LEASE AGREEMENT

LEASE AGREEMENT

THIS AGREEMENT dated as of the 15th day of November, 2005, by and between Pilgrim Partnership, L.L.C., a Vermont limited liability company (hereinafter "Landlord"), and Green Mountain Coffee Roasters, Inc., a Vermont corporation (hereinafter "Tenant").

WITNESSETH:

            In consideration of the rents herein reserved and the mutual covenants contained herein, the parties hereto agree as follows:

1. Premises . Landlord does hereby demise, let, rent and lease unto Tenant, and Tenant hereby leases and rents from Landlord a portion of a certain condominium unit currently under construction owned by Landlord consisting of 3,074 square feet of warehouse space and 9,000 square feet of office space located in a building commonly known as Pilgrim V on land in Waterbury, Vermont (the "Premises") which is a portion of the land identified as Site A and Site G shown on the Plan of Pilgrim Commercial Park Condominiums, dated March, 2005, prepared by Charles Grenier Consulting Engineer, P.C. and attached as Exhibit D to the Declaration of Pilgrim Commercial Park Condominiums dated March 24, 2005, recorded at Volume 233 at Page 163 of the Town of Waterbury Land Records, as the same has been or may be amended from time to time (said Declaration being hereinafter referred to as the "Declaration" and said plan being hereinafter referred to as the "Plan""). The Premises are depicted on Exhibit A attached hereto and incorporated herein by reference. In addition to the foregoing, Tenant shall also have a non-exclusive right to use the roads, open spaces and other common areas included within Pilgrim Commercial Park Condominiums for access to the Premises, subject to the limitations on the use thereof (if any) included in the applicable condominium declaration and other governing documents. The entire building upon which the Premises are located shall hereinafter be referred to as the "Building".
2. Term of Lease .
3. 1. The term shall commence on the Lease Commencement Date and shall remain in effect for a period of time running through March 31, 2016 (the "Term"). The "Lease Commencement Date" shall be the earlier of: (i) the date on which construction of the Premises are Substantially Complete (as defined in Section 2(b)); or (ii) the date Tenant commences beneficial use of the Premises. Tenant shall be deemed to have commenced beneficial use of the Premises when Tenant begins to move furniture, furnishings, inventory, equipment or trade fixtures into the Premises. The parties acknowledge that they contemplate that the Lease Commencement Date will occur on or about April 1, 2006.
   2. The Premises shall be deemed to be "Substantially Complete" when (i) as certified by Landlord's architect for Pilgrim V ("Landlord's Architect"), the Premises have been completed in accordance with the specifications attached hereto as Exhibit B (the "Specifications"), except for items of work and adjustments of equipment and fixtures that can be completed after the Premises are occupied without causing substantial interference with Tenant's use and occupancy of the Premises (collectively, the "Punch List Items"), and (ii) a certificate of occupancy for use of the Premises, if required, has been issued by the applicable governmental authorities. As soon as Landlord's Architect certifies the Premises to be Substantially Complete, Landlord will so notify Tenant and Tenant will promptly thereafter inspect the Premises for conformity to the Specifications. If Tenant determines that the Premises conform to the Specifications, Tenant will so inform Landlord and they will together compile a list of Punch List Items, together with a schedule for completing the Punch List Items. If Tenant determines that the Premises do not conform to the Specifications in any material respect, Tenant will so notify Landlord in writing and Landlord will cause the Premises to be repaired or corrected so that they do conform to the Specifications in all material respects. In the event of a dispute as to whether the Premises conform to the Specifications, the matter in dispute will be referred to Landlord's Architect to be resolved impartially and in good faith.
   3. Tenant, by taking possession of the Premises, shall accept and shall be held to have accepted same as suitable for the use intended by the Tenant, provided that Landlord shall remain responsible for the prompt completion of the Punch List Items and shall complete same in a manner which avoids unnecessary interference with Tenant's use and occupancy of the Premises.
4. Rent .
5. 1. Rent Amount . During the first year of the Term, Tenant agrees to pay Landlord annual rent of Two Hundred Seventeen Thousand Eighty Six and 10/100 Dollars ($217,086.10) in monthly installments of Eighteen Thousand Ninety and 51/100 Dollars ($18,090.51) each. A portion of this rental amount is in lieu of a common area maintenance (CAM) charge. The foregoing annual rental amount is premised upon the following calculations:
   2. 1. Office Space: 9,000 square feet multiplied by $18.00 per square feet multiplied by 110%.
      2. Warehouse Space: 3,074 square feet multiplied by $11.50 per square foot multiplied by 110%.
   3. Rent Increases . The rent amount specified in Section 3(a) shall increase annually during the Term from the amount of rent charged during the previous year by two and one-half percent (2.5%).
   4. Additional Rent . In addition to the rent amount specified in Section 3(a) above, all costs, charges, expenses and adjustments to rent which Tenant assumes, agrees or is obligated to pay Landlord pursuant to this Lease shall be deemed additional rent, and in the event of nonpayment thereof, Landlord shall have all of the rights and remedies with respect thereto as are herein provided for in case of the nonpayment of rent. In the event that any of the costs, charges and expenses constituting additional rent are deemed to be taxable income to Landlord, Landlord shall be entitled to a corresponding tax deduction for said costs, charges and expenses.
   5. Rent Payments . Tenant covenants to pay monthly installments of rent pursuant to subsection (a) above in advance, on the first day of each month, without any set-off or reduction. Tenant covenants to pay Landlord the rent, additional rent and adjustments of rent as herein provided when due, without notice or demand, at the time and in the manner herein specified and, in default of payment may, at the option of Landlord, be added to the next or any other installment of fixed minimum rent subsequently becoming due. All rent and additional rent is to be mailed to Landlord at the address identified for Landlord in Section 25 herein. In the event that this Lease is or becomes a month-to-month lease because of holdover or otherwise, or if Tenant vacates the Premises prior to the end of any month for any reason whatsoever, no rent shall be prorated or refunded to Tenant for the applicable period and Tenant shall be required to pay rent through the end of the applicable monthly period. Additionally, in the event this Lease is or becomes a month-to-month lease because of holdover or otherwise, Tenant shall be required to give Landlord at least sixty (60) days notice prior to vacating the Premises, and Tenant shall be responsible for paying Landlord for all rents which accrue prior to the expiration of the sixty days following the notice, provided that said notice requirement shall be reduced to ten (10) days for any period that rent is being assessed as the rate specified in Section 18(b).
   6. Late Payment Penalty . Tenant acknowledges that late payment by Tenant to Landlord of rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be difficult to ascertain. Accordingly, if any installment of rent or any other sum due hereunder from Tenant shall not be received by Landlord or Landlord's designee within ten (10) days after such amount shall be due, Tenant shall also pay to Landlord a late charge equal to Two Hundred Fifty and 00/100 Dollars ($250.00) for each instance that an installment of rent or other sums due hereunder is not paid by its due date. The parties agree that such late charges represent fair and reasonable estimates of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge or service charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount nor prevent Landlord from exercising any of the other rights and remedies granted hereunder.
6. Option to Purchase.
7. 1. During the first year of the Term, Tenant shall have the option to purchase (i) Landlord's development rights located within the 5.35 acre +/- area depicted as Site F on the Plan (the "Site F Development Rights"), said development rights having been created and reserved pursuant to the Declaration; and (ii) Landlord's development rights within the 10.54 acre +/- area depicted as Site H on the Plan (the "Site H Development Rights"), said development rights also having been created and reserved pursuant to the Declaration. Tenant may exercise each such option separately, by written notice from Tenant to Landlord, given no later than the last day of the first year of the Term. If such notice(s) has not been given by the last day of the first year of the Term, then the purchase option described herein shall terminate unless otherwise extended as provided in Section 4(b) below. Landlord agrees that during the term of said option, including any extension term pursuant to Section 4(b), it shall not transfer or convey the Site F Development Rights or the Site H Development Rights, except as provided in Section 27 herein. The purchase price for each such option, whether exercised during the first year of the Term, or, during the extension term arising pursuant to Section 4(b), shall be as follows:

Purchase Price

Site F Development Rights                                 $548,375

Site H Development Rights                                $1,080,350

4. 2. In the event that Tenant fails to exercise either of its options to purchase the Site F Development Rights or the Site H Development Rights during the first year of the Term as provided in Section 4(a) above, Tenant may extend the time it has to exercise said unexercised option(s) for an additional one year period, expiring on the last day of the second year of the Term, by providing written notice and making payment to Landlord as further set forth in Section 4(b)(i) and Section 4(b)(ii) below. Tenant may extend the period for exercising the options to purchase the Site F Development Rights and the Site H Development Rights separately.
   3. 1. Tenant may extend the time period for exercising the option to purchase the Site F Development Rights for said additional one year period by providing Landlord with written notice of its election to extend the option period together with payment to Landlord in the amount of Fifty Four Thousand Eight Hundred Thirty Seven and 50/100 Dollars ($54,837.50) no later than the last day of the first year of the Term.
      2. Tenant may extend the time period for exercising the option to purchase the Site H Development Rights for said additional one year period by providing Landlord with written notice of its election to extend the option period together with payment to Landlord in the amount of One Hundred Eight Thousand Thirty Five and 00/100 Dollars ($108,035.00) no later than the last day of the first year of the Term.
   4. If Tenant exercises either of the foregoing purchase options, Landlord shall convey the subject development rights, as the case may be, to Tenant or its designee, by warranty deed, conveying fee simple title to such development rights, free and clear of all liens and other encumbrances. Any such conveyance shall include all Special Declarant Rights (as defined by law) appurtenant to the development rights being conveyed, including specifically, but not by way of limitation, the right on the part of Tenant in its name to make, execute and record an amendment to the Declaration in form and content which satisfies the provisions of applicable law to effect the conversion of said development rights and the building or buildings and related improvements constructed by Tenant into a Unit or Units of the Pilgrim Commercial Park Condominium with the interest appurtenant to such Unit in the Common Elements of said Condominium (to be determined in accordance with the Declaration). Closing of the transaction(s) shall occur as reasonably practicable, with standard prorations to the date of closing. Tenant shall be responsible for any transfer tax payable with respect to the conveyance(s) and Landlord shall be responsible for any capital gains tax, land gains tax or other similar tax which may be payable in connection with the conveyance(s). At closing, Tenant shall receive a credit towards the purchase price of the subject development rights being purchased in the amount equal to seventy five percent (75%) of the payment made under Section 4(b)(i) for the purchase of the Site F Development Rights, and under Section 4(b)(ii) for the purchase of the Site H Development Rights, as the case may be. If Tenant fails to exercise either of the foregoing options, or fails to close, after paying either of the sums identified in Section 4(b)(i) or 4(b)(ii) above, its shall not receive any refund (or credit) of such sums from Landlord with respect to the payment made for the subject development right for which its fails to exercise the option or purchase.
   5. Contemporaneously with the exercise of either of the foregoing purchase options, Tenant shall notify Landlord in writing of the existence of encumbrances and defects in the title to the subject development rights. Landlord shall use its best efforts to remove such encumbrances and defects. If Landlord is not able to remove said encumbrances and defects and Landlord is then unable to convey title to the subject development rights free and clear of one or more encumbrances and defects specified in such notice, Tenant in full satisfaction of Tenant's obligations hereunder, shall either:

            (i)          Accept such title to the subject development rights as Landlord can convey without reduction in the corresponding purchase price; or

            (ii)         Revoke its exercise of such option(s). Any revocation of Tenant's exercise of said option shall be by written notice to Landlord.

4. 5. Landlord agrees to exercise its rights as a Declarant and Unit Owner (as said terms are defined in the Declaration) with the Declaration, and all other rights it may have pursuant to the Declaration, in a manner that will support and facilitate Tenant's exercise of any development rights and ensure Tenant's practical realization of the full benefit of the ownership of any development rights acquired pursuant to the exercise of either of the foregoing purchase options, provided that any such exercise is consistent with the terms of the Declaration and with all laws and governmental permits applicable to the exercise of said development rights.

5. Use of Premises/Possession . Tenant may use the Premises only for business office space and/or as a warehouse/workshop, and no other use will be allowed unless expressly agreed in writing by Landlord. Tenant shall be responsible for obtaining all necessary State and local permits and governmental approvals with respect to its use of the Premises, and shall be solely responsible for all costs and expenses associated with obtaining such permits and governmental approvals. The Premises shall not be used as living/sleeping quarters.
6. Taxes .
7. 1. Real Property Taxes : Landlord shall pay and be responsible for all real estate taxes with respect to the Premises except as otherwise provided in this Paragraph. Tenant shall reimburse Landlord for Tenant's proportional share of any increase in the real estate taxes upon the Building over and above such taxes assessed by the tax authority for the municipal tax year running from January 1, 2006 through December 31, 2006 and the school tax year running from July 1, 2005 through June 30, 2006 (collectively the "Base Year"). During the Term, Tenant's proportional share of the increase in real estate taxes on the Building shall be determined by multiplying the total increase in real estate taxes on the Building during any year that taxes are increased above the amount assessed by the taxing authority during the Base Year by 29% (which represents the proportion which the square footage of the Premises bears to the total square footage of the Building including the Premises). Said contribution towards any increases in annual real estate taxes shall be due and payable by Tenant to Landlord within thirty (30) days of receipt by Tenant from Landlord of copies of the relevant tax bills evidencing any tax increase above the Base Year, and calculations from Landlord showing the amount owed.
   2. Personal Property Taxes and Other Assessments : Tenant shall pay and be solely responsible for all operating license fees for the conduct of its business, and all ad valorem taxes, personal property taxes, inventory taxes and other assessments levied upon Tenant's trade fixtures, invent