PATRICK INDUSTRIES INC
COMMERCIAL LEASE
<DOCUMENT>
<TYPE>EX-10.(U)
<SEQUENCE>3
<FILENAME>p02534_x10uk04.txt
<DESCRIPTION>COMMERCIAL LEASE
<TEXT>
                                                                   Exhibit 10(u)

                                COMMERCIAL LEASE
                                ----------------

         THIS AGREEMENT, made and entered into this First day of September 2003,

between MERVIN D. LUNG BUILDING COMPANY, INC., an Indiana Corporation, of

St. Joseph County, State of Indiana, hereafter known as "LESSOR", and PATRICK

INDUSTRIES, INC., an Indiana corporation with principal offices in Elkhart

County, Indiana, hereinafter referred to as "LESSEE", for and in consideration

of the covenants and agreements hereinafter mentioned, that real estate located

in Elkhart County, State of Indiana, and more particularly described in ITEM 1.

LEASED PREMISES.

         WHEREAS, LESSOR is owner of certain property situated in Elkhart,

Indiana; and

         WHEREAS. LESSEE is desirous of leasing said property.

         NOW, THEREFORE, in consideration of the mutual promises hereinafter

contained with applicable ordinances, laws and regulations, the parties agree as

 follows:

         1. LEASED PREMISES: the LESSOR hereby leases to LESSEE those premises
bearing the street address of 3905 Lexington Park Drive, Elkhart, Indiana,

46514, more particularly described as follows:

                  Part of the Northeast Fractional Quarter of Section Two (2),
                  Township Thirty-seven (37) North, Range Four (4) East,
                  Cleveland Township, Elkhart County, Indiana, and more
                  particularly described as follows:

                  Commencing at the Southeast corner of said quarter section;
                  thence due North along the east line of said quarter section
                  one thousand two hundred ninety-three and forty-five
                  hundredths (1293.45) feet to the south right-of-way of the
                  Penn Central Railroad; thence south eighty-nine (89) degrees
                  fifty-nine (59) minutes west along the south right-of-way line
                  of said railroad three hundred sixty-five (365) feet to the
                  point of beginning of this description; thence continuing
                  south, eighty-nine (89) degrees forty-nine minutes along the
                  south line of said railroad three hundred twenty-five (325)
                  feet; thence due south four hundred thirty-eight (438) feet to
                  the north right-of-way line of a 60-foot road; thence north
                  eighty-nine (89) degrees fifty-nine (59) minutes east along
                  the north line of said road three hundred twenty-five (325)

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                  feet; thence due north four hundred thirty-eight (438) feet to
                  the point of beginning.

         2. TERM: The term of this Lease shall be for two years, from the 1st of

September 2003, through the 31st day of August, 2005.

         3. RENTAL: Lessee agrees to pay to Lessor in advance of the first day
of each month throughout the term of this lease, a rental of Nine Thousand One

Hundred Forty Six Dollars and Forty Gents ($9,146.40) Dollars per month (40,381

sq ft including 1,056 sq ft of office). Lessee further agrees to pay all

insurance premiums for fire, extended coverage and hazard insurance on the

leased premises in amounts provided for in this agreement. Lessee additionally,

agrees to pay, Real Estate Taxes assessed after the 2002 tax year, payable in

2003, as provided in this Agreement.

         4. CONDITION. USE AND CARE OF LEASED PREMISES: Lessee hereby

accepts the leased premises in its present condition. Lessee agrees to use said

premises for its warehousing and display, sales, repair and modification of its

products, and for all additional uses and purposes as may be customarily

incidental to the operation of Lessee's business.

         Lessee agrees that in no event shall it conduct any business on said

premises which would be in violation of any local, state or federal rules,

regulations, ordinances, or statutes.

         Lessee agrees that it shall place no sign upon leased premises until

Lessor shall first have approved, in writing, the size and location of said

sign.

         Lessee agrees to maintain the leased premises in good condition at all

times, subject only to reasonable  wear and tear of the kind normally accounted

for by depreciation; and Lessee agrees to maintain the leased premises in a neat


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and presentable condition at all times and not to permit accumulations of any

unsightly deposits of rubbish or other matter.

         Lessor reserves the right to make an inspection of the leased premises

at reasonable times during business hours no oftener than once every three (3)

months; provided, however, that said inspection shall not in any way interrupt

Lessee's normal business operations.

         Lessee shall have the right to make such interior changes,

improvements, and alterations to the leased premises, at its own cost and

expense, as may be desired or necessary to adapt the leased premises to the

business to be carried out by the Lessee; provided, however, that no structural

change shall be made in such leased premises without prior written consent of

the Lessor, and Lessee will not allow any liens or encumbrances to attach to the

premises for any such changes, improvements, and/or alterations, and will hold

the Lessor harmless for any such liens and encumbrances that may arise

therefrom. Any changes, alterations, and/or additions made by the Lessee in the

leased premises shall be and become a part of such premises and remain thereon

or the property of the Lessor; but if such alterations, changes or additions, or

any of them, are removable without injury to the premises, then the same may be

removed at the option of the Lessee.

         5. EFFECT OF DESTRUCTION OF THE LEASED

PREMISES:    If the leased premises should be wholly or substantially destroyed

without any fault on the part of the Lessee, then an equitable adjustment of the

rental due hereunder shall he made with respect to the length of time between

the date of the destruction and the date when the premises are restored, said

adjustment to be made upon

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a prorata basis. If Lessor elects not to restore the destroyed premises or if

such restoration is not completed within four (4) months from the date of such

destruction, then this lease shall terminate as of said date of destruction.

         6. TAXES AND UTILITIES: Lessor agrees to pay all real estate taxes

levied with respect to the leased premises at the rate of taxes assessed for the

2002 taxes payable in 2003, subject to other paragraphs of this agreement.

         Lessee agrees to pay, installments, any increase in real estate taxes

levied, with respect to the leased premises, subsequent to the 2002 tax year.

         Lessee agrees to pay, all taxes levied with respect to all property of

Lessee situated on the leased premises.

      Lessee agrees to pay the installation costs of all current charges for all

utilities used by Lessee on the leased premises, excepting water.

         7. LESSOR'S RESPONSIBILITY FOR REPAIR OF LEASED PREMISES: The

Lessor shall be responsible, at its expense, to keep in repair the warehouse

flooring, heating and air conditioning equipment, and the exterior of said

leased premises, including the roof, exterior walls, footings, foundations,

parking areas and access roads, The Lessee, however, shall have the

responsibility of notifying the Lessor immediately when any repairs are required

hereunder, before the Lessor shall be held responsible for the repair. The

Lessee, however shall be responsible for maintenance or repairs of a minor

nature which result from ordinary wear and tear of the leased premises, as well

as the utilities contained therein, or result from the acts of the Lessee, its

agents, employees or invites.

      8, ASSIGNMENT OR SUBLETTING: Lessee may assign or sublet all or any

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portion of the leased premises; provided, however, that nothing in this

paragraph shall be

construed as relieving Lessee from any responsibility it may have under this

lease for nonpayment of rent or any other responsibility, and. provided further

that Lessee shall remain primarily liable on said lease in the event of any

assignment or subletting.

         9. HOLD HARMLESS. INSURANCE AND SUBROGATION:

         Lessee agrees to maintain in full force and. effect at all times public

liability insurance with bodily injury limits of at least $500,000 per injury,

$1,000,000 aggregate, and property damage limits in amounts of at least $500,000

with an insurance carrier acceptable to Lessor duly protecting Lessor. Lessee

also agrees to keep the real property, including all fixtures, adequately

insured against fire and other casualty; Lessee agrees to keep all personal

property adequately insured against fire and other casualty. Lessee shall

deliver to Lessor evidence of the existence of such liability insurance.

         Lessee agrees to hold Lessor free and harmless from any and all

liability to which Lessor might otherwise be subjected by reason of Lessee's

activities on leased premises, including, among other things, reimbursing Lessor

for all costs, attorneys' fees, etc., that may be incurred by Lessor in

defending against any such claimed liability except that neither Lessor or

Lessee shall be liable to the other for damage or loss to property growing out

of or in connection with Lessee' s use and occupancy of the leased premises

or to the contents caused by the negligence or fault of Lessor or Lessee or of

their respective agents, employees, subtenants, assignees, or invitees, to the

extent such damage or loss is covered by the parties. Lessor and Lessee agree to

notify their respective insurance companies, in writing, of the provisions of

this paragraph, and in the event either party cannot waive its subrogation

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rights pursuant to this paragraph, such parties shall immediately notify the

other party of this fact in writing.

         Lessor shall be entitled at all times to post on the leased premises

appropriate notices of non-responsibility with respect to any work by Lessee

which might otherwise subject the leased premises to mechanic's lien claims.

         10. RIGHTS OF LESSOR ON RECEIVERSHIP OR BANKRUPTCY OF ANY

LESSEE: At the option of Lessor, this lease shall terminate and Lessor shall

forthwith be entitled to the possession of the leased premises upon the

occurrence of any of the following events:

         (a) The execution by any Lessee of an assignment for the benefit of

         creditors.

         (b) The appointment by any court of competent jurisdiction of a

         receiver or other

         similar officer to administer the assets of any Lessee.

         (c) The filing of a petition in bankruptcy by or against any Lessee.

         (d) The filing of a petition for an arrangement or any other similar

         proceeding under any provision of the Federal Bankruptcy Act, as

         amended, with respect to any Lessee. This option shall be exercised, if

         at all, by  Lessor mailing postage prepaid, a written notice to Lessee

         at the leased premises or to the assignee, trustee, etc. , as the case

         may be, at his place of business, advising of Lessor's election to so

         terminate this lease as of the date of the occurrence of such event.

         Such written notice must be mailed within ninety (90) days after Lessor

         receives actual notice of the occurrence of such event.

         Lessee, when used in this paragraph, shall mean any one or more of

several persons embraced within the term Lessee under this lease.

         11. RIGHTS OF LESSOR UPON DEFAULT BY LESSEE: If at any time Lessee

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defaults, under this lease, by failing to fully observe and perform all

conditions and promises to be observed and performed by Lessee hereunder or

defaults in any other manner, and such default is not cured within ten (10) days

(except default in payment of rent for which the period is three (3) days after

the delivery in person to Lessee by or on behalf of Lessor or the mailing to

Lessee, by or on behalf of Lessor, postage prepaid, addressed to Lessee at the

leased premises of a written notice of such default and a demand that the

default be cured, then at any time thereafter Lessor may pursue any one or more

of the following remedies (such remedies being cumulative and not mutually

exclusive):

         (a) Lessor may immediately recover from Lessee all amounts due to

         Lessor hereunder, together with damages arising from Lessee's default

         (b) Lessor shall forthwith be entitled to the possession of the leased

         premises without thereby in any way relieving Lessee of Lessee's

         obligation to pay rent hereunder. If pursuant hereto, Lessor should

         repossess the leased premises, Lessor may, at its option, re-let the

         leased premises for the benefit of Lessee, in which case Lessee agrees

         to pay all costs of re-letting, pay monthly, the excess of the monthly

         rental provided, for hereunder over the monthly rental received from

         such re-letting with Lessor being entitled to retain the excess, if

         any, of the monthly rental received from such re-letting over the

         monthly rental provided for hereunder, Neither repossession with Lessor

         being entitled to retain the excess, if any, of the monthly rental

         received from such re-letting over the monthly rental provided for

         hereunder. Neither repossession by Lessor hereunder nor re-letting by

         Lessor hereunder shall in any way take away


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         Lessor's right to thereafter terminate this lease as provided for in

         the following subparagraph (c).

         (c) Lessor may terminate this lease by delivering to Lessee in person

         or by mailing, postage prepaid, to Lessee at the leased premises, a

         writing stating Lessor's election to terminate this lease.

         If Lessor should thus terminate this lease, then Lessor may forthwith

recover, from Lessee the excess of rentals provided for hereunder above the then

reasonable rental value of the remainder of the term of this lease.

         Lessee agrees that if Lessor pursues any of the foregoing remedies,

Lessee will pay to Lessor all expenses and attorney's fees reasonably incurred

by Lessor in connection therewith and that in any litigation the same shall be

provided for as incidental damages.

         12. Lessee agrees that this lease and Lessee's rights hereunder shall

at all times during the term hereof be subject and subordinate to the lien of

any mortgage, deed of trust or other encumbrance which presently exists with

respect to the leased premises or which may be placed upon the leased premises

hereafter by Lessor or Lessor's successor in interest and Lessee agrees to

execute and deliver to Lessor or Lessor's successor in interest any instrument

or instruments requested by Lessor with respect to any such encumbrance placed

or to be placed upon the leased premises and subordinating this lease thereto.

     13. OPTION TO RENEW: At the expiration of the term of the Lease, Lessee

shall have the option to renew the Lease for an additional twenty-four (24)

months, commencing September 1, 2005 and ending August 31, 2007. All provisions

of the Lease




<PAGE>

for the renewal term, excepting that basic rent for the renewal term shall be

renegotiated by and between the parties prior to the commencement of said

renewal term. Notice of exercise of said option to renew shall be given by the

Lessee to the excepting that basic rent for the renewal term shall be

renegotiated by and between the parties prior to the commencement of said

renewal term. Notice of exercise of said option to renew shall be given by the

Lessee to the Lessor no less than sixty (60) days prior to the termination of

this lease term.

         This agreement constitutes the entire agreement by and between the

parties and may only be altered, amended or changed in writing.

         IN WITNESS WHEREOF, the parties have hereunto executed this agreement

on the day first above written.


                                         LESSOR:
                                         MERVIN D. LUNG BUILDING COMPANY, INC.
                                         By:
                                         Mervin D. Lung, President


                                         LESSEE:
                                         PATRICK INDUSTRIES, INC.
                                         By:
                                         David D. Lung, President & CEO



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