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"Permitted Exceptions." Owner shall have ten (10) days after receipt of such notice to advise Optionee by written notice of any disapproved exceptions or matters which will not be removed from title by Owner prior to the Closing (other than Owner Removal Items, which Owner shall be required to remove prior to the Closing). If Optionee provides the Notice to Proceed to Owner during the Feasibility Period, the exceptions contained in the Owner's notice (other than Owner Removal Items) shall be deemed additional Permitted Exceptions. (b) New Exceptions. If any new exceptions or matters are first included in any supplement or update to the Title Report issued after the expiration of the Feasibility Period (collectively, "New Exceptions "), Optionee shall notify Owner in writing on or before 5:00 p.m. Pacific Time within three (3) business days after receipt of such supplement if Optionee disapproves some or all of the New Exceptions (the "New Exceptions Objection Notice "). If Optionee timely delivers to Owner a New Exceptions Objection Notice, Owner shall thereafter have five (5) business days to determine whether Owner is willing to remove the New Exceptions (the "Decision Period ") and deliver notice to Optionee. If at the end of the Decision Period Owner is unwilling to remove the New Exceptions, and if Optionee is unwilling to waive its objections, then either party may terminate this Agreement upon notice to the other. If Optionee waives its objections and elects to proceed to Closing, the New Exceptions shall be deemed to be Permitted Exceptions and Optionee shall not be entitled to any reduction in the Purchase Price. In the event that Owner fails to deliver Owner's response notice to Optionee as set forth in this Paragraph 5(b), Owner shall be deemed to have elected not to remove the New Exceptions. If prior to the end of the Decision Period Owner advises Optionee that Owner is willing to remove the New Exceptions, then Owner thereafter shall cause the New Exceptions to be removed by the Closing Date. Notwithstanding the foregoing, Owner shall be required to remove at its sole cost any New Exceptions that constitute Owner Removal Items, irrespective of whether Optionee expressly has objected to such exceptions or items. (c) Title Delivered at Closing. By executing the Grant Deed, Owner shall convey to Optionee (or to such other person or entity as Optionee may designate) marketable fee title to the Real Property subject only to the Permitted Exceptions. Immediately following recordation of the Grant Deed, Escrow Holder shall issue to Optionee an ALTA extended coverage owner's policy of title insurance (2006 form), with coverage in the amount of the purchase price for the Real Property, showing fee simple title to the Real Property vested in Optionee, subject only to the Permitted Exceptions (the "Title Policy "). (d) Personal Property Encumbrances. To the extent that any of the Personal Property is encumbered by Uniform Commercial Code financing statements or other liens or encumbrances ( "Personal Property Encumbrances "), Owner shall cause such Personal Property Encumbrances to be released or otherwise removed prior to the Closing. 6. Liquidated Damages. OPTIONEE AND OWNER AGREE THAT IF OPTIONEE EXERCISES THE OPTION PURSUANT TO PARAGRAPH 2(c) AND THEREAFTER DEFAULTS ON ITS OBLIGATION TO PURCHASE THE PROPERTY PURSUANT HERETO, THE DAMAGES TO OWNER WOULD BE DIFFICULT AND IMPRACTICAL TO DETERMINE. ACCORDINGLY, IN THE EVENT OF SUCH DEFAULT BY OPTIONEE, OPTIONEE AND OWNER HAVE AGREED TO FIX AS LIQUIDATED DAMAGES THE DEPOSITS, BUT ONLY TO THE EXTENT THE DEPOSITS HAVE THERETOFORE BEEN Option Agreement 50 Chemical 10.5.2010 v. 8 8