LEASE AGREEMENT

EXHIBIT 10.8

LEASE AGREEMENT

Between

THE KANSAS CITY SOUTHERN RAILWAY COMPANY

and

ARKANSAS SOUTHERN RAILROAD, INC.

Covering Certain Land and Track

Between Milepost 4 near Heavener, Ok., and End of Line at Milepost
33 on the Waldron Branch

Effective as of September 25, 2005

Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Redacted portions are indicated with the notation [**].

CONTENTS

EXHIBITS

LEASE AGREEMENT

      THIS LEASE AGREEMENT , dated as of this 20th day of July, 2005, by and between THE KANSAS CITY SOUTHERN RAILWAY COMPANY , a Missouri corporation, (“KCS”) and ARKANSAS SOUTHERN RAILROAD, INC, a Kansas corporation (“LESSEE”).

RECITALS

          A. LESSEE intends to lease from KCS, that certain line of railroad in the State of Arkansas, on the Waldron Branch extending between Milepost 4 near Heavener, Ok., and End of Line at Milepost 33, a distance of approximately 29 miles. The Waldron Branch is hereinafter referred to as the “Leased Premises”), and are shown in solid green lines on attached Exhibit “A”.

          B. The parties desire to enter into this Lease setting forth terms and conditions for the use, management and operation of the Leased Premises described above.

NOW, THEREFORE , in consideration of the foregoing and other good and valuable consideration, intending to be legally bound, the parties do hereby agree as follows:

SECTION I. LEASED PREMISES

           SECTION 1.1 KCS does hereby lease to LESSEE and LESSEE does hereby lease from KCS the Leased Premises described in the Recitals above and the property described in Section 1.2.

           SECTION 1.2 The Leased Premises shall include, without limitation, the right to use the right of way for railroad operations, tracks, rails, ties, ballast, other track materials, switches, crossings, bridges, culverts, buildings, crossing, warning devices and any and all improvements or fixtures affixed to the right-of-way, but specifically exclude any and all items of personal property not owned by KCS or not affixed to the land, including, without limitation, railroad rolling stock, locomotives, equipment, machinery, tools, inventories, materials and supplies. Within ninety (90) days after the Effective Date, as defined in Section 2.1. KCS shall remove all its personal property from the Leased Premises. Items not so removed shall be deemed included in the Leased Premises. LESSEE expressly acknowledges that KCS has previously leased and/or licensed portions of the Leased Premises. This Lease is made subject to those leases and/or licenses. To the extent that there exists, on the Leased Premises, property included in or owned by said prior Lessees, said property may remain on the property to the extent permitted by the terms of the lease under which it was placed on the property.

     KCS shall retain the ownership of all AEI readers currently on the Leased Premises. KCS and LESSEE will mutually agree on locations where AEI readers are required to record interchange of cars under this Agreement. LESSEE will relocate or pay for the relocation, operation and maintenance of any AEI readers relocated from their current location to record interchange of cars under this Agreement. KCS will remove, at its cost, from the Leased Premises all AEI readers not required for recording interchange of cars under this Agreement.

     LESSEE may, at its expense obtain and locate on the Leased Premises, AEI readers at other locations of its choice on the Leased Premise. Any AEI readers obtained and placed at the expense of LESSEE shall remain the property of LESSEE and LESSEE shall have the right to remove such readers for the Leased Premises upon expiration of termination of this Agreement.

      SECTION 1.3 LESSEE shall take the Leased Premises in an “AS IS, WHERE IS” CONDITION AND WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF TITLE, MERCHANTABILITY, HABITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE and subject to: (a) reservations or exceptions of record of minerals or mineral rights, including but not limited to all coal, oil, gas, casing head gasoline and minerals of any nature and character whatsoever underlying the Leased Premises together with the sole, exclusive and perpetual right to explore for, remove, and dispose of said minerals by any means or methods suitable to KCS, (b) all easements, public utility easements and rights-of-way, howsoever created, for crossings, pipelines, wire lines, fiber optic facilities, roads, streets, highways and other legal purposes; (c) existing and future building zoning, subdivision and other applicable federal, state, county, municipal and local laws, ordinances and regulations; (d) encroachments or other conditions that may be revealed by a survey, title search or inspection of the property; (e) all existing ways, alleys, privileges, rights, appurtenances and servitudes, howsoever created; (f) any liens of mortgage or deeds of trust encumbering said property; (g) the KCS’s exclusive right to grant any and all easements, leases, licenses or rights of occupancy in, on, under, through, above, across or along the Leased Premises, or any portion thereof, for the purpose of construction, of these rights shall include but not be limited to, the installation, operation, use, maintenance, repair, replacement, relocation and reconstruction of any fiber optic facilities, signboards or coal slurry pipeline PROVIDED, HOWEVER, that the exercise not materially interfere with LESSEE’s railroad operations.

SECTION II. LEASE TERM

      SECTION 2.1 Unless this Agreement is terminated earlier in accordance with Section XV, LESSEE shall have and hold the Leased Premises unto itself, its successors and assigns, for a term of ten (10) years, beginning no later than November 15, 2005, or at such earlier date as is mutually agreed to by both parties in writing: and continuing in effect until August 31, 2015. The “Effective Date” shall be the date five (5) days after KCS has notified LESSEE in writing that KCS has satisfactory evidence of compliance with the conditions precedent provided in Section

Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Redacted portions are indicated with the notation [**].

V unless such notice period is waived by mutual agreement. Promptly following execution of this Agreement, Lessee, at its sole expense, shall prepare and file such documents as may be required (if any) to secure approval, or exemption from approval of this transaction by the Surface Transportation Board of the United States Department of Transportation (“STB”), if such approval or exemption from approval is necessary or appropriate. LESSEE shall permit KCS to review prior to filing all documents proposed by LESSEE to be filed with the STB, or any court, to secure legal approval or exemption of this transaction.

     At least six month prior to the end of the initial ten (10) year term of this Agreement, either party may provide the other party with written notice of a request to renew the term of this Agreement. In the event either party provides such notice, the parties will meet to discuss whether it would be mutually beneficial to extend the term of this Agreement for an additional ten year term, upon such terms as may be agreed to by the parties. without obligation on either party to enter into an extension.

      SECTION 2.2 If, subject to the right of KCS to evict or remove LESSEE from the Leased Premises by all available legal means, LESSEE holds over and remains in possession of the Leased Premises following expiration of the then current term, original or extended, or following an early termination of this Lease pursuant to Section XIV, such holding over will create a month-to-month tenancy only. During any such hold over period, LESSEE agrees to pay to KCS as monthly rent, a sum of [**], as adjusted pursuant to Section 4.4. Such monthly payments shall be due each month on the same day of the month as the Anniversary Date of this Lease. Any profits or losses from LESSEE’s operations during any holdover period shall inure and accrue to the LESSEE.

SECTION III. RAIL SERVICE

      SECTION 3.1 Beginning on the Effective Date and throughout the term of this Lease, LESSEE shall be entitled to use of the Leased Premises for the operation of common carrier rail service. KCS further warrants that as of the date of this Lease, there is no other rail carrier to which KCS has granted rights to use the Leased Premises other than pursuant to joint facility agreements or arrangements that are superior to those granted herein to LESSEE. During the term of this Lease, LESSEE shall not grant to any third party the right to operate over the Leased Premises, nor shall it enter into any commercial or other agreement to move the traffic of any third party, other than to perform its common carrier obligations under the Interstate Commerce Commission Termination Act.

      SECTION 3.2 During the term of this Lease, LESSEE:

3.2.1 will not suspend or discontinue its operation as a common carrier by rail over all or any part of the Leased Premises without first applying for and

Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Redacted portions are indicated with the notation [**].

3.2.2 obtaining from the Surface Transportation Board (“STB”), and any other regulatory agency with jurisdiction, any necessary certificate of public convenience and necessity or other approvals or exemptions from regulation for such discontinuance of operations over the Leased Premises; provided, however, that LESSEE will not seek such regulatory authority, or if no regulatory authority is needed, take any action to suspend or discontinue its operations on the Leased Premises, without first giving KCS six (6) months’ advance written notice of LESSEE’s intent to do so.

3.2.3 agrees to offer freight transportation services on the Leased Premises, to all shippers on the Leased Premises as least at the levels in place on the Effective Date of this Lease Agreement and sufficient to comply with all current contracts with shippers located on the Leased Premises.

3.2.4 agrees to fulfill all service requirements of existing transportation contracts to the extent such services involve services formerly provided on Leased Premises. LESSEE agrees to comply with the terms of all existing agreements related to the use of the Leased Premises including but not limited to: car cleaning contracts, crossing agreements, interlocker agreements and joint facility agreements, as shown on Exhibit “B”.

3.2.4 [**]

      SECTION 3.3 Upon suspension or discontinuance of LESSEE’s operations as a rail carrier of freight over all or any part of the Leased Premises during the term of this Lease or any extended term hereof, for reasons other than events of force majeure, or a lawful embargo, whether or not pursuant to necessary and proper regulatory authority as required by Section 3.2 of this Section III, LESSEE will promptly relinquish to KCS possession of the Leased Premises and this Lease Agreement will terminate as provided by Section XIV of this Lease; PROVIDED, HOWEVER, any discontinuance of service or abandonment of any portion(s) of the Leased Premises which are inconsequential to rail freight service over the Leased Premises generally will be permitted and will not result in a termination of this Lease or require relinquishment of possession of the Leased Premises by LESSEE.

SECTION IV. RENT

      SECTION 4.1 LESSEE agrees to pay KCS rent for the Leased Premises, payable annually in advance on the 1st day of September, the amount of [**] for the annual period for which the rent is due. In calculating the percentage of revenue derived from traffic interchanged to carriers other than KCS, for purposes of this section,[**] As additional consideration, Lessee agrees to enter into and fulfill the obligations of the Divisions Agreement attached hereto and incorporated herein as Exhibit “D”.

      SECTION 4.2 LESSEE shall pay all due rent payments, and all other payments required by this Lease, to KCS at 427 West 12 ^th Street, P.O.Box 219335, Kansas City, Missouri 64121-9335, or at such other location or individual as may be designated by KCS in writing from time to time.

      SECTION 4.3 Acceptance by KCS, its successors, assigns or designees of rent or other payments shall not be deemed to constitute a waiver of any other provision of this Lease.

      SECTION 4.4 As additional security for the payment by LESSEE to KCS of any sums of money required hereunder to be paid by LESSEE, it is agreed that in the event LESSEE fails, neglects or refuses to timely pay any sums due and owing to KCS hereunder, KCS may use any and all sums which it may collect from any third party and which may, in whole or in part, be payable to LESSEE, as an offset against any and all payments for which LESSEE is delinquent. In addition, any sums at any time due and payable to LESSEE by KCS may also be used by KCS and credited to KCS’s account to the extent of any delinquent payment owed by LESSEE to KCS.

SECTION V. CONDITIONS-PRECEDENT

      SECTION 5.1 Prior to the Effective Date and as conditions precedent to either party’s obligations hereunder:

5.1.1 There shall not be a work stoppage imminent or in effect on the lines of KCS or any of its affiliated companies as a result of the execution and/or implementation of this Lease.

5.1.2 LESSEE shall have acquired, at LESSEE’s cost, the right to conduct rail freight service over the Leased Premises from the Surface Transportation Board (“STB”) through an application or exemption under 10901 49 U.S.C., and shall have obtained such judicial, administrative agency or other regulatory approvals, authorizations or exemptions as may be necessary to enable it to undertake its obligations hereunder.

5.1.3 KCS and LESSEE shall not be prevented from fulfilling their respective obligations under this Lease as a result of legislative, judicial or administrative action.

5.1.4 KCS and LESSEE shall execute an interchange agreement in the form attached as Exhibit “C” whereby KCS and LESSEE will interchange traffic destined to or originating at Industries located on or served from the Leased Premises.

5.1.5 Upon execution hereof, KCS shall make available for LESSEE’s inspection and review all contracts, deeds, agreements and documents pertaining to or affecting the Leased Premises.

Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Redacted portions are indicated with the notation [**].

      SECTION 5.2 Each party to this Lease shall be responsible for all costs of protection of its respective employees arising out of STB approval or exemption of this transaction under 49 U.S.C. § 10901 and implementation of the transaction, the exercise or performance by KCS or LESSEE of any rights or obligations hereunder, the termination of this Lease, or LESSEE’s abandonment or discontinuance of operations on the Lease Premises, whether such costs are attributable to protective conditions or benefits imposed by any judicial, regulatory or governmental body or are required to be paid pursuant to collective bargaining or other agreements. LESSEE shall consider for employment any of KCS’s employees on the Leased Premises who, in LESSEE’s sole judgment, are qualified for the positions for which they apply and make proper application therefor. LESSEE shall give priority-hiring consideration to employees of KCS who work on the Leased Premises. LESSEE promptly shall notify KCS of the name of each of KCS’s current employees who LESSEE offers to hire, and also the name of each of these employees who LESSEE actually hires.

SECTION VI. MAINTENANCE, MODIFICATIONS AND IMPROVEMENTS

      SECTION 6.1 During the term of this Lease, LESSEE shall:

6.1.1. Maintain the Leased Premises in compliance with all state and federal statues, rules and regulations and except for track that is classified as excepted track pursuant to 49 C.F.R. Section 213.9 (“Excepted Track”) on the Effective Date, maintain the track on Leased Premises to at least Class I standards, as defined by the Federal Railroad Administration (“FRA”) and capable of operating speeds of at least 10 miles an hour, at LESSEE’s own cost and expense and to a standard that is sufficient to continue rail freight service commensurate with the needs of the rail users located thereon, provided that if on the Effective Date the condition of any portion of the Leased Premises is better than Class I standards, that portion of the Leased Premises shall be maintained at no worse condition than exists on the Effective Date.

6.1.2. Maintain Excepted Track on the Leased Premises in a condition that operations can be safely conducted over it at the speed specified in the timetable or track bulletins as of the Effective Date and that is sufficient to continue rail freight service commensurate with the needs of the rail users located thereon.

6.1.3. LESSEE shall protect the Leased Premises against all encroachments or unauthorized uses.

6.1.4 The parties agree that to the extent that traffic volumes decrease on any segment of the Leased Premises to a level that LESSEE [**]

Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Redacted portions are indicated with the notation [**].

      SECTION 6.2 In the event KCS shall notifies LESSEE in writing that Lessee has failed to perform any of its maintenance obligations under this agreement LESSEE shall, within thirty (30) days of its receipt of such notice, commence necessary repairs and maintenance and shall proceed to complete same with reasonable diligence. LESSEE may relocate switches and industrial tracks from one location on the Leased Premises to another location on the Leased Premises upon receiving any necessary and proper regulatory authority and after ten (10) days’ written notice to KCS. Any rehabilitation or reconstruction, including but not limited to that necessitated by an Act of God, will be the sole responsibility of LESSEE. Such maintenance shall include any function which KCS, but for this Lease, would be required to perform pursuant to any applicable federal, state or municipal laws ordinances or regulations.

      SECTION 6.3 Nothing herein shall preclude LESSEE, at its sole cost and expense, from maintaining the Leased Premises to a standard higher than the minimum herein provided, but LESSEE shall not be required hereunder to do so.

      SECTION 6.4 Except for Reserved Rights, LESSEE’s maintenance obligations hereunder shall include, but shall not be limited to, buildings, highway grade crossings, grade crossing signal protection devices, bridges, culverts and other structures, sub-roadbed and all other improvements on the Leased Premises. [**]

      SECTION 6.5 In connection with its use of the Leased Premises, LESSEE shall have the right to replace, add to or relay elements of the Leased Premises in the interest of cost or operating efficiency provided that, a continuous and usable line of railroad between the termini in effect on the Effective Date is maintained and that all items removed are replaced with similar items of the same or higher quality, greater weight and higher value and provided that the work being performed by the LESSEE and the materials being provided by the LESSEE are sufficient to maintain the trackage to the standards set forth in Section 6.1 and any modifications conform with KCS’s then current engineering standards. LESSEE shall have the right to apply the net proceeds from salvaged materials to maintenance or improvement of the Leased Premises; provided that any such net proceeds not reinvested in the Leased Premises shall be paid to KCS. Such requirement shall also apply to all other facilities leased hereunder. Any repair or replacement of welded rail shall also be welded. LESSEE may make any replacement and substitute with any material having the same or higher weight and quality as the materials being replaced, without the prior written consent of the KCS, All maintenance, renewal, retirements, additions and betterments shall progressively become a part of the Leased Premises and the sole ownership of KCS.

     On or before June 1st of 2006 and June 1 of each calendar year thereafter, during the term of this Agreement, LESSEE shall provide KCS with a written summary of all salvage or other materials removed from the Leased Premises, the proceeds received therefor and the manner in which the proceeds were reinvested. Failure to

Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Redacted portions are indicated with the notation [**].

either reinvest such proceeds or pay any unreinvested proceeds to KCS within six (6) months following such reporting date shall, at KCS’s sole discretion, constitute a Default hereunder.

      SECTION 6.6 LESSEE may from time to time establish or relocate sidetracks or industrial spur tracks on the Leased Premises. KCS shall have no obligation to bear any cost of materials, construction or maintenance of said sidetracks or industrial spur tracks outside the leased right of way. That portion of any such spur track that is constructed upon the Leased Premises shall become part of the Leased Premises and, upon termination of this Lease, the property of KCS. Prior to execution of any industry track agreement by LESSEE, Lessee shall obtain KCS’s written approval. For any industry or Customer track built on the Leased Premises after the effective date, which is constructed or financed by LESSEE, LESSEE shall be entitled to any and all track rentals derived therefrom during the term of this Lease. All industry track agreements, regardless of duration, shall contain provisions indemnifying KCS and holding it harmless from all liability in connection with the construction, maintenance or operation thereof.

      SECTION 6.7 In the event of a dispute between KCS and LESSEE with respect to LESSEE’s fulfillment of its duties under this Section VI, it is agreed between the parties that an inspection by a qualified representative of the FRA shall be arranged by KCS and such representative shall inspect those segments or portions of track in dispute and his findings in this regard shall be binding upon the parties.

      SECTION 6.8 LESSEE shall not allow any liens to be placed on the Leased Premises or encumbrances against the Leased Premises or any portion thereof, and will pay, satisfy, and discharge all claims or liens for material and labor or either of them used, contracted for, or employed by LESSEE during the term of this Lease in any construction, repair, maintenance, or removal on the Leased Premises and any improvements located thereon, whether said improvements are the property of KCS or of LESSEE, within thirty (30) days of receiving notice of such lien. LESSEE WILL INDEMNIFY AND SAVE HARMLESS KCS FROM ALL SUCH CLAIMS, LIENS, OR DEMANDS WHATSOEVER . In the event the Lease is terminated or expires, LESSEE shall return the Leased Premises to KCS free and clear of any such liens claims and demands.

      SECTION 6.9 [**]

SECTION VII. ACCOUNTING AND REPORTING

      SECTION 7.1 LESSEE agrees to furnish to KCS audited copies of the financial reports of Watco Companies, Inc. or any company which directly or indirectly owns a majority interest in LESSEE audited by an independent accounting firm on an annual basis on or before May 1 of each year for the term of this lease. Copies of

unaudited financial reports pertaining to LESSEE and the Leased Premises prepared in the normal course of LESSEE’s business shall be provided to Lessor on a quarterly basis. KCS shall take the same precautions to protect the confidentiality of non-public financial information provided under this Section that it uses to protect its own confidential non-public financial information.

SECTION VIII. REPRESENTATIONS AND WARRANTIES

      SECTION 8.1 KCS represents and war