs (collectively, “ Uncontrollable Expenses ”), without regard to the level of increase in any or all of the above in any year or other period of time.

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B. Controllable Expenses . Tenant’s obligation to pay all other Operating Expenses which are not Uncontrollable Expenses (herein “ Controllable Expenses ”) shall be limited to a five percent (5%) per annum increase over the amount the Controllable Expenses for the immediately preceding calendar year would have been had the Controllable Expenses increased at the rate of five percent (5%) in all previous calendar years beginning with the actual Controllable Expenses for the year ending December 31 of the second full calendar year of the Lease Term.

C. Real Estate Taxes . “ Real Estate Taxes ” shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, payments in lieu of taxes, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed upon the Leased Premises or appurtenant land (or against Landlord’s business of leasing the Building) by any authority having the direct or indirect power to tax, together with costs and expenses of contesting the validity or amount of Real Estate Taxes. If the property is not separately assessed, then Tenant’s liability shall be an equitable proportion of the real estate taxes for all of the land and improvements included within the tax parcel assessed. Landlord’s reasonable determination thereof, in good faith, shall be conclusive. Tenant, at its cost, shall have the right at any time to seek a reduction in or otherwise contest any Real Estate Taxes for which it is obligated to reimburse Landlord by action or proceeding against the entity with authority to assess or impose the same. Landlord shall not be required to join in any such proceeding or action brought by Tenant unless the provisions of applicable Laws require that such proceeding or action be brought by or in the name of Landlord, in which event Landlord shall join in such proceeding or action or permit it to be brought in Landlord’s name, provided that Tenant protect, indemnify, and hold Landlord free and harmless from and against any liability, cost or expense in connection with such proceeding or contest. Tenant shall continue, during the pendency of such proceeding or action, to pay the Real Estate Taxes due as determined by Landlord pursuant to this Section 3.02 . If Tenant is successful in such action or proceeding, Landlord shall reimburse to Tenant the reduction in Real Estate Taxes realized by Tenant in such contest or proceeding within ten (10) days after the amount of such reduction has been reimbursed to Landlord. Notwithstanding anything herein to the contrary, in no event shall Real Estate Taxes include any franchise, estate, gift, succession, inheritance, transfer, net income, or excess profits tax imposed upon Landlord, or any penalties or fees.

Tenant shall pay, prior to delinquency, all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Leased Premises or elsewhere. Tenant shall cause such trade fixtures, furniture, equipment and all other personal property to be assessed and billed separately from the Leased Premises.

D. Capital Expenses . Notwithstanding anything to the contrary contained in this Lease, any costs of a capital nature (including, but not limited to, capital improvements and alterations, capital repairs, capital equipment, and capital tools, all as determined in accordance with generally accepted accounting principles, consistently applied (“ GAAP ”)) that would otherwise be properly included within “Operating Expenses” hereunder shall be capitalized by Landlord, and Tenant shall be required to pay as Operating Expenses only the pro rata share of the cost of the applicable item falling due within the Lease Term based upon the amortization of the same over the useful life of such item, such amount to be payable in substantially equal monthly installments over the then-remaining balance of the Lease Term.

Section 3.03 Payment of Additional Rent . Landlord shall be entitled to estimate annually the total amount of Additional Rent to be paid by Tenant during each calendar year of the Lease Term and written notice thereof shall be given to Tenant within a reasonable time period prior to the beginning of each calendar year (in the event the Lease Term shall commence in a calendar year, Tenant shall be furnished with said notice on the Commencement Date). Not later than November 30th of each calendar year, Landlord shall deliver to Tenant a proposed budget of Operating Expenses (each, an “ Expense

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Budget ”) for the following calendar year (except that, for the first year of the Lease Term, Tenant shall be provided with an Expense Budget not later than sixty (60) days prior to the Commencement Date). Tenant shall have the right to review and consult with Landlord regarding each Expense Budget within fifteen (15) days after Tenant’s receipt of the same. Tenant shall provide to Landlord, within such fifteen (15) day period, written approval of the applicable Expense Budget or, if Tenant disapproves any line item or line items contained therein, written notice of such disapproval on a line item basis. In the event Tenant delivers a notice of disapproval, Landlord shall act reasonably and in good faith to develop an Expense Budget that is responsive to Tenant’s concerns; provided, however, that in the event of a disagreement between Landlord and Tenant concerning the Expense Budget, the decision of Landlord shall control. Commencing on the Commencement Date, Tenant shall pay to Landlord each month, at the same time the Monthly Rental Installment is due, an amount equal to one-twelfth (1/12) of the estimated Additional Rent for such year. Any amount required to be paid by Tenant hereunder (in addition to Minimum Annual Rent) and any charges or expenses incurred by Landlord on behalf of Tenant under the terms of this Lease shall be considered “ Additional Rent ” payable in the same manner and upon the same terms and conditions as the Minimum Annual Rent reserved hereunder, except as set forth herein to the contrary. Any failure on the part of Tenant to pay such Additional Rent when and as the same shall become due shall entitle Landlord to the remedies available to it for non-payment of Minimum Annual Rent.

A. Increases or Decreases in Estimated Additional Rent . If any expenses comprising Additional Rent increase during a calendar year, Landlord may increase or decrease the estimated Additional Rent during such year by giving Tenant written notice to that effect, and thereafter Tenant shall pay to Landlord, in each of the remaining months of such year, an amount equal to the amount of such increase or decrease in the estimated Additional Rent divided by the number of months remaining in such year.

B. Adjustment to Additional Rent . Within a reasonable time after the end of each calendar year, Landlord shall prepare and deliver to Tenant a statement showing the actual Additional Rent for the prior calendar year (the “ Statement ”). Within thirty (30) days after receipt of the Statement, Tenant shall pay to Landlord, or Landlord shall credit against the next rent payment or payments due from Tenant, as the case may be, the difference between the actual Additional Rent for the preceding calendar year and the estimated amount paid by Tenant during such year, subject to the limitations contained in Section 3.02B and this Section 3.03 . For any fractional portion of a calendar year at the commencement or termination of this Lease, any such deficiency or overage shall be settled and adjusted between the parties after the end of that calendar year in the same manner as above, but prorated based on the number of days of the Lease Term within such calendar year.

C. Audit Rights . Within two hundred seventy (270) days of receipt of the Statement, Tenant shall have the right, upon at least ten (10) days’ prior written notice to Landlord, to audit at Landlord’s local offices, at Tenant’s expense, Landlord’s accounts and records relating to Additional Rent. Such audit shall be conducted by a certified public accountant (not billing on a contingency fee basis) selected by Tenant, which certified public accountant may be an employee of Tenant. If Landlord and Tenant agree that Landlord has overcharged Tenant, then the amount overcharged shall be paid to Tenant within thirty (30) days after the audit is concluded, together with interest thereon at the rate of ten percent (10%) per annum, from the date the Statement was delivered to Tenant until payment of the overcharge is made to Tenant. If Tenant provides Landlord with written notice disputing the correctness of Landlord’s statement, and if such dispute shall have not been settled by agreement between Landlord and Tenant within thirty (30) days after Tenant provides Landlord with such written notice, Tenant may submit the dispute to a reputable firm of independent certified public accountants selected by Tenant and approved by Landlord, such approval not to be unreasonably withheld, and the decision of such accountants shall be

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conclusive and binding upon the parties. If such accountant decides that there was an error, Landlord will make a correcting payment if Tenant overpaid such amount, and Tenant shall pay Landlord if Tenant underpaid such amount. In addition, if the Statement exceeds the actual Additional Rent which should have been charged to Tenant by more than five percent (5%), then the cost of the audit shall be paid by Landlord.

All of the information obtained through Tenant’s inspection with respect to financial matters (including, without limitation, costs, expenses and income) and any other matters pertaining to Landlord, the Leased Premises, the Building and/or the Park as well as any compromise, settlement or adjustment reached between Landlord and Tenant relative to the results of the inspection shall be subject to the confidentiality restrictions set forth in Section 17.15 below.

Section 3.04 Late Charges . Tenant acknowledges that Landlord shall incur certain additional unanticipated administrative and legal costs and expenses if Tenant fails to pay timely any payment required hereunder. Therefore, in addition to the other remedies available to Landlord hereunder, if any payment required to be paid by Tenant to Landlord hereunder shall not be paid within five (5) days after written notice of delinquency, then such unpaid amount shall bear interest from the due date thereof to the date of payment at the prime rate (as reported in the Wall Street Journal on the date such payment was due) of interest (“ Prime Rate ”) plus four percent (4%) per annum; provided, however, that Tenant shall be entitled to only two (2) such notices in any twelve (12) month period and, thereafter during such period, a late charge shall be due if Tenant fails to pay to Landlord any amount required to be paid hereunder within five (5) days after the date the same is due.

ARTICLE 4

SECURITY DEPOSIT

[I NTENTIONALLY O MITTED ].

ARTICLE 5

USE

Section 5.01 Use of Leased Premises . The Leased Premises are to be used by Tenant solely for the Permitted Use, and for no other purposes without the prior written consent of Landlord. Landlord warrants that the Land is currently or shall as of the Commencement Date be zoned for general office use and warehousing and distribution of consumer products, and the Leased Premises shall be, as of the Commencement Date, in compliance with all federal and municipal statutes, rules and regulations taking into account the foregoing uses. Based upon (i) that certain Zoning Ordinance 03-022 from the Village of West Jefferson passed April 21, 2003 and effective May 21, 2003; and (ii) that certain letter to Duke Realty Corporation from Thomas C. Philips, Mayor of the Village of West Jefferson, dated June 1, 2007, Landlord also warrants that the Land is currently zoned for sales to the general public. Landlord shall assist Tenant from time to time (including, without limitation, meeting with governmental officials) as reasonably necessary to enable Tenant to conduct sales to the general public from the Leased Premises. For purposes of this Lease, “ Tenant’s Intended Use ” shall mean general office use, warehousing and distribution of consumer products, and sales to the general public.

Section 5.02 Covenants of Tenant Regarding Use . Tenant shall (i) use and maintain the Leased Premises and conduct its business thereon in a safe, careful, reputable and lawful manner, (ii) following the Substantial Completion of the Leased Premises and subject to Landlord’s obligations herein, be responsible for meeting all applicable codes with regard to its storage, racking and warehousing, (iii) comply with all covenants that encumber the Building, including (except with respect

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to the Landlord Work) the “ Design Standards ” attached hereto as Exhibit M and the CCRs, whether or not such Design Standards and/or CCRs are yet recorded, but only to the extent the same do not prohibit Tenant’s use of the Leased Premises for Tenant’s Intended Use, and to the extent the same do not increase Tenant’s express obligations or decrease Tenant’s rights under this Lease, (iv) subject to Landlord’s obligations herein, comply with all laws, rules, regulations, orders, ordinances, directions and requirements of any governmental authority or agency, now in force or which may hereafter be in force, pertaining to Tenant’s particular use or occupancy of the Leased Premises, including, without limitation, those which shall impose upon Landlord or Tenant any duty with respect to or triggered by a change in the use or occupation of, or any improvement or alteration by Tenant to, the Leased Premises, and (v) comply with and obey the Rules and Regulations attached hereto as Exhibit N and as may be reasonably modified from time to time by Landlord on reasonable notice to Tenant; provided that any application and/or enforcement of any such Rules and Regulations shall be consistently applied among the tenants and occupants of the Park and shall not, unless required by law, materially alter, reduce or adversely affect any of Tenant’s rights or enlarge Tenant’s obligations under this Lease. Tenant shall not do or permit anything to be done in or about the Leased Premises or common areas of the Park which constitutes a nuisance or which interferes with the rights of other tenants within the Park or injures or annoys them. Landlord shall not be responsible to Tenant for the nonperformance by any other tenant or occupant of the Park of its lease or of any rules and regulations. Tenant shall not overload the floors of the Building or exceed traffic criteria for the truck courts beyond the Scope of Work attached hereto as Exhibit E . All damage to the floor structure or foundation of the Building due to improper positioning or storage of items or materials beyond that contemplated in the Scope of Work attached hereto as Exhibit E shall be repaired by Landlord at the sole expense of Tenant, who shall reimburse Landlord immediately therefor upon demand (or such cost shall be deemed Additional Rent). Tenant shall not use the Leased Premises, or allow the Leased Premises to be used, for any purpose or in any manner which would invalidate any policy of insurance now or hereafter carried on the Building or increase the rate of premiums payable on any such insurance policy unless Tenant reimburses Landlord as Additional Rent for any increase in premiums charged. Tenant shall have access to the Leased Premises, including, without limitation, in and out-going truck traffic for shipping and receiving of Tenant’s goods and products, twenty-four (24) hours a day, seven (7) days a week.

Section 5.03 Landlord’s Rights Regarding Use . In addition to the rights specified elsewhere in this Lease, Landlord shall have the following rights regarding the use of the Leased Premises or the common areas of the Park: (a) Landlord may install such signs, advertisements, notices or tenant identification information within the Park as it shall deem necessary or proper (provided that no such signs (other than Tenant’s Signage), advertisements, notices or tenant identification information shall be installed or displayed on the Building or within the Leased Premises, except “for sale” or “for lease” signs nine (9) months prior to the expiration of the Lease Term, without the prior written consent of Tenant, which consent may be given or withheld in Tenant’s sole discretion); (b) Landlord shall have the right at any time to control, change or otherwise alter the common areas of the Park as it shall deem necessary or proper; provided, however, that no such change or alteration shall adversely affect vehicular ingress to or egress from the Leased Premises; (c) Landlord reserves the right to reserve or grant drainage and other utility easements over, upon, under and across the portion of the Leased Premises located outside the Building to the extent reasonably deemed necessary by Landlord for the use, development or benefit of other land owned by Landlord or any affiliate of Landlord or other land in the Park, which easements shall be created by commercially reasonable easement agreements; provided, however, that such easements shall be non-exclusive and shall not interfere with Tenant’s use of the affected portions of the Leased Premises; and (d) subject to Tenant’s security requirements, Landlord, its employees and agents shall be permitted to inspect or examine the Leased Premises at any reasonable time upon no less than twenty-four (24) hours’ notice (except in an emergency when no notice shall be required), and to enter the Leased Premises for the purposes of showing the same to prospective tenants (during the last twelve (12)

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months of the Lease Term) and performing Landlord’s obligations under this Lease; provided, however, that except in the case of an emergency, a representative of Tenant shall have the right to accompany Landlord and its employees and agents during all such visits to the Leased Premises. Landlord shall incur no liability to Tenant for such entry, nor shall such entry constitute an eviction of Tenant or a termination of this Lease, or entitle Tenant to any abatement of rent therefor. Notwithstanding anything herein to the contrary, Landlord’s rights pursuant to this Section 5.03 shall be subject to the conditions that (i) the exercise of any of such rights shall not unreasonably interfere with Tenant’s use of the Leased Premises, (ii) except in emergencies, Landlord shall provide reasonable prior notice to Tenant before exercising any such rights which may interfere with Tenant’s business, and (iii) Landlord shall use commercially reasonable efforts to minimize to the extent possible any interference with Tenant’s business.

ARTICLE 6

UTILITIES AND SERVICES

Tenant shall obtain in its own name and shall pay directly to the appropriate supplier the cost of all utilities and services serving the Leased Premises, including, but not limited to: natural gas, heat, light, electrical power, water, sewer, telephone, janitorial service, refuse disposal and other utilities and services. Except as set forth below, Landlord shall not be liable in damages or other