Exhibit 10.1

MASTER LEASE AGREEMENT

dated as of            August 21, 2009          

THIS MASTER LEASE AGREEMENT (as amended, supplemented or otherwise modified from
time to time, this "Agreement") is between   General Electric Capital
Corporation (together with its successors and assigns, if any, "Lessor") and
Masland Carpets, LLC ("Lessee").  Lessor has an office at 10 Riverview Drive,
Danbury, CT 06810-6268.  Lessee is a Limited Liability Company organized and
existing under the laws of the state of Georgia.  Lessee's mailing address and
chief executive office is 2208 S. Hamilton Street, Dalton, GA 30721.  This
Agreement contains the general terms that apply to the leasing of certain
equipment and personal property (the "Equipment") from Lessor to Lessee.
 Additional terms that apply to the Equipment and financial terms in relation to
the lease of the Equipment (term, rent, options, etc.) shall be contained on an
equipment schedule (each a "Schedule", and collectively the "Schedules").  This
Agreement together with any Schedule shall constitute the "Lease" for any
Equipment.  Capitalized terms used but not defined in this Agreement shall have
the meanings assigned to such terms set forth in the applicable Schedule(s).

1.

LEASING:

 

(a)

Subject to the terms and conditions set forth below, Lessor agrees to lease to
Lessee, and Lessee agrees to lease from Lessor, the Equipment described in any
Schedule signed by both parties.

 

(b)

Lessor shall purchase Equipment from the manufacturer or supplier ("Supplier")
and lease it to Lessee if on or before the Last Delivery Date Lessor receives
(i) a Schedule for the Equipment, (ii) evidence of insurance which complies with
the requirements of Section 9, and (iii) such other documents as Lessor may
reasonably request.  Each of the documents required above must be in form and
substance satisfactory to Lessor.  Lessor hereby appoints Lessee its agent for
inspection and acceptance of the Equipment from Supplier. Once the Schedule is
signed, Lessee may not cancel the Schedule.

2.

TERM, RENT AND PAYMENT:

 

(a)

The rent ("Rent") payable for the Equipment and Lessee's right to use the
Equipment shall begin on the earlier of (i) the date when Lessee signs the
Schedule and accepts the Equipment or (ii) when Lessee has accepted the
Equipment under a Certificate of Acceptance ("Lease Commencement Date").  The
term of the Lease for any Equipment shall commence on the Basic Lease
Commencement Date and shall continue, unless earlier cancelled or terminated
pursuant to the provisions of the applicable Schedule (the "Term").  If any term
is extended or renewed, the word "Term" shall be deemed to refer to all extended
or renewal terms, and all provisions of this Agreement shall apply during any
such extension or renewal terms, except as may be otherwise specifically
provided in writing.

 

(b)

Lessee shall pay rent to Lessor at its address stated above, unless otherwise
directed by Lessor.  Each payment of Rent (each a "Rent Payment") shall be in
the amount set forth in, payable at such intervals and due in accordance with
the provisions of the applicable Schedule.  If any Interim Rent and/or any
Advance Rent is payable in respect of any Equipment, such Interim Rent and/or
Advance Rent shall be set forth in the applicable Schedule and shall be due and
payable in accordance with the terms of the Schedule.  Upon Lessor's receipt of
the Interim Rent and the Advance Rent, (i) the Interim Rent shall be applied to
the Rent Payment due for the Interim Period, if any, set forth in the Schedule,
and (ii) the Advance Rent shall be applied to the first Rent Payment due for the
Basic Term, and (iii) the remaining balance, if any, shall be applied to the
next scheduled Rent Payment under such Schedule.  In no event shall any Interim
Rent, Advance Rent or any other Rent Payments be refunded to Lessee.  If Lessor
does not receive from Lessee payment in full of any scheduled Rent Payment or
any other sum due under any Lease within ten (10) days after its due date,
Lessee agrees to pay, a late fee equal to five percent (5%) on such unpaid Rent
Payment or other sum, but not exceeding any lawful maximum.  Such late fee will
be immediately due and payable, and is in addition to any other costs, fees and
expenses that Lessee may owe as a result of such late payment.

3.

RENT ADJUSTMENT:

(a)

If, solely as a result of Congressional enactment of any law (including, without
limitation, any modification of, or amendment or addition to, the Internal
Revenue Code of 1986, as amended, ("Code")), the maximum effective corporate
income tax rate (exclusive of any minimum tax rate) for calendar-year taxpayers
("Effective Rate") is higher than thirty-five percent (35%) for any year during
the Term for any Lease, then Lessor shall have the right to increase such rent
payments by requiring payment of a single additional sum.  The additional sum
shall be equal to the product of (i) the Effective Rate (expressed as a

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decimal) for such year less 0.35 (or, in the event that any adjustment has been
made hereunder for any previous year, the Effective Rate (expressed as a
decimal) used in calculating the next previous adjustment) times (ii) the
adjusted Termination Value (defined below), divided by (iii) the difference
between the new Effective Rate (expressed as a decimal) and one (1).  The
adjusted Termination Value shall be the Termination Value (calculated as of the
first rental due in the year for which such adjustment is being made) minus the
Tax Benefits that would be allowable under Section 168 of the Code (as of the
first day of the year for which such adjustment is being made and all future
years of the Term for any Lease).  The Termination Values and Tax Benefits are
defined on the Schedule.  Lessee shall pay to Lessor the full amount of the
additional rent payment on the later of (i) receipt of notice or (ii) the first
day of the year for which such adjustment is being made.

(b)

Lessee's obligations under this Section 3 shall survive any expiration,
cancellation or termination of any Lease.

 

4.

TAXES AND FEES:

(a)

If permitted by law, Lessee shall report and pay promptly all taxes, fees and
assessments due, imposed, assessed or levied against any Equipment (or purchase,
ownership, delivery, leasing, possession, use or operation thereof), this
Agreement (or any rents or receipts hereunder), any Schedule, Lessor or Lessee,
by any domestic or foreign governmental entity or taxing authority during or
related to the Term of any Lease, including, without limitation, all license and
registration fees, and all sales, use, personal property, excise, gross
receipts, franchise, stamp or other taxes, imposts, duties and charges, together
with any penalties, fines or interest thereon (collectively "Taxes").  Lessee
shall have no liability for Taxes imposed by the United States of America or any
state or political subdivision thereof which are on or measured by the net
income of Lessor except as provided in Sections 3 and 14(c).  Lessee shall
promptly reimburse (on an after tax basis) Lessor for any Taxes charged to or
assessed against Lessor.  Lessee shall show Lessor as the owner of the Equipment
on all tax reports or returns, and send Lessor a copy of each report or return
and evidence of Lessee's payment of Taxes upon request.

(b)

Lessee's obligations, and Lessor's rights, privileges and indemnities, contained
in this Section 4 shall survive the expiration or other cancellation or
termination of this Agreement.

5.

REPORTS:

 

(a)

If any tax or other lien shall attach to any Equipment, Lessee will notify
Lessor in writing, within ten (10) days after Lessee becomes aware of the tax or
lien. The notice shall include the full particulars of the tax or lien and the
location of such Equipment on the date of the notice.

 

(b)

Lessee will deliver or make available to Lessor, Lessee's and any Guarantor's,
if applicable, complete financial statements prepared in accordance with
generally accepted accounting principles, consistently applied, certified by a
recognized firm of certified public accountants within ninety (90) days of the
close of each fiscal year of Lessee, together with a certificate of an
authorized officer of Lessee stating that such officer has reviewed the
activities of Lessee and that to the best of such officer's knowledge, there
exists no Event of Default or event which with notice or lapse of time (or both)
would become an Event of Default.  In addition, Lessee will deliver to Lessor
copies of Lessee's and any Guarantor's, if applicable, quarterly financial
report certified by the chief financial officer of Lessee, within ninety (90)
days of the close of each fiscal quarter of Lessee.  Lessee will deliver or make
available to Lessor all Forms 10-K and 10-Q, if any, filed with the Securities
and Exchange Commission within thirty (30) days after the date on which they are
filed.  As long as:  i) Lessee remains a wholly-owned subsidiary of The Dixie
Group, Inc.; and ii) The Dixie Group, Inc. remains publicly traded and is  a
corporate guarantor of Lessee’s payment and performance obligations under this
Agreement;  then copies of  Form 10-K and Form 10-Q for The Dixie Group, Inc.
will satisfy the financial statement delivery requirements  set forth in this
section 5(b),  if provided within the time periods specified in this section
 for the delivery of  quarterly and  annual financial reports.

 

(c)

Lessor may inspect any Equipment during normal business hours after giving
Lessee reasonable prior notice.

 

(d)

Lessee will keep the Equipment under any Lease at the Equipment Location
specified in the applicable Schedule and will give Lessor at least five (5)
business days prior written notice of any relocation of such Equipment.  If
Lessor asks, Lessee will promptly notify Lessor in writing of the location of
any Equipment.

 

(e)

If any Equipment is lost or damaged (where the estimated repair costs would
exceed the greater of ten percent (10%) of the original Equipment cost or fifty
thousand and 00/100 dollars ($50,000)), or is otherwise involved in an accident
causing personal injury  requiring hospital admission and/or (as the case may
be) requiring federal, state or local government reporting (including without
limitation to the Occupational Safety and Health Administration) and/or (as the
case may be) causing  third party property damage in excess of fifty thousand
dollars ($50,000),  Lessee will promptly and fully report the event to Lessor in
writing within ten (10) days of the occurrence of any such incident.

 

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(f)

Upon Lessor’s request, Lessee will provide within ten (10) days of such request,
copies of the insurance policies or other evidence required by the terms hereof.

(g)

Upon reasonable request by Lessor, Lessee will furnish a certificate of an
authorized officer of Lessee stating that he has reviewed the activities of
Lessee and that, to the best of his knowledge, no Event of Default or event
which with notice or lapse of time (or both) would become an Event of Default
within thirty (30) days of Lessor's request.

(h)

Lessee will promptly notify Lessor of any change in Lessee's state of
incorporation or organization, in any case within thirty (30) days of such
change.

(i)

Upon reasonable request by Lessor, Lessee will provide Lessor such other reports
or information in relation to the Equipment and the maintenance thereof.

6.

DELIVERY, USE AND OPERATION:

 

(a)

All Equipment shall be shipped directly from Supplier to Lessee (unless the
Equipment is being leased pursuant to a sale-leaseback transaction in which case
Lessee represents and warrants that it is in possession of the Equipment as of
the Lease Commencement Date).

 

(b)

Lessee agrees that the Equipment will be used by Lessee solely in the conduct of
its business, and in a manner complying with all applicable laws, regulations
and insurance policies, and in compliance with manufacturer’s recommendations.
 Lessee further agrees that it shall not discontinue use of any Equipment for
more than one hundred twenty (120) consecutive days unless otherwise permitted
under the terms of the corresponding Schedule. .

 

(c)

Lessee will not (i) move any Equipment from the location specified on the
Schedule, without the prior written consent of Lessor, or (ii) part with
possession of any of the Equipment (except to Lessor or for maintenance or
repair).   The foregoing notwithstanding, provided Lessee is not subject to an
Event of Default under this Agreement, Lessee may relocate the Equipment to
other facilities operated by it or by its parent company (The Dixie Group,
Inc.), or wholly-owned subsidiaries of its parent company within the continental
United States; provided, Lessee (i) provides Lessor with at least five (5)
business days prior written notice of such proposed relocation, including the
address and operator of such facility, (ii) delivers to Lessor prior to
relocation any information,  instruments or documents reasonably required to
protect the interest of Lessor in the Equipment, including without limitation,
UCC filings, sublease consents and landlord or mortgagee waivers with respect to
the new location, and (iii) indemnifies and holds harmless Lessor from any
additional tax, fees or other charges resulting from the relocation of the
Equipment.  Upon the written request of Lessor, Lessee will notify Lessor
forthwith in writing of the location of any Equipment as of the date of such
notification.

(d)

Lessee will keep the Equipment free and clear of all liens, claims and
encumbrances other than those which result from acts of Lessor.

(e)

Lessor shall not disturb Lessee's quiet enjoyment of the Equipment during the
term of the Agreement unless an Event of Default has occurred and is continuing
under this Agreement.

7.

MAINTENANCE:

 

(a)

Lessee will, at its sole expense, maintain each unit of Equipment in good
operating order and repair, normal wear and tear excepted.  Lessee shall also
maintain the Equipment in accordance with manufacturer's recommendations.
 Lessee shall make all alterations or modifications required to comply with any
applicable law, rule or regulation during the Term of any Lease.  If Lessor
requests, Lessee shall affix plates, tags or other identifying labels showing
ownership thereof by Lessor.  The tags or labels shall be placed in a prominent
position on each unit of Equipment.

 

(b)

Lessee will not attach or install anything on any Equipment that will impair the
originally intended function or use of such Equipment without the prior written
consent of Lessor.  All additions, parts, supplies, accessories, and equipment
("Additions") furnished or attached to any Equipment that are not readily
removable shall become the property of Lessor.  All Additions shall be made only
in compliance with applicable law.  Lessee will not attach or install any
Equipment to or in any other personal or real property without the prior written
consent of Lessor.

8.

STIPULATED LOSS VALUE:  If for any reason any unit of Equipment becomes worn
out, lost, stolen, destroyed, irreparably damaged or unusable ("Casualty
Occurrences") Lessee shall promptly and fully notify Lessor in writing.  Lessee
shall pay Lessor the sum of (i) the Stipulated Loss Value (see Schedule) of the
affected unit determined as of the rent payment date prior to the Casualty
Occurrence; and (ii) all rent and other amounts which are then due

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under this Agreement on the Payment Date (defined below) for the affected unit.
 The "Payment Date" for purposes of this Section 8 shall be the next scheduled
Rent Payment date after the Casualty Occurrence.  Upon payment of all sums due
hereunder, the term of the Lease as to such unit shall terminate.

9.

INSURANCE:

(a)

Lessee shall bear the entire risk of any loss, theft, damage to, or destruction
of, any unit of Equipment from any cause whatsoever from the time the Equipment
is shipped to Lessee.  

(b)

Lessee shall secure and maintain in effect at its own expense throughout the
Term of any Lease of the Equipment, insurance for such amounts and against such
hazards as Lessor may reasonably require.  All such policies shall be with
companies, and on terms, reasonably satisfactory to Lessor.  The insurance shall
include coverage for damage to or loss of the Equipment, liability for personal
injuries, death or property damage. Lessor shall be named as additional insured
with a loss payable clause in favor of Lessor, as its interest may appear,
irrespective of any breach of warranty or other act or omission of Lessee.  The
insurance shall provide for liability coverage in an amount equal to at least
ONE MILLION U.S. DOLLARS ($1,000,000.00) total liability per occurrence, unless
otherwise stated in any Schedule.  The casualty/property damage coverage shall
be in an amount equal to the full replacement cost of the Equipment and shall
have deductible amounts acceptable to Lessor. Notwithstanding anything in this
Section 9(b) to the contrary, as long as Lessee is not subject to an Event of
Default under this Agreement, Lessee may assume a deductible exposure of up to
TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) in the aggregate per occurrence
under the physical damage insurance coverages required to be maintained under
the Agreement.  No insurance shall be subject to any co-insurance clause. The
insurance policies shall provide that the insurance may not be altered or
canceled by the insurer until after thirty (30) days written notice to Lessor.
 Lessee agrees to deliver to Lessor evidence of insurance reasonably
satisfactory to Lessor.

 

(c)

Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make proof of loss
and claim for insurance, and to make adjustments with insurers and to receive
payment of and execute or endorse all documents, checks or drafts in connection
with insurance payments. Lessor shall not act as Lessee's attorney-in-fact
unless Lessee is in default.  Lessee shall pay any reasonable expenses of Lessor
in adjusting or collecting insurance.  Lessee will not make adjustments with
insurers except (provided Lessee is not subject to an Event of Default under
this Agreement) with respect to claims for damage to any unit of Equipment where
the repair costs for such unit of Equipment are less than ten percent (10%) of
the original Equipment cost (as stipulated in the applicable Schedule for such
Equipment).  Lessee may, at its option (unless Lessee is subject to an Event of
Default, in which case Lessor may, at its option) apply proceeds of insurance,
in whole or in part, to (i) repair or replace Equipment or any portion thereof,
or (ii) satisfy any obligation of Lessee to Lessor under this Agreement.

10.

RETURN OF EQUIPMENT:

 

(a)

Upon the expiration, cancellation or termination of this Agreement or any Lease
(including any cancellation or termination pursuant to Section 17 hereof or any
cancellation or termination occurring after or in connection with an Event of
Default hereunder), Lessee shall perform any testing and repairs required to
place the units of Equipment in the same condition and appearance as when
received by Lessee (reasonable wear and tear excepted) and in good working order
for the original intended purpose of the Equipment.  If required the units of
Equipment shall be deinstalled, disassembled and crated by an authorized
manufacturer's representative or such other service person as is reasonably
satisfactory to Lessor.  Lessee shall remove installed markings that are not
necessary for the operation, maintenance or repair of the Equipment.  All
Equipment will be cleaned, cosmetically acceptable, and in such condition as to
be immediately installed into use in a similar environment for which the
Equipment was originally intended to be used.  All waste material and fluid must
be removed from the Equipment and disposed of in accordance with then current
waste disposal laws.  Lessee shall return the units of Equipment to a location
within the continental United States as Lessor shall direct.  Lessee shall
obtain and pay for a policy of transit insurance for the redelivery period in an
amount equal to the replacement value of the Equipment.  The transit insurance
must name Lessor as the loss payee.  Lessee shall pay for all costs to comply
with this Section 10.

 

(b)

Until Lessee has fully complied with the requirements of Section 10(a) above,
Lessee's rent payment obligation and all other obligations under this Agreement
shall continue from month to month notwithstanding any expiration, cancellation
or termination of the lease term.  Lessor may terminate Lessee's right to use
the Equipment upon ten (10) days notice to Lessee.

(c) Lessee shall provide to Lessor a detailed inventory of all components of the
Equipment including model and serial numbers.  Lessee shall also provide an
up-to-date copy of all other documentation pertaining to the Equipment.  All
service manuals, blue prints, process flow diagrams, operating manuals,
inventory and maintenance records shall be given to Lessor at least ninety (90)
days and not more than one hundred twenty (120) days prior to lease cancellation
or termination.

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(d)

Lessee shall make the Equipment available for on-site operational inspections by
potential purchasers at least one hundred twenty (120) days prior to and
continuing up to lease cancellation or termination.  Lessor shall provide Lessee
with reasonable notice prior to any inspection.  Lessee shall provide personnel,
power and other requirements necessary to demonstrate electrical, hydraulic and
mechanical systems for each item of Equipment.

11.

DEFAULT AND REMEDIES:

 

(a)

Lessee shall be in default under this Agreement and under any Lease upon the
occurrence of any of the following (each an "Event of Default", and
collectively, the "Events of Default"):

(i)

Lessee fails to pay within ten (10) days after its due date, any Rent or any
other amount due under this Agreement or any Lease;

(ii)

Lessee breaches any of its insurance obligations under this Agreement or any
other Document (as defined in Section 16 hereof);

(iii)

Lessee breaches any of its other obligations under any Lease (other than those
described in Section 11(a)(i) and (ii) above), and fails to cure that breach
within thirty (30) days after written notice from Lessor;

(iv)

any representation, warranty or covenant made by Lessee or any guarantor or
surety for the obligations under any Lease (each a "Guarantor", and
collectively, the "Guarantors") in connection with this Agreement or under any
Lease shall be materially false or materially misleading;

(v)

any Equipment is illegally used;

(vi)

Lessee or any Guarantor becomes insolvent or ceases to do business as a going
concern;

(vii)

if Lessee or any Guarantor is a natural person, any death or incompetency of
Lessee or such Guarantor;

(viii)

a receiver is appointed for all or of any part of the property of Lessee or any
Guarantor, or Lessee or any Guarantor makes any assignment for the benefit of
its creditors;

(ix)

Lessee or any Guarantor files a petition under any bankruptcy, insolvency or
similar law, or in the event an involuntary petition is filed against Lessee or
any Guarantor under any bankruptcy or insolvency laws and in the event of an
involuntary petition, such petition is not dismissed within forty-five (45) days
of the filing date;

(x)

Lessee or any Guarantor breaches or is in default under any other agreement by
and between Lessor (or any of its affiliates or parent entities) on the one
hand, and Lessee or such Guarantor (or any of their respective parent or
affiliates) on the other hand; provided however that any such default under this
Section 11(a)(x) is not solely related to a material adverse change in Lessee’s
financial condition;

(xi)

any Guarantor revokes or attempts to revoke its obligations under its guaranty
or any related document to which it is a party, or fails to observe or perform
any covenant, condition or agreement to be performed under such guaranty or
other related document to which it is a party;

(xii)

Lessee or any Guarantor defaults under any other agreement, document or
instrument to which Lessee or any Guarantor is a party or by which Lessee or any
Guarantor or any of their respective properties is bound, creating or relating
to any obligations owed to a party other than Lessor (or any of Lessor’s
 affiliates or parent companies) (each a “Third Party Obligation” and
collectively the “Third Party Obligations”) (i) in excess of  $3,000,000 if the
 payment or maturity of such Third Party Obligation(s) may be accelerated in
consequence of such event of default or demand for payment of such Third Party
Obligation(s) may be made; or (ii) an acceleration  occurs of the payment or
maturity of any Third Party Obligation(s) in excess of $1,500,000; provided
however that any such default under this Section 11(a)(xii) is not solely
related to a material adverse change in Lessee’s or any Guarantor's financial
condition;

(xiii)

there is any dissolution or termination of existence of Lessee or any Guarantor;
 or

(xiv)

there is any  merger, consolidation or change in controlling ownership of Lessee
or any Guarantor, or either Lessee or any Guarantor sells or leases all, or
substantially all, of its assets.

The default declaration shall apply to all Schedules unless specifically
excepted by Lessor.

(b)

Upon the occurrence of any Event of Default and so long as the same shall be
continuing, Lessor may, at its option, at any time thereafter, exercise one or
more of the following remedies set forth in this Section 11, as Lessor in its
sole discretion shall lawfully elect.  (i) Upon the request of Lessor, Lessee
shall immediately comply with the provisions of Section 10(a), (ii) Lessee shall
authorize Lessor to peacefully enter any premises where any Equipment may be and
take possession of the Equipment, (iii) Lessee shall immediately pay to Lessor
without further demand as liquidated damages, for loss of a bargain and not as a
penalty, an amount equal to (x) the Stipulated Loss Value of the Equipment
(calculated as of the Rent Payment date prior to the declaration of default),
plus (y) all Rents and other sums then due under this Agreement, any Lease and
all Schedules, (iv) Lessor may cancel or terminate the Lease as to any or all of
the Equipment, and any cancellation or termination of Leases shall occur only
upon written notice by Lessor to Lessee and only as to the units of Equipment
specified in any such notice, (v) Lessor may, but shall not be required to, sell
Equipment at private or public sale, in bulk or in parcels, with or without
notice, and without having the Equipment present at the place of sale, (vi)
Lessor may also, but shall not be required to, lease, otherwise dispose of or
keep idle all or part of the Equipment, (vii) Lessor may use Lessee's premises
for a reasonable period of time for any or all of the purposes stated above
without liability for rent, costs, damages or otherwise, (viii) Lessor shall
have the right to apply the proceeds of any sale, lease or other disposition, if
any, in the following order of

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priorities:  (1) to pay all of Lessor's costs, charges and expenses incurred in
taking, removing, holding, repairing and selling, leasing or otherwise disposing
of Equipment; then, (2) to the extent not previously paid by Lessee, to pay
Lessor all sums due from Lessee under this Agreement; then (3) to reimburse to
Lessee any sums previously paid by Lessee as liquidated damages; and (4) any
surplus shall be retained by Lessor.  Lessee shall immediately pay any
deficiency in (1) and (2) above, to the extent any exists, (ix) Lessor shall be
entitled to collect from Lessee all costs, charges, and expenses, including
actual legal fees and disbursements, incurred by Lessor by reason of any Event
of Default under the terms of this Agreement or under any other agreement
between Lessor (or any of its affiliates or parent entities), on the one hand,
and Lessee or any Guarantor (or any of their respective affiliates or parent
entities), on the other hand, (x) Lessor may proceed by appropriate court
action, either by law or in equity, to enforce the performance by Lessee of the
applicable covenants of this Agreement and any Lease or to recover damages for
breach hereof, and (xi) Lessor may exercise any rights it may have against any
security deposit or other collateral pledged to it by Lessee, any Guarantor or
any of their respective affiliates or parent entities.

(c)

In addition to Lessor’s remedies set forth above, any rent or other amount not
paid when due shall bear interest, from the due date until paid, at a per annum
rate equal to the lesser of twelve percent (12%) or the maximum rate not
prohibited by applicable law (the "Per Diem Interest Rate").  The application of
such Per Diem Interest Rate shall not be interpreted or deemed to extend any
cure period set forth herein, cure any default or otherwise limit Lessor's
rights or remedies hereunder.  Notwithstanding anything to the contrary
contained in this Agreement or any Schedule, in no event shall this Agreement or
any Schedule require the payment or permit the collection of amounts in excess
of the maximum permitted by applicable law.

(d)

The foregoing remedies are cumulative, and any or all thereof may be exercised
instead of or in addition to each other or any remedies at law, in equity, or
under any applicable statute, or international treaty, convention or protocol.
 Lessee waives notice of sale or other disposition (and the time and place
thereof), and the manner and place of any advertising.  Lessee shall pay
Lessor's actual attorney's fees incurred in connection with the enforcement,
assertion, defense or preservation of Lessor's rights and remedies under this
Agreement, or if prohibited by law, such lesser sum as may be permitted.  Waiver
of any default shall not be deemed to be a waiver of any other or subsequent
default.

(e)

Any Event of Default under the terms of this Agreement, any Lease or any other
agreement between Lessor and Lessee may be declared by Lessor a default under
this Agreement, any Lease and any such other agreement between Lessor and
Lessee.

12.

ASSIGNMENT:  LESSEE SHALL NOT SELL, TRANSFER, ASSIGN, ENCUMBER OR SUBLET ANY
EQUIPMENT OR THE INTEREST OF LESSEE IN THE EQUIPMENT WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR, WHICH CONSENT WILL NOT BE UNREASONABLY WITHHELD.  However,
Lessor shall not be deemed to have unreasonably withheld its consent if:  (A) in
Lessor’s opinion, there is expected to be any adverse affect on Lessor’s
interest in the Lease, the Equipment, or any related Tax Benefits,  (B) at the
time of Lessee’s request,  Lessee is subject to an Event of  Default or an event
that  with the giving of notice or passage  of time or both would constitute an
Event of Default,  (C) any  proposed assignee or (as the case may be) sublessee
fails to meet Lessor’s compliance screening standards then in effect (e.g.,
 “Patriot Act”), or (D) Lessor fails to receive, in form and substance
satisfactory to Lessor, any transfer and assumption agreement, consents to
sublease, new or amended financing statements, or other documents and
instruments that may be required by Lessor in connection with such request..
 Lessor may, without the consent of Lessee, assign this Agreement, any Schedule
or the right to enter into a Schedule.  Lessee agrees that if Lessee receives
written notice of an assignment from Lessor, Lessee will pay all rent and all
other amounts payable under any assigned Schedule to such assignee or as
instructed by Lessor.  Lessee also agrees to confirm in writing receipt of the
notice of assignment as may be reasonably requested by assignee.  Lessee hereby
waives and agrees not to assert against any such assignee any defense, set-off,
recoupment claim or counterclaim which Lessee has or may at any time have
against Lessor for any reason whatsoever.

13.

NET LEASE:  Any Lease entered into pursuant to the terms and provisions of this
Agreement is a net lease.  Lessee acknowledges and agrees that its obligations
to pay Rent and any and all amounts due and owing in accordance with the terms
hereof and under any Schedule shall be absolute and unconditional, and such
obligations shall not be released, discharged, waived, reduced, set-off or
affected by any circumstances whatsoever, including, without limitation, any
damage to or destruction of any Equipment, defects in the Equipment or Lessee no
longer can use such Equipment.  Lessee further acknowledges that Lessee is not
entitled to reduce or set-off against Rent or any other amounts due to Lessor or
to any assignee under Section 12, whether or not Lessee’s claim arises out of
this Agreement, any Lease, any statement by Lessor, Lessor’s liability or any
Supplier’s liability, strict liability, negligence or otherwise.  Lessor shall
have no obligation, liability or responsibility to Lessee or any other person
with respect to the operation, maintenance, repairs, alternations,
modifications, correction of faults or defects (whether or not required by
applicable law) or insurance with respect to any Equipment, all such matters
shall be, as between Lessee and Lessor, the sole responsibility of Lessee,
regardless upon whom such responsibilities may fall under applicable law or
otherwise, and the Rent payable hereunder has been set in reliance of Lessee’s
sole responsibility for such aforementioned matters.  

14.

INDEMNIFICATION:

 

(a)

Lessee hereby agrees to indemnify and save, on a net after-tax basis, Lessor and
its affiliates, and all of Lessor’s and such affiliates’ respective directors,
shareholders, officers, employees, agents, employees, predecessors,
attorneys-in-fact, lawyers, successors and assigns (each an "Indemnitee")
harmless from and against any and all losses, damages, penalties, injuries,
claims, actions and suits, including reasonable attorneys’ fees and legal
expenses, of whatsoever kind

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and nature and other costs of investigation or defense, including those incurred
upon any appeal arising out of or relating to the Equipment, this Agreement or
any Lease or any other Document (as defined in Section 16 hereof) (collectively,
"Claims") whether in law or equity, or in contract, tort or otherwise.  

This indemnity shall include, but is not limited to, Lessor's strict liability
in tort or otherwise, including Claims that may be imposed on, incurred by or
asserted against an Indemnitee in any way arising out of (i) the selection,
manufacture, purchase, acceptance or rejection of Equipment, the ownership of
Equipment during the term of this Agreement, and the delivery, lease, sublease,
chartering, possession, maintenance, use, non-use, financing, mortgaging,
control, insurance, testing, condition, return, sale (including all costs,
incurred in making the Equipment ready for sale after the exercise of remedies
as a result of an Event of Default), operation or design of the Equipment
(including, without limitation, latent and other defects, whether or not
discoverable by Lessor or Lessee and any claim for patent, trademark or
copyright infringement or environmental damage), any interchanging or pooling of
any parts of the Equipment, if applicable; (ii) the condition of Equipment sold
or disposed of after use by Lessee, any sublessee or employees of Lessee; (iii)
any breach of Lessee's or any Guarantor's representations or obligations under
any Lease or any other Document or any guaranty, or the failure by Lessee to
comply with any term, provision or covenant contained in any Lease or any other
Document or the Equipment or with any applicable law, rule or regulation with
respect to the Equipment, or the nonconformity of the Equipment or its operation
with any applicable law; (iv) any actions brought against any Indemnitee that
arise out of Lessee's or any Guarantor's actions or omissions (or actions or
omissions of Lessee's or Guarantor's agents); or (v) reliance by any Indemnitee
on any representation or warranty made or deemed made by Lessee or any Guarantor
(or any of their officers) under or in connection with any Lease or any other
Document, or any report or other information delivered by Lessee or Guarantor
pursuant hereto which shall have been incorrect in any material respect when
made or deemed made or delivered; provided, that Lessee shall not be obligated
to pay and shall have no indemnity liability for any Claims (x) imposed on or
against an Indemnitee to the extent that such Claims are caused by the gross
negligence or willful misconduct of such Indemnitee, or (y) to the extent
imposed with respect to any Claim solely based on events occurring after the
earlier of (A) the expiration or other cancellation or termination of the Term
of any Lease in circumstances not requiring the return of the Equipment and
payment in full of all amounts due from Lessee under such Lease and any other
Document, and (B) the satisfaction in full by Lessee of all its obligations
under Section 10 "Return of Equipment" hereof in respect of any Lease, and the
payment in full of all amounts due from Lessee under any Lease and related
Documents, except in each case to the extent such Claims result from an exercise
of remedies under this Agreement and any Lease following the occurrence of an
Event of Default.  Lessee shall pay on demand to each Indemnitee any and all
amounts necessary to indemnify such Indemnitee from and against any Claims.
 Lessee shall, upon request, defend any actions based on, or arising out of, any
of the foregoing.

 

(b)

Lessee hereby represents, warrants and covenants that (i) on the Lease
Commencement Date for any unit of Equipment, such unit will qualify for all of
the items of deduction and credit specified in Section C of the applicable
Schedule ("Tax Benefits") in the hands of Lessor, and (ii) at no time during the
term of this Agreement will Lessee take or omit to take, nor will it permit any
sublessee or assignee to take or omit to take, any action (whether or not such
act or omission is otherwise permitted by Lessor or by this Agreement), which
will result in the disqualification of any Equipment for, or recapture of, all
or any portion of such Tax Benefits.

 

(c)

If as a result of a breach of any representation, warranty or covenant of Lessee
contained in this Agreement or any Schedule (i) tax counsel of Lessor shall
determine that Lessor is not entitled to claim on its Federal income tax return
all or any portion of the Tax Benefits with respect to any Equipment, or (ii)
any Tax Benefit claimed on the Federal income tax return of Lessor is disallowed
or adjusted by the Internal Revenue Service, or (iii) any Tax Benefit is
recalculated or recaptured (any determination, disallowance, adjustment,
recalculation or recapture being  a "Loss"), then Lessee shall pay to Lessor, as
an indemnity and as additional rent, an amount that shall, in the reasonable
opinion of Lessor, cause Lessor's after-tax economic yields and cash flows to
equal the Net Economic Return that would have been realized by Lessor if such
Loss had not occurred.  Such amount shall be payable upon demand accompanied by
a statement describing in reasonable detail such Loss and the computation of
such amount.  The economic yields and cash flows shall be computed on the same
assumptions, including tax rates as were used by Lessor in originally evaluating
the transaction ("Net Economic Return").  If an adjustment has been made under
Section 3 then the Effective Rate used in the next preceding adjustment shall be
substituted.

 

(d)

All references to Lessor in this Section 14 include Lessor and the consolidated
taxpayer group of which Lessor is a member. All of Lessor's rights, privileges
and indemnities contained in this Section 14 shall survive the expiration or
other cancellation or termination of this Agreement.  The rights, privileges and
indemnities contained in this Agreement are expressly made for the benefit of,
and shall be enforceable by Lessor, its successors and assigns.

15.

DISCLAIMER:  LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY
ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES.  LESSOR DOES NOT MAKE, HAS NOT
MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION,
EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED
UNDER THIS AGREEMENT OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS
OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION,
SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE.  All such risks,
as between Lessor and Lessee, are to be borne by Lessee.  Without limiting the
foregoing, Lessor shall have no responsibility or liability to Lessee or any
other person with respect to any of the following; (i) any liability, loss or
damage caused or alleged to be caused directly or indirectly by any Equipment,
any inadequacy thereof, any deficiency or defect (latent or otherwise) of the
Equipment, or any other circumstance in connection with the Equipment; (ii) the
use, operation or performance of any

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Equipment or any risks relating to it; (iii) any interruption of service, loss
of business or anticipated profits or consequential damages; or (iv) the
delivery, operation, servicing, maintenance, repair, improvement or replacement
of any Equipment.  If, and so long as, no default exists under this Agreement,
Lessee shall be, and hereby is, authorized during the Term of any Lease to
assert and enforce whatever claims and rights Lessor may have against any
Supplier of the Equipment leased hereunder at Lessee's sole cost and expense,
 in the name of and for the account of Lessor and/or Lessee, as their interests
may appear.

16.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE:  

(a)  Lessee makes each of the following representations and warranties to Lessor
on the date hereof and on the Lease Commencement Date.

 

(i)

Lessee has adequate power and capacity to enter into, and perform under, this
Agreement and all related documents (together, the "Documents").  Lessee is duly
qualified to do business wherever necessary to carry on its present business and
operations, including the jurisdiction(s) where the Equipment is or is to be
located.

 

(ii)

The Documents have been duly authorized, executed and delivered by Lessee and
constitute valid, legal and binding agreements, enforceable in accordance with
their terms, except to the extent that the enforcement of remedies may be
limited under applicable bankruptcy and insolvency laws.

 

(iii)

No approval, consent or withholding of objections is required from any
governmental authority or entity with respect to the entry into or performance
by Lessee of the Documents except such as have already been obtained.

 

(iv)

The entry into and performance by Lessee of the Documents do not, and will not:
(i) violate any judgment, order, law or regulation applicable to Lessee or any
provision of Lessee's organizational documents; or (ii) result in any breach of,
constitute a default under or result in the creation of any lien, charge,
security interest or other encumbrance upon any Equipment pursuant to any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
instrument (other than this Agreement) to which Lessee is a party.

 

(v)

There are no suits or proceedings pending or threatened in court or before any
commission, board or other administrative agency against or affecting Lessee,
which if decided against Lessee will have a material adverse effect on the
ability of Lessee to fulfill its obligations under this Agreement.

 

(vi)

Each financial statement delivered to Lessor has been prepared in accordance
with generally accepted accounting principles consistently applied.  Since the
date of the most recent financial statement, there has been no material adverse
change.

 

(vii)

Lessee's exact legal name is as set forth in the first sentence of this
Agreement.

(b)

Lessee hereby covenants to Lessor that at all times during the Term of any
Lease:

(i)

The Equipment accepted under any Certificate of Acceptance is and will remain
tangible personal property.

(ii)

Lessee is and will be at all times validly existing and in good standing under
the laws of its state of incorporation or organization (specified in the first
sentence of this Agreement).

(iii)

The Equipment will at all time be used for commercial or business purposes.

(iv)  Lessee shall not consolidate or reorganize (other than any internal
reorganization or consolidation that does not change the legal entity status of
the Lessee) or merge with any other corporation or entity, or sell, convey,
transfer or lease all or substantially all of its property during the Term of
any Lease, without the prior written consent of Lessor, which shall not be
unreasonably withheld. Lessee acknowledges that with respect to the prior
written consent of Lessor referred to in this Section 16(b)(iv), Lessor shall
not be deemed to have unreasonably withheld its consent if:  (A) in Lessor’s
reasonable opinion, there is expected to be any adverse change in the
creditworthiness of Lessee or any Guarantor or (as the case may be) any proposed
successor lessee or successor guarantor, (B) in Lessor’s reasonable opinion,
there is expected to be any adverse affect on the Equipment, Lessor’s  interest
therein or any related Tax Benefits,  (C) at the time of Lessee’s request,
 Lessee is subject to an Event of  Default or an event that  with the giving of
notice or passage  of time or both would constitute an Event of Default,  (D)
any such proposed successor entity or new controlling entity fails to meet
Lessor’s compliance screening standards then in effect (e.g., “Patriot Act”), or
(E) Lessor fails to receive, in form and substance satisfactory to Lessor, any
transfer and assumption agreement, new or amended financing statements, or other
documents and instruments that may be required by Lessor in connection with such
request.

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(v)

Lessee shall maintain all books and records (including any computerized
maintenance records) pertaining to the Equipment during the Term of any Lease in
accordance with applicable rules and regulations.

(vi)

Lessee is and will remain in full compliance with all laws and regulations
applicable to it including, without limitation, (i) ensuring that no person who
owns a controlling interest in or otherwise controls Lessee is or shall be (Y)
listed on the Specially Designated Nationals and Blocked Person List maintained
by the Office of Foreign Assets Control ("OFAC"), Department of the Treasury,
and/or any other similar lists maintained by OFAC pursuant to any authorizing
statute, Executive Order or regulation or (Z) a person designated under Section
1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related
enabling legislation or any other similar Executive Orders, and (ii) compliance
with all applicable Bank Secrecy Act ("BSA") laws, regulations and government
guidance on BSA compliance and on the prevention and detection of money
laundering violations.

17.

EARLY TERMINATION:

 

(a)

On or after the First Termination Date (specified in the applicable Schedule),
Lessee may, so long as no Event of Default (or event or circumstance which with
the giving of notice or passage of time or both, would result in an Event of
Default) exists and no Casualty Occurrence has occurred, terminate this
Agreement as to all (but not less than all) of the Equipment on such Schedule as
of a rent payment date ("Termination Date").  Lessee must give Lessor at least
ninety (90) days', but no more than one hundred eighty (180) days' prior written
notice of the termination.

 

(b)

Lessee shall, and Lessor shall have the right to, solicit cash bids for the
Equipment on an AS IS, WHERE IS BASIS without recourse to or warranty from
Lessor, express or implied ("AS IS BASIS").  Prior to the Termination Date,
Lessee shall (i) certify to Lessor any bids received by Lessee and (ii) pay to
Lessor (1) the Termination Value (calculated as of the Rent due on the
Termination Date) for the Equipment, and (2) all Rent and other sums due and
unpaid as of the Termination Date.

 

(c)

If all amounts due hereunder have been paid on the Termination Date, Lessor
shall (i) sell the Equipment on an AS IS BASIS for cash to the highest bidder
and (ii) refund the proceeds of such sale (net of any related expenses) to
Lessee up to the amount of the Termination Value.  If such sale is not
consummated, no termination shall occur and Lessor shall refund the Termination
Value (less any expenses incurred by Lessor) to Lessee.

 

(d)

Notwithstanding the foregoing, Lessor shall have the right to elect by written
notice, at any time prior to the Termination Date, not to sell the Equipment.
 In that event, on the Termination Date Lessee shall (i) return the Equipment
(in accordance with Section 10) and (ii) pay to Lessor an amount equal to the
sum of (x) the Termination Value (calculated as of the Termination Date) for the
Equipment as required under Section 17(b)(ii)(1) above less the amount of the
highest bid certified by Lessee to Lessor, plus (y) all Rent and other amounts
due and unpaid as of the Termination Date as required under Section 17(b)(ii)(2)
above.

18.

END OF LEASE PURCHASE OPTION:  

 

(a)

On the expiration of any Lease, Lessee may, so long as no Event of Default (or
event or circumstance which with the giving of notice or passage of time or
both, would result in an Event of Default) exists thereunder, and such Lease has
not been earlier cancelled or terminated, purchase all (but not less than all)
of the Equipment set forth in any Schedule on an AS IS BASIS for cash equal to
its then Fair Market Value (plus all applicable sales taxes).  Lessee must
notify Lessor of its intent to purchase the Equipment in writing at least one
hundred eighty (180) days prior to the expiration date of such Lease.  If Lessee
is in default, or if the Lease or this Agreement has already been cancelled or
terminated, Lessee may not purchase the Equipment.

 

(b)

"Fair Market Value" shall mean the price that a willing buyer (who is neither a
lessee in possession nor a used equipment dealer) would pay for the Equipment in
an arm's-length transaction to a willing seller under no compulsion to sell.  In
determining the Fair Market Value, (i) the Equipment shall be assumed to be in
the condition in which it is required to be maintained and returned under the
Lease, (ii) if the Equipment is installed it shall be valued on an installed
basis, and (iii) the costs of removal of the Equipment from current location
shall not be a deduction from the value of the Equipment.  If Lessor and Lessee
are unable to agree on the Fair Market Value at least one hundred thirty-five
(135) days prior to the expiration of the Lease, Lessor shall appoint an
independent appraiser (reasonably acceptable to Lessee) to determine Fair Market
Value, at Lessee's sole cost, and such independent appraiser's determination
shall be final, binding and conclusive.

 

(c)

Lessee shall be deemed to have waived this option unless it provides Lessor with
written notice of its irrevocable election to exercise the same within fifteen
(15) days after Fair Market Value is told to Lessee.

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19.

MISCELLANEOUS:

 

(a)

LESSEE AND LESSOR UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE
RELATED DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE
RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE AND LESSOR.  THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT.  THIS WAIVER IS IRREVOCABLE.  THIS WAIVER MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING.  THE WAIVER ALSO SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT,
ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION.  THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

(b)

The Equipment shall remain Lessor's property unless Lessee purchases the
Equipment from Lessor in accordance with the terms hereof, and until such time
Lessee shall only have the right to use the Equipment as a lessee.  Any
cancellation or termination by Lessor of this Agreement, any Schedule,
supplement or amendment hereto, or the lease of any Equipment hereunder shall
not release Lessee from any then outstanding obligations to Lessor hereunder.
 All Equipment shall at all times remain personal property of Lessor even though
it may be attached to real property.  The Equipment shall not become part of any
other property by reason of any installation in, or attachment to, other real or
personal property.

 

(c)

Time is of the essence of this Agreement.  Lessor's failure at any time to
require strict performance by Lessee of any of the provisions hereof shall not
waive or diminish Lessor's right at any other time to demand strict compliance
with this Agreement and any Lease.  Lessor may correct patent errors and fill in
all blanks in the Documents consistent with the agreement of the parties.
 Lessee will promptly, upon Lessor's request and at Lessee's sole cost and
expense, execute, or otherwise authenticate, any document, record or instrument
necessary or expedient for filing, recording or perfecting the interest of
Lessor or to carry out the intent of this Agreement and any Lease (including
filings to evidence amendments to this Agreement and any Lease, and
acknowledgments of assignments), and will take such further action as Lessor may
reasonably request in order to carry out more effectively the intent and
purposes of this Agreement and any Lease and to establish Lessor's rights and
remedies under this Lease, or otherwise with respect to the Equipment.  In
addition, Lessee hereby authorizes Lessor to file a financing statement and
amendments thereto describing the Equipment described in any and all Schedules
now and hereafter executed pursuant hereto and adding any other collateral
described therein and containing any other information required by the
applicable Uniform Commercial Code.  Lessee irrevocably grants to Lessor the
power to sign Lessee's name and generally to act on behalf of Lessee to execute
and file financing statements and other documents pertaining to any or all of
the Equipment.  Lessee hereby ratifies its prior authorization for Lessor to
file financing statements and amendments thereto describing the Equipment and
containing any other information required by any applicable law (including
without limitation the Uniform Commercial Code) if filed prior to the date
hereof.  If and to the extent that this Agreement or a Schedule is deemed a
security agreement, Lessee hereby grants to Lessor a first priority security
interest in the Equipment, together with all additions, attachments,
 accessories and accessions thereto whether or not furnished by Supplier of the
Equipment and any and all substitutions, upgrades, replacements or exchanges
therefor, and any and all insurance and/or other proceeds of the property in and
against which a security interest is granted hereunder.  This security interest
is given to secure the payment and performance of all debts, obligations and
liabilities of any kind whatsoever of Lessee to Lessor, now existing or arising
in the future under this Agreement or any Schedules hereto, and any renewals,
extensions and modifications of such debts, obligations and liabilities.  All
notices required to be given hereunder shall be deemed adequately given if
delivered by hand, or sent by registered or certified mail to the addressee at
its address stated herein, or at such other place as such addressee may have
designated in writing.  This Agreement and any Schedules and Annexes thereto
constitute the entire agreement of the parties with respect to the subject
matter hereof.  NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF
ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED
BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO.

 

(d)

If Lessee does not comply with any provision of this Agreement, Lessor shall
have the right, but shall not be obligated, to effect such compliance, in whole
or in part.  All reasonable amounts spent and obligations incurred or assumed by
Lessor in effecting such compliance shall constitute additional rent due to
Lessor.  Lessee shall pay the additional rent within five (5) days after the
date Lessor sends notice to Lessee requesting payment.  Lessor's effecting such
compliance shall not be a waiver of Lessee's default.

   

(e)

Any provisions in this Agreement and any Schedule that are in conflict with any
statute, law or applicable rule shall be deemed omitted, modified or altered to
conform thereto.

(f)

Lessee hereby irrevocably authorizes Lessor to adjust the Capitalized Lessor's
Cost up or down by no more than ten percent (10%) within each Schedule to
account for equipment change orders, equipment returns, invoicing errors, and
similar matters.  Lessee acknowledges and agrees that the rent shall be adjusted
as a result of the change in the Capitalized Lessor's Cost.  Lessor shall send
Lessee a written notice stating the final Capitalized Lessor's Cost, if it has
changed.

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(g)

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN
ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES
OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
REGARDLESS OF THE LOCATION OF THE EQUIPMENT.  LESSEE IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF
CONNECTICUT TO HEAR AND DETERMINE ANY SUIT,  ACTION OR PROCEEDING AND TO SETTLE
ANY DISPUTES, WHICH MAY ARISE OUT OF OR IN CONNECTION HEREWITH  (COLLECTIVELY,
THE "PROCEEDINGS"), AND LESSEE FURTHER IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO REMOVE ANY SUCH PROCEEDINGS FROM ANY SUCH COURT (EVEN IF REMOVAL IS SOUGHT TO
ANOTHER OF THE ABOVE-NAMED COURTS).  LESSEE IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MIGHT NOW OR HEREAFTER HAVE TO THE ABOVE-NAMED COURTS BEING NOMINATED
AS THE EXCLUSIVE FORUM TO HEAR AND DETERMINE ANY SUCH PROCEEDINGS AND AGREES NOT
TO CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE
ABOVE-NAMED COURTS FOR ANY REASON WHATSOEVER, THAT IT OR ITS PROPERTY IS IMMUNE
FROM LEGAL PROCESS FOR ANY REASON WHATSOEVER, THAT ANY SUCH COURT IS NOT A
CONVENIENT OR APPROPRIATE FORUM IN EACH CASE WHETHER ON THE GROUNDS OF VENUE OR
FORUM NON-CONVENIENS OR OTHERWISE.  LESSEE ACKNOWLEDGES THAT BRINGING ANY SUCH
SUIT, ACTION OR PROCEEDING IN ANY COURT OTHER THAN THE COURTS SET FORTH ABOVE
WILL CAUSE IRREPARABLE HARM TO LESSOR WHICH COULD NOT ADEQUATELY BE COMPENSATED
BY MONETARY DAMAGES, AND, AS SUCH, LESSEE AGREES THAT, IN ADDITION TO ANY OF THE
REMEDIES TO WHICH LESSOR MAY BE ENTITLED AT LAW OR IN EQUITY, LESSOR WILL BE
ENTITLED TO AN INJUNCTION OR INJUNCTIONS (WITHOUT THE POSTING OF ANY BOND AND
WITHOUT PROOF OF ACTUAL DAMAGES) TO ENJOIN THE PROSECUTION OF ANY SUCH
PROCEEDINGS IN ANY OTHER COURT. Notwithstanding the foregoing, each of Lessee
and Lessor shall have the right to apply to a court of competent jurisdiction in
the United States or abroad for equitable relief as is necessary to preserve,
protect and enforce their rights under this Agreement and any Lease, including
but not limited to orders of attachment or injunction necessary to maintain the
status quo pending litigation or to enforce judgments against Lessee, any
Guarantor or the Equipment or to gain possession of the Equipment.

(h)

Any cancellation or termination by Lessor, pursuant to the provisions of this
Agreement, any Schedule, supplement or amendment hereto, of the lease of any
Equipment hereunder, shall not release Lessee from any then outstanding
obligations to Lessor hereunder.

(i)

To the extent that any Schedule would constitute chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest therein may be created through the transfer
or possession of this Agreement in and of itself without the transfer or
possession of the original of a Schedule executed pursuant to this Agreement and
incorporating this Agreement by reference; and no security interest in this
Agreement and a Schedule may be created by the transfer or possession of any
counterpart of the Schedule other than the original thereof, which shall be
identified as the document marked "Original" and all other counterparts shall be
marked "Duplicate".

(j)

This Agreement and any amendments, waivers, consents or supplements hereto or in
connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.  Delivery of an executed signature page of this Agreement or any
delivery contemplated hereby by facsimile or electronic transmission shall be as
effective as delivery of a manually executed counterpart thereof.

(k)

Each party hereto agrees to keep confidential, the terms and provisions of the
Documents and the transactions contemplated hereby and thereby (collectively,
the "Transactions"); provided that either party may disclose the terms and
provisions of the Documents and transactions contemplated hereby and thereby
(collectively, "Confidential Information") (i) to its or its controlling
entities' employees, officers, directors, agents, consultants, auditors,
attorneys and accountants, (ii) if it is reasonably believed by it to be
compelled by any court decree, subpoena or other legal or administrative order
or process, (iii) on the advice of its counsel, otherwise required by law or
necessary or appropriate in connection with any litigation or other proceeding
to which it or its affiliates is a party, or (iv) which becomes available to
such party from a third party on a non-confidential basis.  Notwithstanding the
foregoing, the obligations of confidentiality contained herein, as they relate
to the Transactions, shall not apply to the federal tax structure or federal tax
treatment of the Transactions, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the federal tax structure and federal
tax treatment of the Transactions.  The preceding sentence is intended to cause
each Transaction to be treated as not having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision) of the Treasury Regulations promulgated under Section 6011 of the
Internal Revenue Code of 1986, as amended, and shall be construed in a manner
consistent with such purpose.  In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the federal tax structure of the
Transactions or any federal tax matter or federal tax idea related to the
Transactions.

(l)

Lessee hereby acknowledges and agrees that Lessor reserves the right to impose
fees or charges for returned checks and certain optional services that Lessor
may offer or provide to Lessee during the term of this Agreement.  Lessor will
notify Lessee the amount of the applicable fee or charge if Lessee requests

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such optional services.  In addition, Lessor may make available to Lessee a
schedule of fees or charges for such optional services from time to time or upon
demand, provided, however, that such fees and charges are subject to change in
Lessor's sole discretion without notice to Lessee.

(m)

Lessee hereby acknowledges that it has not received or relied on any legal, tax,
financial or accounting advice from Lessor and that Lessee has had

the opportunity to seek advice from its own advisors and professionals in that
regard.

IN WITNESS WHEREOF,  Lessee and Lessor have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.

 

LESSOR:

LESSEE:

General Electric Capital Corporation

Masland Carpets, LLC

By:  /s/ Mark E. Frankel              

By:  /s/ Gary A. Harmon              

Name:    Mark E. Frankel                

Name:  Gary A. Harmon                

Title:   Operations Analyst           

Title:     President and Chief Manager