LEASE AGREEMENT

Exhibit 10.11

CITY OF PARAGOULD, ARKANSAS
Lessor

TO

AMERICAN RAILCAR INDUSTRIES, INC.
Lessee

LEASE AGREEMENT

Dated as of April 1, 1995

This instrument also constitutes a Security Agreement under the Arkansas Uniform Commercial Code.

The interest of the Lessor in this Lease Agreement has been assigned to Fleet National Bank, as Trustee, under the Trust Indenture, dated as of April 1, 1995, securing $9,500,000 City of Paragould, Arkansas, Industrial Development Revenue Bonds (American Railcar Industries, Inc./ACF Industries, Incorporated Railcar Manufacturing Project), Series 1995, as security for payment of the principal of and premium, if any, and interest on such Bonds.

Prepared by: .

Kephart & Fisher
41 South High Street
Suite 1685
Columbus, Ohio 43215

LEASE AGREEMENT

TABLE OF CONTENTS

ARTICLE I

LEASE AGREEMENT

     This Lease Agreement dated as of April 1, 1995, is between the CITY OP PARAGOULD, ARKANSAS (hereinafter called “Issuer”), a municipal corporation organized and existing under the laws of the State of Arkansas (“State”), as lessor, and AMERICAN RAILCAR INDUSTRIES, INC. (hereinafter called “Company”) , a corporation organized and existing under the laws of the State of Missouri as lessee.

W I T N E S S E T H:

     WHEREAS, Issuer is authorized by the Municipalities and Counties Industrial Development Revenue Bond Law, Ark. Code Ann. §§ 14-164-201 to -224 (1987) (the “Act”) , to acquire lands, construct and equip industrial buildings, improvements, and facilities, and incur other costs and expenses and make other expenditures incidental to and for the securing and developing of industry; and

     WHEREAS, Issuer is authorized by the Act to issue industrial development revenue bonds payable from revenues derived from the industrial project so acquired and constructed and secured by a lien thereon and security interest therein; and

     WHEREAS, the necessary arrangements have been made with Company for the acquisition, construction, and equipping of a substantial industrial project consisting of a manufacturing facility for railroad cars or related industrial products with attached office or any other manufacturing or industrial use provided for in Section 2.2(c) hereof (the “Project”), and to lease the Project to Company for use in Company’s business; and

     WHEREAS, Company desires that Issuer issue its Industrial Development Revenue Bonds (American Railcar Industries, Inc./ACF Industries, Incorporated Railcar Manufacturing Project), Series 1995 (the “Bonds”) , to provide funds to acquire, construct, and equip the Project, and Issuer has agreed to do the same;

     WHEREAS, pursuant to an Ordinance adopted March 27, 1995, the Issuer has authorized the execution and delivery of this Lease Agreement; and

     WHEREAS, pursuant to a Trust Indenture, dated as of the date hereof, between Issuer and Fleet National Bank, a national banking association duly organized, validly existing, and in good standing under the laws of the United States, having all requisite power and authority to act as trustee, and having its principal corporate trust office in Providence, Rhode Island, as Trustee, Issuer intends to assign to Trustee as security for the Bonds its interest in this Agreement (except for the reimbursement of certain

expenses, payment of the renewal option price, payment of the optional purchase price for the Leased Land, and payments for indemnification of Issuer);

     NOW, THEREFORE, in consideration of the respective representations and agreements hereinafter contained Issuer and Company agree as follows (provided, that in the performance of the agreements of Issuer herein contained, any obligation it may thereby incur for the payment of money shall not be a general debt on its part, but shall be payable solely out of the proceeds derived from this Lease Agreement, the sale of the bonds referred to in Section 2.1 hereof, and the insurance proceeds and condemnation awards as herein provided and the Issuer’s estate and interest in the Mortgaged Property):

ARTICLE I
DEFINITIONS

     All words and phrases defined in the indenture shall have the same meanings for purposes of this Lease Agreement. In addition, the following words and terms shall have the following meanings:

     “Agreed Rate” means 8 percent per annum.

     “AuthoriZed Issuer Representative” means the person or persons, satisfactory to Company, at the time designated to act on behalf of- Issuer by written certificate furnished to Company and Trustee containing the specimen, signature (s) of such person(s) and signed on behalf of Issuer by its Mayor. Such certificate may designate an alternate or alternates.

     “Collateral” means all machinery, equipment, furniture, and fixtures and other personal property of every kind and nature whatever acquired by Company and paid for or reimbursed to Company for the cost thereof out of the Construction Fund or other funds provided by the Company pursuant to Section 4.5 of this Agreement and placed on and in the Leased Land and Buildings including, Without limitation, all replacements and substitutions of all of , the foregoing and the proceeds of all of the foregoing. All such machinery, equipment, furniture, fixtures, and other personal property shall be identified in a ledger, one copy of which shall be filed with Trustee and one copy maintained by Company on the Mortgaged Property. The term Collateral does not include any equipment leased by Company from any lessor other than Issuer (the “Equipment”) .

     “Construction Period” means the period between the beginning of construction or April 27, 1995 (whichever is earlier) and the Completion Date.

     “Lease Term” means the duration of Company’s right to use and occupy the Mortgaged Property as specified in Section 5.1 of this Lease Agreement.

     “Official Action Date” means November 28, 1994.

     “Permitted Encumbrances” means, as of any particular time, (i) the Indenture and the Lease Agreement, (ii) any easements, licenses, rights of way (including the dedication of public, highways), and other rights or privileges in the nature of easements with respect to any property included in the Mortgaged Property, granted or conveyed in accordance with and pursuant to Section 8.5 of this Lease Agreement, (iii) utility, access, and other easements and rights-of-way, restrictions, reservations, reversions, and exceptions that an Independent Engineer, acceptable to Trustee and Company certify will not interfere with or impair the operations being conducted in the Mortgaged Property (or, if no operations are being conducted therein, the operations for which the Mortgaged Property was designed or last modified) , (iv) such minor defects, irregularities, encumbrances, easements, rights-of-way, and clouds on title as normally exist with respect to properties similar in character to the Mortgaged Property, and as do not, in the opinion of any Counsel acceptable to Trustee, materially impair the property affected thereby for the purpose for which it was acquired or is held by Issuer, (v) any judgment lien against the Company so long as such judgment is being contested and execution thereon is stayed, (vi) any liens on the Mortgaged Property for taxes, payments-in-lieu of taxes, assessments, levies, fees, water and sewer rents, other governmental and similar charges, and any liens of mechanics, materialmen, laborers, suppliers or vendors for work or services performed or materials furnished in connection with the Mortgaged Property, which are not due and payable or which are not delinquent, or the amount or validity of which, are being contested in accordance with the terms of this Lease Agreement, (vii) any lien on accounts receivable securing or deemed to secure any indebtedness incurred or deemed incurred by virtue of any recourse obligation associated with any sale or assignment of accounts receivable; and (viii) any lien or encumbrance or reservation of title affecting personalty constituting part of the Mortgaged Property.

     “Permitted Investments” means:

     (a) Governmental Obligations;

     (b) obligations of any of the following federal agencies which represent full faith and credit of the United States of America: Farmers Home Administration, General Services Administration, United States Maritime Administration, Small Business Administration, Government National Mortgage Association, United States Department of Housing and Urban Development, and Federal Housing Administration;

     (c) U.S. dollar denominated deposit accounts fully insured to the holder by the Federal Deposit Insurance Corporation in commercial banks;

     (d) U.S. dollar denominated deposit accounts, federal funds, and banker’s acceptances with commercial banks (foreign or domestic) which have a rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-1+” by S&P or “P-l” by Moody’s and maturing no more than 360 days after the date of purchase;

     (e) money market funds rated in the highest rating category of S&P or Moody’s which are monitored quarterly or money market funds which are invested exclusively in Government Obligations;

     (f) pre-refunded municipal obligations, which obligations shall be limited to bonds or other obligations of any state of the United States or of any agency, instrumentality, or local governmental unit of any such state (i) which are not callable at the option of the obligor prior to maturity or as to which irrevocable notice has been given by the obligor to call on the date specified in the notice; (ii) which are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or obligations described in paragraph (a) above, which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate; (iii) which fund is sufficient, as verified-by an independent accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations describied in this paragraph on the maturity date or dates thereof or the redemption date or dates specified in the irrevocable instructions referred to in subclause (i) of this paragraph, as appropriated; and (iv) which are rated, based on the escrow, in the highest rating category of S&P or Moody’s, or any successors thereto; and

     (g) U.S. dollar denominated certificates of deposit in commercial banks properly secured at all times by collateral security described in (a) and (b) above.

     “Qualified Project Costs” means costs and expenses of the Project which constitute land costs or costs for property of a character subject to the allowance for depreciation, excluding specifically working capital and inventory costs, provided, however, that (a) costs or expenses paid or incurred more than sixty days prior to the Official Action Date shall not be deemed to be Qualified Project Costs; (b) Issuance Costs shall not be deemed to be Qualified Project Costs; (c) interest during the Construction Period shall be allocated between Qualified Project Costs and other costs and expenses to be paid from the proceeds of the Bonds; (d) interest following the Construction Period shall not constitute a Qualified Project Cost; (e) letter of credit fees and municipal

bond insurance premiums which represent a transfer of credit risk shall be allocated between Qualified Project Costs and other costs and expenses to be paid from the proceeds of the Bonds; and (f) letter of credit fees and municipal bond insurance premiums which do not represent a transfer of the credit risk shall not constitute Qualified Project Costs.

     “Yield” means yield computed under Regulation §1.148-4 for the Bonds and yield computed under Regulation for an investment.

ARTICLE II
REPRESENTATIONS

      Section 2.1. Representations by Issuer. Issuer makes the following representations as the basis for the undertakings on its part herein contained:

     (a) Under the provisions of the Act and the Constitution of the State, Issuer is authorized to enter into the transactions to be performed by it under this Lease Agreement and the Indenture and to carry out its obligations hereunder and thereunder. Issuer has been duly authorized to execute and deliver this Lease Agreement and the Indenture.

     (b) Issuer will perform all of its obligations with reference to the acquiring, constructing, and equipping of the Project as specified in Article IV of-this Lease Agreement.

     (c) Notwithstanding anything herein contained to the contrary, it is the intention of Issuer that any obligation it

     may hereby incur for the payment of money shall not be a general debt on its part but shall be payable solely from the proceeds derived from this Lease Agreement, the sale of the Bonds, and the insurance and condemnation awards as herein provided and the Issuer’s estate and interest in the Mortgaged Property.

     (d) issuer has been induced to enter into this undertaking by the promise of Company to locate industrial facilities within or near the corporate limits of Issuer.

     (e) In order to furnish necessary moneys for. the payment of Project Costs and a portion of the expenses of authorizing and issuing the Bonds, Issuer has authorized the issuance of the Bonds.

     (f) The Bonds are to be issued under and secured by the Indenture, pursuant to which Issuer’ s interest in this Lease Agreement and the revenues and income derived by Issuer from the leasing of the Mortgaged Property will be. assigned to Trustee as security for payment of the principal of and

premium, if any, and interest on the Bonds, and the Bonds will be secured by a mortgage on and security interest in Issuer’s interest in the Mortgaged Property (provided that in the performance of the agreements of the Issuer herein contained, any obligation that Issuer may thereby incur for the payment of money shall be limited to the Issuer’s estate or interest in the Mortgaged Property and shall not be a general debt on its part, but shall be payable solely out of the proceeds derived from this Agreement, the sale of the Bonds referred to in Section 2.1 herein, and the insurance proceeds and condemnation awards as herein provided) and provided further that the obligations of Company under the Bonds, this Agreement and Indenture are guaranteed by ACF Industries, Incorporated and the Company pursuant to the Guaranty.

     (g) Not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are delivered by Issuer pursuant to Article II of the Indenture, Issuer covenants to satisfy the information reporting requirement of Section 149(e) of the Code.

        Section 2.2. Representations by Company. Company makes the following representations as the basis for the undertakings on its part herein contained:

     (a) Company is a corporation duly incorporated under the laws of the State of Missouri, is in good standing under the laws of the State of Missouri and the State, and has power to enter into this Lease Agreement, the Hazardous Substance Certification and Indemnification, and the Guaranty, and to perform all obligations contained herein and therein, and by proper corporate action, has been duly authorized to execute and deliver this Lease Agreement, the Hazardous Substance Certification and Indemnification, and the Guaranty.

     (b) The leasing by Issuer of the Mortgaged Property to Company will induce Company to acquire, construct, and equip an industrial enterprise within or near the corporate limits of Issuer.

     (c) Company will operate the Mortgaged Property upon its completion as (i) a manufacturing facility for railroad cars or related industrial products with attached office or (ii) any other manufacturing or industrial use provided that such use (a) is consistent with the Act and with a Manufacturing Facility (as such term is defined in Section 144 (a) (12) of the Code and (b) does not violate any other requirements of the Code and applicable Regulations so that interest on the Bonds shall at any time cease to be excluded from gross income for federal income tax purposes, until the expiration or earlier

termination of the Lease Term as provided herein, all to the extent that such operation is, in Company’s judgment, commercially desirable.

     (d) Neither the execution and delivery of this Lease Agreement, the Hazardous Substance Certification and Indemnification, and the Guaranty, the consummation of the transactions contemplated hereby and thereby, nor the fulfillment of or compliance with the terms and conditions hereof and thereof conflicts with or results in a material breach of the terms, conditions, or provisions of the Articles of Incorporation or bylaws of Company or any agreement or instrument to which Company is now a party or by which Company is bound, or constitutes a material default under any of the foregoing, or results in the creation or imposition of any lien, charge, or encumbrance whatsoever upon any of the property or assets of Company under the terms of any instrument or agreement except as provided herein.

     (e) There is no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court or public board or body, known to be pending or threatened against or affecting Company, nor to the best of the knowledge of Company is there any basis therefor, wherein an unfavorable decision, ruling, or finding would materially adversely affect the transactions contemplated by this Lease Agreement or which, in any way, would materially adversely affect the validity or enforceability of the Bonds, this Lease Agreement, the Hazardous Substance Certification and Indemnification the Guaranty, or any other agreement or instrument, to which Company is a party, used or contemplated for use in the consummation of the transactions contemplated hereby.

     (f) The Project consists of land, buildings, Leased Equipment, or facilities that can be used to secure and develop industry within or near the City of Paragould, Arkansas.

     (g) The proceeds from the sale of the Bonds will be used only for the payment of Cost of the Project and paying a portion of the costs of issuing the Bonds.

     (h) The Mortgaged Property complies, or will comply upon completion of construction, with all presently applicable building and zoning ordinances where failure to comply would have a materially adverse effect on Company’s ability to utilize the Mortgaged Property for the purposes intended.

     (i) Company agrees to cooperate with Issuer in the performance of Issuer’s obligations under the Indenture.

     (j) No changes shall be made in the Project and no actions will be taken by Company which shall in any way impair the exemption of interest on any of the Bonds from federal income taxation.

     (k) Company will comply with and fulfill all other requirements and conditions of the Code and regulations and rulings issued pursuant thereto in the acquisition, construction, equipping, and operation of the Project to the end that the interest on the Bonds shall at all times be free from federal income taxation.

     (l) The Project is substantially the same in all material respects to that described in the notice of public hearing published in the Paragould Daily Press on March 10, 1995 and the amended notice of public hearing published in the Paragould Daily Press on March 21, 1995.

     (m) Subject to the provisions of Section 6.9, Company acknowledges that it has leased the Leased Land “as is”.

        Section 2.3. Intention. It is intended by the parties hereto that this Lease Agreement and all actions taken hereunder be consistent with and pursuant to the ordinances of Issuer relating to the Bonds, and that the interest on the Bonds be excluded from the gross income of the recipients thereof for federal income tax purposes by reasons of the provisions of Section 144 (a) of the Code or any substantially similar successor provision hereinafter enacted.

ARTICLE III
DEMISING CLAUSES AND WARRANTY OF TITLE

        Section 3.1. Demise of the Leased Land, Buildings, and the Leased Equipment. Issuer demises and leases to Company, and Company leases from Issuer, the Mortgaged Property at the rental set forth in Section 5.3 hereof and in accordance with the provisions of this Lease Agreement. Notwithstanding the definition of Mortgaged Property as all property and personalty demised under the Lease Agreement, the Issuer and the Company hereby acknowledge that this Lease Agreement is superior in lien to the lien of the Indenture.

       TO HAVE AND TO HOLD the Mortgaged Property unto Company for the term of this Lease Agreement as hereafter set forth.

        Section 3.2. Warranty of Title. Issuer warrants that it lawfully owns and is lawfully possessed of the Leased Land and that it has good and merchantable title and estate therein, free from all encumbrances other than Permitted Encumbrances, but it has no liability in regard thereto. Issuer will obtain an ALTA lender’s

extended coverage title insurance policy which runs in favor of Trustee, in form and with such exceptions as shall be acceptable to Trustee (the cost of which is to be defrayed from the Construction Fund), issued by a title insurance company designated by Company in the amount of $9,500,000 with an option to increase such insurance from time to time up to the full insurable value of the Mortgaged Property if Company shall so direct.

      Section 3.3. Quiet Enjoyment. Issuer covenants and agrees that Company, upon paying the rent herein and upon performing and observing the covenants, conditions, and agreements hereof, shall and may peaceably hold and enjoy the Mortgaged Property during the Lease Term without any interruption or disturbance, subject however, to the terms of this Lease Agreement.

      Section 3.4. Zoning. Anything herein and elsewhere contained to the contrary, this Lease Agreement and all the terms, covenants, and conditions hereof are in all respects subject and subordinate to all zoning restrictions affecting the Leased Land and Company shall be bound by such restrictions. Issuer represents and warrants that the intended use of the Mortgaged Property by Company is permitted under applicable zoning laws.

ARTICLE IV
ACQUISITION, CONSTRUCTION, AND EQUIPPING OP THE PROJECT;
ISSUANCE OF THE BONDS

      Section 4.1. Agreement to Acquire, Construct, and Equip the Project. After the Bond proceeds are available, Issuer (or Company, as agent for Issuer) will enter into or accept the assignment of contracts or purchase orders having terms, conditions, drawings, specifications, and other provisions designated and prescribed by Company for acquiring, constructing, and equipping the Project. All payments necessary to acquire, construct, and equip the Project shall be made out of the Construction, Fund or other funds provided by the Company pursuant to Section 4.5 hereof, and Company shall be reimbursed out of the Construction Fund, for all expenditures made by it in connection with the Project. Title to all machinery, equipment and personal property of every nature paid for out of the Construction Fund or other funds provided by the Company pursuant to Section 4.5 of this Agreement (either by direct payment or by virtue of reimbursement to Company) shall be vested in, or be transferred to, Issuer. The Collateral does not include any Equipment leased by the Company from any Lessor (as defined in the Indenture) other than the Issuer. The obligations of Issuer hereunder are subject to the provisions of this Lease Agreement limiting the obligations of Issuer to the extent of moneys in the Construction Fund.

     Company, with the cooperation of Issuer when necessary, shall obtain all necessary approvals from any and all governmental agencies requisite to the constructing and equipping of the Project, and the Project shall be constructed and equipped in compliance with all federal, State, and local laws, ordinances, and regulations applicable thereto.

     All requests, approvals, and agreements required on the part of Issuer and Company shall be in writing, signed by the Authorized Issuer Representative and/or the Authorized Company Representative, as appropriate, granting such approval or entering into such agreement. Issuer and Company shall, concurrently with the delivery of this Lease Agreement, notify each other and Trustee of the Authorized Representative of each. It is agreed that each party may have more than one Authorized Representative and may change the Authorized Representative or Representatives from time to time, with each such change to be in writing forwarded to the other party and Trustee. The Authorized Representative of each party so designated shall be authorized to enter into and execute any contracts or agreements or to grant any approvals or to take any action for and on behalf of the party hereto represented by him, and the other party to this Lease Agreement shall be entitled to rely upon the duly designated Authorized Representative as having full authority to bind the party hereto represented by him.

        Section 4.2. Disbursements from the construction Fund. Issuer has, in the Indenture, authorized and directed Trustee to make disbursements from the Construction Fund to pay the Cost of the Project or to reimburse Company for any Cost of the Project paid by Company.

     Trustee shall make disbursements upon receipt of a requisition signed by an Authorized Company Representative:

     (a) stating with respect to each disbursement to be made: (i) the requisition number, (ii) the name and address of the person, firm, or corporation to whom payment is due, (iii) the amount to be disbursed, (iv) that each obligation mentioned therein has been properly incurred , is a proper charge against the Construction Fund, and has not been the basis of any previous disbursement, (v) with respect to any requisition for payment for work, material, or supplies, that such obligation was incurred for work, materials or supplies in connection with the acquisition, construction, and equipping of the Project, (vi) that at least 95 percent of the amount requested for disbursement will be used for the payment of Qualified Project Costs, (vii) that all property to be acquired with the proceeds of the disbursement will be owned by Issuer, (viii) that no portion of the amount requested for disbursement will be used in the manner prohibited in Sections 8.11 or 8.13 of this Lease Agreement, and (ix) that no portion of the amount requested for disbursement will be used for the

acquisition of existing property except upon compliance with Section 8.16 of this Lease Agreement;

     (b) specifying in reasonable detail the nature and purpose of the obligation, including (i) that such obligation has been properly incurred, is a proper charge against the Construction Fund, is a proper cost of the Project as defined in the Act and has not been the basis of any previous withdrawal, (ii) that the Authorized Company Representative has no written notice of any mechanics’, materialmen’s, or other liens or rights to liens or other obligations (other than those being contested in good faith) which should be satisfied or discharged before payment of such obligation is made, (iii) that such payment does not include any amount which is then entitled to be retained under any holdbacks or retainages provided for in any agreement, (iv) that there exists no event of default or any event which, with notice or the passage of time or both, would result in any event of default;

     (c) with respect to the first disbursement to be made for Costs of the Project, Company shall provide Trustee with a certificate of an officer of Company that the Project, as designed, complies with all presently applicable building and zoning ordinances applicable to the Project; and

     (d) accompanied by a lien search certified by the circuit clerk or by Chicago Title Insurance Company or any successor or replacement to Chicago Title Insurance Company approved by the Trustee, that there are no mechanics’ liens or other liens or encumbrances other than the Permitted Encumbrances recorded in the lien register against the Mortgaged Property as of the date of such disbursement request.

     In making any payment from the Construction Fund, Trustee may rely conclusively on requisitions and certificates delivered to it pursuant to this Section, and Trustee and Issuer shall be relieved of all liability with respect to the accuracy of such requisitions and certificates and the making of such payments in accordance with such requisitions and certificates and all liability to see to the proper application thereof by Company.

      Section 4.3. Furnishing Documents to Trustee. Company agrees to cause such requisitions to be directed to Trustee as may be necessary to effect payments out of the Construction Fund in accordance with Section 4.2 hereof. Trustee shall retain a record of all such requisitions.

      Section 4.4. Establishment of Completion Date. The Completion Date shall be evidenced to Issuer and Trustee by (a) a certificate signed by an Authorized Company Representative stating

that, except for amounts retained by Trustee at Company’s direction for any Cost of the Project not then due and payable, (i) acquisition and construction of the Project has been substantially completed and all costs of labor, services, materials, and supplies used in such acquisition and construction have been paid, except for punch list items, for which adequate reserves shall have been established (ii) all equipment for the Project has been installed to Company’s satisfaction, such equipment so installed is suitable and sufficient for the operation of the Project, and substantially all costs and expenses incurred in the acquisition and installation of such equipment have been paid, and (iii) all other facilities necessary in connection with the Project have been acquired, constructed, and equipped and all costs and expenses incurred in connection therewith have been paid and (b) certificate signed by an Authorized Company Representative stating that the Project has been substantially completed in accordance with all plans and specifications for the Project and complies with all applicable federal, State, and local laws, regulations, and other governmental requirements (including, without limitation, the federal Americans with Disabilities Act) . Notwithstanding the foregoing, the certificate required by clause (a) above shall state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently come into being. Forthwith upon substantial completion of the acquisition, construction, and equipping of the Project, Company agrees to cause such certificates to be furnished to Issuer and Trustee.

       Any moneys in the Construction Fund remaining after the Completion Date and payment, or provision for payment, of the costs of financing the Project described above, at the direction of the Authorized Company Representative, promptly, and in all events on or before April 27, 1998, shall be:

     (i) used to acquire, construct, equip and install such additional real or personal property in connection with the Project, in accordance with the applicable provisions of the Code (including the public notice requirements therein) , as is designated by the Authorized Company Representative and the acquisition, construction, equipping and installation of which will be permitted under the Act, provided that any such use shall be accompanied by evidence satisfactory to the Trustee that the average reasonably expected economic life of such additional property, together with the other property theretofore acquired with the proceeds of the Bonds, will not be less than 5/6ths of the average maturity of the Bonds or, if such evidence is not presented with the direction, an opinion of Bond Counsel to the effect that the acquisition of such additional property will not result in the interest on the Bonds becoming subject to federal income taxation, and provided further that any such additional real or personal property shall be Mortgaged Property or Collateral, as applicable, pursuant to the terms of this Lease Agreement and Indenture;

     (ii) used to redeem Bonds in accordance with the terms of the Indenture; or

     (iii) used to accomplish a combination of the foregoing as is provided in that direction.

     Any amounts transferred from the Construction Fund to the Bond Fund shall be treated as a separate, restricted fund within the Bond Fund and may be invested and reinvested at the written direction of the Authorized Company Representative by Trustee only in investments designated by the Authorized Company Representative and permitted by the Indenture. The Authorized Company Representative shall in no event direct such investment such that the Yield on such investments would be in excess of the Yield on the Bonds. Trustee shall, to the extent of the funds available, apply such transferred funds to the redemption of Bonds (not including interest) on the earliest date that such Bonds are subject to redemption in accordance with and in the manner provided in the Indenture.

      Section 4.5. Company Required to pay in Event Construction Fund Insufficient. In the event the moneys in the Construction Fund available for payment of the Cost of the Project should not be sufficient to pay the Cost of the Project in full, Company agrees to complete the Project and to pay that portion of the Cost of the Project in excess of the moneys available therefor in the Construction Fund or to lease Equipment to complete the Project. Issuer does not make any warranty, either express or implied, that the moneys paid into the Construction Fund and available for payment of the Cost of the Project will be sufficient to pay all of the Cost of the Project. Company agrees that if, after exhaustion of the moneys in the Construction Fund, Company should pay any portion of the Cost of the Project pursuant to the provisions of this Section, Company shall not be entitled to any reimbursement therefor from Issuer, Trustee, or the owners of any of the Bonds, nor shall company be entitled to any limitation of the amounts payable under Section 5.3 hereof.

      Section 4.6. Enforcement of Contracts.

     (a) Issuer covenants that it will, upon request of the Company, execute and deliver to the Company or as the Company may otherwise direct, any agreement or contract required to be signed by the Issuer in connection with the Company’s acquisition, construction, equipping and operation of the Project, provided, however, that the execution and delivery of any such agreement(s) by the Issuer shall not affect the status of the Bonds as limited obligations of the Issuer payable solely out of the proceeds derived from this Lease Agreement, the sale of the Bonds referred to in Section 2.1 hereof, and the insurance proceeds and condemnation awards as herein provided.

     (b) Issuer covenants that it will take any action and institute any proceedings requested by Company to cause and require all contractors and material suppliers to complete their contracts diligently in accordance with the terms of said contracts, including, without limitation, the correcting of any defective work. All expenses incurred by Issuer in connection with the performance of its obligations under this Subsection (a) may be considered part of the Cost of the Project, and Issuer agrees that Company may, from time to time, in its own name, or in the name of Issuer, take such action as may be necessary or advisable, as determined by Company, to insure the construction of the Project in accordance with the terms of the construction contract and the installation of machinery and equipment in accordance with any applicable contract pertaining thereto, to insure the peaceable and quiet enjoyment of the Mortgaged Property for the term of this Lease Agreement.

     (c) The Issuer shall notify the Company of the existence of any warranties and/or guaranties received by the Issuer in connection with the Project and if requested by Company, Issuer will assign and extend to Company any vendor’s warranties received . by Issuer in connection with machinery and equipment purchased by Issuer for the Project, together with any warranties given by contractors, manufacturers, or service organizations who perform construction work or install any machinery and equipment on or in the Project. If requested, Issuer will execute and deliver instruments of assignment to Company to accomplish the foregoing.

      Section 4.7. Ownership of Tax Benefits. It is the intention of the parties that any tax benefits resulting from ownership of the Mortgaged Property and any tax credit or comparable credit which may ever be available shall accrue, to the benefit of Company, and Company shall, and Issuer upon advice of counsel may, make any election and take other action in accordance with the Code and the regulations promulgated thereunder as may be necessary to entitle Company to have such benefit and credit.

      Section 4.8. Investment of Moneys. Money held for the credit of any fund or account created in the Indenture shall, to the extent practicable, be invested and reinvested by Trustee as directed in writing by the Authorized Company Representative in Permitted Investments which shall mature not later than the date or dates on which the money held for credit of the particular fund shall be required for the purposes intended. Trustee shall sell or reduce to cash a sufficient amount of such investments in the Construction Fund whenever the cash balance in the Construction Fund is insufficient to pay a requisition when presented, and such investments in the Bond Fund whenever the cash balance in the Bond Fund is insufficient to pay the principal of and premium, if any, and interest on the Bonds when due. The Trustee shall have no liability for any loss on such sale or reduction to cash absent gross negligence or wilful misconduct.

     Trustee may make any and all such investments through its own investment department or the investment department of any bank or trust company under common control with Trustee. Issuer shall have no responsibility for control of or directing such investments and shall not be held accountable for any losses resulting from any such investments. All such investments and the income thereon shall at all times be a part of the fund (the Construction Fund the Bond Fund, or such other fund, as the case may be) from which the moneys used to acquire such investments shall have come, and all losses on such investments shall be charged against such fund. All investments shall be registered in the name of Trustee, as Trustee under the Indenture.

      Section 4.9. Plans and Specifications; Modifications to Mortgaged Property. Company agrees to maintain plans and specifications for the Mortgaged Property. Company may make any changes in or modifications of the plans and specifications, and may make any deletions from or substitutions or additions to the Mortgaged Property without the prior consent of Issuer so long as such changes or modifications in the plans and specifications, or deletions from or substitutions or additions to the Mortgaged Property, do not materially alter the size, scope, or character of the Mortgaged Property or impair the structural integrity and utility of the Mortgaged Property. If any such changes in or . modifications of the plans and specifications, or if any such deletions from or substitutions or additions to the Mortgaged Property, materially alter the size, scope, or character of the Mortgaged Property or impair the structural integrity and utility of the Mortgaged Property then, and in such event, no such changes, modifications, substitutions, deletions, or additions shall be made without the express written consent of Issuer, which consent shall not be unreasonably withheld. No changes in or modifications of the plans and specifications and no deletions from or substitutions or additions to the Mortgaged Property may be made without prior approval of the contractor’s sureties if required by the terms of any indemnity bond. Company covenants and agrees that no changes, modifications, substitutions, deletions, or additions shall be made with respect to the Mortgaged Property (a) if such change disqualifies the Project under the Act or results in interest on the Bonds being includable in the gross income of the Owners of the Bonds for federal income tax purposes, and (b) unless there shall be on deposit with Trustee adequate moneys available therefor or Company deposits in the Construction Fund adequate moneys to pay any additional Cost of the Project resulting therefrom.

      Section 4.10. Agreement to Issue Bonds; Application of Bond Proceeds. In order to provide funds for payment of the Cost of the Project, Issuer, concurrently with the execution of this Lease Agreement, will issue, sell, and deliver the Bonds and deposit the proceeds thereof in the Construction Fund.

ARTICLE V
EFFECTIVE DATE OF THIS LEASE AGREEMENT; DEFINITION OF
LEASE TERM; RENTAL PROVISIONS

      Section 5.1. Effective Date of this Lease Agreement; Duration of Lease Term. This Lease Agreement shall become effective upon its delivery, and the leasehold estate created herein shall then -begin, and, subject to the provisions of this Lease Agreement (including particularly Sections 5.3 and 7.5 hereof and Articles X and XI hereof) , shall continue until the later of (a) such date as payment has been made in full of the Bonds, including, without limitation, the payment of principal, interest to the payment date, premium, if any, Trustee’s fees and expenses, and registrars’ fees and expenses, or provision for such payment has been made as provided in the Indenture or (b) at midnight,. Local Time April 1, 2010.

      Section 5.2. Delivery and Acceptance of Possession. Issuer agrees that Company shall have possession of the Mortgaged Property (subject to the right of Trustee to enter thereon for inspection purposes and to the other provisions of Section 8.2 hereof) whenever such possession is desired by Company, provided such possession does not unreasonably interfere with the construction of the Buildings or installation of the Leased Equipment, and Company may install, maintain, and operate its own equipment during the Construction” Period.

      Section 5.3. Basic Rent and Additional Rent Payable.

     (a) Basic Rent.

     (i) On or before two Business Days prior to each Interest Payment Date, and on or before two Business Days prior to any date on which any or all of the Bonds shall be declared to be and shall become due and payable prior to their stated maturity pursuant to the provisions of the Indenture, by redemption or otherwise, Company shall pay directly to Trustee in immediately available funds the aggregate amount of principal, premium, if any, and interest becoming due and payable on the Bonds on such date.

     Anything herein to the contrary notwithstanding, any amount at any time held by Trustee in the Bond Fund (except for any amounts held in any separate, restricted fund within the Bond Fund created pursuant to Section 4.4 of this Lease Agreement) shall be credited against the next succeeding rental payment and shall reduce the payment to be made by Company to the extent such amount is in excess of the amount required for payment of Bonds theretofore matured or called for redemption and past due interest in all cases where such Bonds have not been presented for payment; and further, if the amount held by Trustee in the Bond Fund should be sufficient to pay at the times required the principal of and premium, if any, and interest on the Bonds then remaining unpaid, Company

shall not be obligated to make any further rental payments under the provisions of this subsection (a)(i).

     (ii) Company will pay the amount, if any, required to be rebated to the United States of America pursuant to section 148(f) of the Code.

     (b) Additional Rent.

     (i) Company will pay the reasonable fees and expenses of Issuer related to the issuance of the Bonds or in connection with the Project and incurred upon the written request of Company.

     (ii) Company will pay the reasonable fees and expenses of Trustee under the Indenture, including the reasonable fees and expenses of the Trustee’s attorneys and agents, such reasonable fees and expenses to be paid directly to Trustee for its own account as and when such reasonable fees and expenses become due and payable, and any reasonable expenses in connection with any redemption of the Bonds.

     It is understood and agreed that all payments payable by Company under subsections 5.3(a)(i) of this Section are assigned by Issuer to Trustee as collateral security for the benefit of the owners of the Bonds. Company assents to such assignment.

     In the event Company should fail to make any of the payments required in this Section, the item or installment so in default shall continue as an obligation of Company until the amount in default shall have been fully paid, and Company agrees to pay the same with interest thereon or with respect to payments to Trustee or Issuer with interest thereon, to the extent permitted by law, from the date thereof at the Agreed Rate.

     Payments made on account of the indebtedness evidenced by the Bonds and secured by the Indenture, or as otherwise required to be paid pursuant to the provisions of the Indenture or this Lease Agreement, whether made to the Trustee or otherwise, by the Company or by the Guarantor, shall constitute payments of Basic Rent and/or Additional Rent, as the case may be, under this Lease Agreement.

      Section 5.4. Place of Rental Payments. Issuer hereby directs Company and Company hereby agrees to pay to Trustee at Trustee’s principal corporate trust office all payments payable by Company pursuant to subsections 5.3(a) and 5.3(b)(ii).

      Section 5.5. Obligation of Company Hereunder Unconditional. Subject to the provisions of Section 9.6 hereof, the obligations of Company to make the payments required in Section 5.3 hereof and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional, and the payments required in Section 5.3 shall be certainly payable on the dates and at the times specified without notice or demand, and without abatement or set-off, and regardless of any contingencies

whatsoever, and notwithstanding any circumstances or occurrences that may now exist or that may hereafter arise or take place,including, but without limiting the generality of the foregoing:

     (a) The unavailability of the Mortgaged Property or any part thereof for use by Company at any time by reason of the failure to complete the overall industrial project by any particular time or at all or by reason of any other contingency, occurrence, or circumstance whatsoever;

     (b) Damage to or destruction of the Mortgaged Property or any part thereof;

     (c) Legal curtailment of Company’s use of the Mortgaged Property or any part thereof;

     (d) Change in Issuer’ s legal organization or status;

     (e) The taking of title to or the temporary use of the whole or any part of the Mortgaged Property by condemnation;

     (f) Any termination of this Lease Agreement for any reason whatsoever;

     (g) Failure of consideration or commercial frustration of purposes;

     (h) Any change in the tax or other laws of- the United States of America or of the State;

     (i) Any default of Issuer under this Lease Agreement or any other default or failure of Issuer whatsoever.

     Nothing contained in this Section shall be construed to release Issuer from the performance of any of the provisions of this Lease Agreement on its part to be performed.

     Company covenants that it will not enter into any contract, indenture, or agreement of any nature whatsoever which shall in any way limit, restrict, or prevent Company from performing any of its obligations under this Lease Agreement.

      Section 5.6. Credit for Bonds Surrendered. Company shall have the right to surrender Bonds acquired by it to Trustee. Bonds so surrendered shall be forthwith cancelled and the principal amounts thereof upon the instructions by the Company to the Trustee shall be applied as (a) credits against mandatory sinking fund requirements pursuant to Section 303 of the Indenture, (b) credits or prepayments upon the basic rent payments due and payable with respect to the respective maturity dates or redemption dates of such Bonds in accordance with the instructions of the Company and the terms of the Indenture or (c) full payment of the Bonds pursuant to Section 11.3 of this Agreement.

ARTICLE VI

MAINTENANCE, MODIFICATIONS, IMPOSITIONS, AND INSURANCE

      Section 6.1. Maintenance and Modifications of Mortgaged Property by company.

     (a) Company agrees that during the Lease Term it will at its own expense (i) keep the Mortgaged Property in reasonably safe condition as its operations shall permit and (ii) keep the Buildings and the Leased Equipment and all other improvements forming a part of the Mortgaged Property in good repair and in good operating condition, making from time to time all necessary repairs thereto and renewals and replacements thereof.

     (b) Company may from time to time, in its sole discretion and at its own expense, make any additions, modifications, or improvements at the Mortgaged Property location, including installation of additional machinery, equipment, furniture, or fixtures in the Buildings or on the Leased Land, which it may deem desirable for its business purposes; provided that all such additions, modifications, and improvements do not adversely affect the structural integrity of the Buildings. The Company shall be under no obligation to restore the Mortgaged Property to the condition it was in immediately prior to the commencement of the Lease term.

     (c) Company, in consideration of the premises and of the issuance of the Bonds by Issuer and the sum of $1.00, lawful money of the United States of America, to it duly paid by Issuer at or before the execution and delivery of this Lease Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, and in order to secure the obligations of Company under this Lease Agreement and under the Guaranty and the Hazardous Substance Certification and Indemnification, does hereby grant a first position security interest (within the meaning of the Uniform Commercial Code in effect in the State) in, and pledge unto Issuer, and its assigns forever the Collateral, and the proceeds and products of the Collateral.

     (d) Company will not permit any mechanics’, materialmen’s, or other liens to be established or remain against the Mortgaged Property for labor or materials furnished in connection with any addition, modifications, improvements, repairs, renewals, or replacements so made by it; provided, that if Company shall first notify Trustee of its intention so to do, Company may provide the Issuer with a title insurance policy insuring the Mortgaged Property without exception for the lien in question or affirmative insurance insuring against collection out of the Mortgaged Property and may in good faith contest any mechanics’ or other liens filed or established against the Mortgaged Property, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom unless Issuer or Trustee shall notify Company that, in the opinion of Counsel, by nonpayment of any such items, the security of the Bondowners, as to any part of the Mortgaged

Property, will be materially endangered or the Mortgaged Property or any substantial part thereof will be subject to loss or forfeiture, in which event Company shall promptly pay and cause to be satisfied and discharged or bond (if legally permissible) all such unpaid items. Notwithstanding the foregoing, Company’s right to undertake a good faith contest of mechanic’s and other liens is subject to the condition that, if such contest continues for 6 months or more, Company must maintain adequate reserves for the payment of the same in accordance with generally accepted accounting principles. Issuer will cooperate fully with Company in any such contest.

      Section 6.2. Removal of Leased Equipment. Issuer shall not be under any obligation to renew, repair, or replace any inadequate, obsolete, worn-