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Exhibit 10.16

LASALLE NATIONAL LEASING CORPORATION

EQUIPMENT LEASE AGREEMENT

        THIS EQUIPMENT LEASE AGREEMENT (the "Lease") is made as of the 29th day
of December, 1997, by and between LASALLE NATIONAL LEASING CORPORATION, its
successors and assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC., its
successors and permitted assigns ("Lessee").

        The parties agree that Lessee shall lease from Lessor the property (the
"Equipment") described in the Equipment Schedule(s) to be executed pursuant
hereto (collectively, the "Equipment Schedule"), subject to the terms set forth
herein, in the Riders annexed hereto and in the Equipment Schedule. Certain
definitions and construction of certain of the terms used herein are provided in
Section 19 hereof.

        1.     TERM.    The term of lease with respect to any item of the
Equipment shall be the term set forth in the Equipment Schedule relating
thereto; provided, however, that this Lease shall be effective from and after
the date of execution hereof.

        2.     RENT.    Lessee shall pay Lessor the rental installments in the
aggregate amounts specified in the Equipment Schedule, without prior notice or
demand, and all other amounts payable pursuant to this Lease (such installments
and other amounts, the "rent"). Each Equipment Schedule constitutes a
non-cancelable net lease, and Lessee's obligation to pay rent, and to otherwise
perform its obligations under this Lease, each such Equipment Schedule and all
of the other documents and agreements entered in connection herewith
(collectively, the "Lease Documents"), are and shall be absolute and
unconditional and shall not be affected by any right of setoff, counterclaim,
recoupment, deduction, defense or other right which Lessee may have against
Lessor, the manufacturer or vendor of the Equipment (the "Suppliers"), or anyone
else, for any reason whatsoever. Rental installments are payable as and when
specified in the Equipment Schedule by mailing the same to Lessor at its address
specified pursuant to this Lease; and payments of rent shall be effective upon
receipt. Timeliness of Lessee's payment and its other performance under the
Lease Documents is of the essence. If any rent is not paid on the due date,
Lessor may collect, and Lessee agrees to pay, a charge (the "Late Charge")
calculated as the product of the late charge rate specified in the Equipment
Schedule (the "Late Charge Rate") and the amount in arrears for the period such
amount remains unpaid.

        3.     REPRESENTATIONS AND WARRANTIES OF LESSEE.    Lessee represents
and warrants that: (a) Lessee is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation. (b) The
execution, delivery and performance of the Lease Documents: (1) have been duly
authorized by all necessary corporate action on the part of Lessee; (2) do not
require the approval of any stockholder, trustee or holder of any obligations of
Lessee except such as have been duly obtained; and (3) do not and will not
contravene any law, governmental rule, regulation or order now binding on
Lessee, or the charter or by-laws of Lessee, or contravene the provisions of, or
constitute a default under, or result in the creation of any lien or encumbrance
upon the property of Lessee under, any indenture, mortgage, contract or other
agreement to which Lessee is a party or by which it or its property is bound the
contravention and/or creation of which would have a material adverse effect on
Lessee. (c) Each of the Lease Documents, when entered into, will constitute
legal, valid and binding obligations of Lessee enforceable against Lessee, in
accordance with the terms thereof, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally, and by applicable law (or equitable rights)
which may affect creditors' rights generally. (d) There are no pending actions
or proceedings to which

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Lessee is a party (and as to which Lessee has received written notice), and
there are no other pending or threatened actions or proceedings of which Lessee
has knowledge, before any court, arbitrator or administrative agency, which,
either individually or in the aggregate, would materially and adversely affect
the financial condition of Lessee, or the ability of Lessee to perform its
obligations or remain in compliance with the Lease Documents. Further, Lessee is
not in default (as of the date of execution hereof, and Lessee has no knowledge
of the occurrence of any event which, with the giving of notice or the lapse of
time, or both, would become a default ) under any obligation for borrowed money,
for the deferred purchase price of property or any lease agreement which, either
individually or in the aggregate, would have the same such effect. (e) The
financial statements of Lessee (copies of which have been furnished to Lessor)
have been prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"), and fairly present Lessee's financial condition
and the results of its operations as of the date of and for the period covered
by such statements, and since the date of such statements there has been no
material adverse change in such conditions or operations. (f) The address stated
below the signature of Lessee is the chief executive office of Lessee; and
Lessee does not conduct business under a trade, assumed or fictitious name.

        4.     FINANCIALS, FURTHER ASSURANCES AND NOTICES.    Lessee covenants
and agrees as follows: (a) Lessee will furnish Lessor (1) within one hundred
twenty (120) days after the end of each fiscal year of Lessee, a balance sheet
of Lessee as at the end of such year, and the related statement of income and
statement of cash flows of Lessee for such fiscal year, prepared in accordance
with GAAP, all in reasonable detail and certified by independent certified
public accountants of recognized standing selected by Lessee (which shall be a
"Big 4" accounting firm); (2) within sixty (60) days after the end of each
quarter, a balance sheet of Lessee as at the end of such quarter, and the
related statement of income and statement of cash flows of Lessee for such
quarter, prepared in accordance with GAAP; and (3) within thirty (30) days after
the date on which they are filed, all regular periodic reports, forms and other
filings required to be made by Lessee to the Securities and Exchange Commission,
if any. (b) Lessee will promptly execute and deliver to Lessor such further
reasonable documents, instruments and assurances and take such further action as
Lessor from time to time may reasonably request in order to carry out the intent
and purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor under the Lease Documents.
(c) Lessee shall provide written notice to Lessor: (1) thirty (30) days prior to
any contemplated change in the name or address of the chief executive office of
Lessee; (2) promptly upon the occurrence of any Default (as hereinafter defined)
or event which, with the lapse of time or the giving of notice, or both, would
become a Default (a "default"; except as used in Sections 15 and 16); and (3)
promptly upon Lessee becoming aware of any alleged material violation of
applicable law relating to the Equipment or this Lease.

        5.     CONDITIONS PRECEDENT.    Lessor's obligations under each
Equipment Schedule, including its obligation to purchase and lease any Equipment
to be leased thereunder, are conditioned upon Lessor's reasonable determination
that all of the following have been satisfied (or waived, at Lessor's sole
discretion): (a) Lessor having received the following, in form and substance
satisfactory to Lessor: (1) evidence as to due compliance with the insurance
provisions hereof; (2) Uniform Commercial Code financing statements and all
other filings and recordings as required by Lessor; (3) certificate of Lessee's
Secretary certifying: (i) resolutions of Lessee's Board of Directors duly
authorizing the leasing of the Equipment hereunder and the execution, delivery
and performance of this Lease and the Equipment Schedule and all related
instruments and documents, and (ii) the incumbency and signature of the officers
of Lessee authorized to execute such documents; (4) an opinion of counsel for
Lessee as to each of the matters set forth in sub-parts (a) through (d) of
Section 3 hereof; (5) the only manually executed original of the Equipment
Schedule and all other Lease Documents; (6) IRS Form W-9, Payer Request for
Taxpayer Identification Number, executed by Lessee; and (7) such other
documents, agreements, instruments, certificates, opinions, assurances, as
Lessor reasonably may require. (b) All representations and warranties provided
in favor of Lessor in any of

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the Lease Documents shall be true and correct on the effective date of such
Equipment Schedule with the same effect as though made as of such date (Lessee's
execution and delivery of the Equipment Schedule shall constitute an
acknowledgment of the same). (c) There shall be no default or Default under the
Equipment Schedule or any other Lease Documents. (d) On the effective date of
the Equipment Schedule, Lessor shall have received good title to the Equipment
to be leased thereunder, free and clear of any lien, claim or encumbrance of any
kind. (e) The purchase price payable by Lessor to Lessee to acquire the
Equipment shall be applied to pay down the obligations of Lessee pursuant to
that certain Credit Agreement dated as of April 7, 1994, between Lessee and
Chase Manhattan Bank, ET AL. (the "Credit Agreement"), in accordance with the
terms of the Credit Agreement. Lessee's obligations under each Equipment
Schedule, this Lease and the Bill of Sale, including Lessee's obligation to sell
the Equipment to Lessor pursuant to the Bill of Sale, are conditioned upon
Lessee's receipt from Lessor by federal wire transfer or other immediately
available funds in the amount of the Total Invoice Cost set forth on Equipment
Schedule Nos. 1 through 8 hereof, which amounts shall not be less than Thirty
Million Dollars ($30,000,000).

        6.     DELIVERY; INSPECTION AND ACCEPTANCE BY LESSEE.    Upon execution
hereof, Lessee shall execute and deliver to Lessor Equipment Schedules
containing a complete description of the Equipment; whereupon, as between Lessor
and Lessee, the same shall be deemed to have been finally accepted by Lessee
pursuant to this Lease.

        7.     USE AND MAINTENANCE.    (a) Lessee shall: (1) use the Equipment
solely in the Continental United States and in the conduct of its business,
consistent with Lessee's past practice, and shall not permanently discontinue
use of the Equipment; (2) operate, maintain, service and repair the Equipment,
and maintain all records and other materials relating thereto, (i) in accordance
and consistent with (A) the Supplier's recommendations and all maintenance and
operating manuals or service agreements, whenever furnished or entered into,
including any subsequent amendments or replacements thereof, consistent with
Lessee's past practice, (B) the requirements of all applicable insurance
policies, (C) all applicable laws, and (D) the prudent practice of other similar
companies in the same business as Lessee, but in any event, to no lesser
standard than that employed by Lessee for comparable equipment owned or leased
by it; and (ii) without limiting the foregoing, so as to cause the Equipment to
be in good repair and operating condition and in at least the same condition as
when delivered to Lessee hereunder, except for ordinary wear and tear; (3) not
change the location of any Equipment as specified in the Equipment Schedule
without prior written notice to Lessor; (4) not attach or incorporate the
Equipment to or in any other item of equipment in such a manner that the
Equipment may be deemed to have become an accession to or a part of such other
item of equipment; and (5) cause each principal item of the Equipment to be
continually marked, in a plain and distinct manner, with the name of Lessor
followed by the words "Owner and Lessor," or other appropriate words designated
by Lessor on labels furnished by Lessor. (b) Within a reasonable time, Lessee
will replace any parts of the Equipment which become worn out, lost, destroyed,
damaged beyond repair or otherwise permanently rendered unfit for use, by new or
reconditioned replacement parts which are free and clear of all liens,
encumbrances or rights of others and have a value, utility and remaining useful
life at least equal to the parts replaced. Title to all replacement parts and
permanent improvements, or attachments to the Equipment which cannot be removed
without damaging the Equipment, immediately shall vest in Lessor, without cost
or expense to Lessor or any further action by any other person, and such parts,
improvements and additions shall be deemed incorporated in the Equipment and
subject to the terms of this Lease as if originally leased hereunder, if such
parts are essential to the operation of the Equipment or cannot be detached from
the Equipment without materially interfering with the operation of the Equipment
or adversely affecting the value, utility and remaining useful life which the
Equipment would have had without the addition thereof. Lessee shall not make any
material alterations to the Equipment without prior written notice to Lessor,
provided that such material alterations do not adversely affect the value,
utility and remaining useful life which the Equipment would have had without the
addition thereof. (c) Upon forty-eight (48) hours' notice,

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Lessee shall afford Lessor access to the premises where the Equipment is located
for the purpose of inspecting such Equipment and all applicable maintenance or
other records at any reasonable time during normal business hours; provided,
however, if a default or Default shall have occurred and then be continuing, no
notice of any inspection by Lessor shall be required.

        8.     DISCLAIMER OF WARRANTIES.    LESSOR IS NOT A SELLER, SUPPLIER OR
MANUFACTURER (AS SUCH TERMS ARE DEFINED OR USED, AS THE CASE MAY BE, IN THE
UNIFORM COMMERCIAL CODE), OR DEALER, NOR A SELLER'S OR A DEALER'S AGENT. THE
EQUIPMENT IS LEASED HEREUNDER "AS IS", AND LESSOR HAS NOT MADE, AND HEREBY
DISCLAIMS LIABILITY FOR, AND LESSEE HEREBY WAIVES ALL RIGHTS AGAINST LESSOR
RELATING TO, ANY AND ALL WARRANTIES, REPRESENTATIONS OR OBLIGATIONS OF ANY KIND
WITH RESPECT TO THE EQUIPMENT, EITHER EXPRESS OR IMPLIED, ARISING BY APPLICABLE
LAW OR OTHERWISE, INCLUDING ANY OF THE SAME RELATING TO OR ARISING IN OR UNDER
(a) MERCHANTABILITY OR FITNESS FOR PARTICULAR USE OR PURPOSE, (b) COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE OR (c) TORT (WHETHER OR NOT
ARISING FROM THE ACTUAL, IMPLIED OR IMPUTED NEGLIGENCE OF LESSOR OR STRICT
LIABILITY) OR THE UNIFORM COMMERCIAL CODE (INCLUDING ARTICLE 2A, AS HEREINAFTER
DEFINED; AND, WITHOUT LIMITING THE FOREGOING, INCLUDING, (i) ANY WARRANTIES
CONTAINED IN ss.ss. 2A-210, 2A-211, 2A-212 AND 2A-213, (ii) ANY RIGHT TO DEEM
LESSOR IN DEFAULT PURSUANT THERETO, AND (iii) ALL OF LESSEE'S RIGHTS AND
REMEDIES UNDER ss.ss. 2A-508 THROUGH 2A-521) OR OTHER APPLICABLE LAW WITH
RESPECT TO THE EQUIPMENT, INCLUDING ITS TITLE OR FREEDOM FROM LIENS (EXCEPT AS
EXPRESSLY SET FORTH HEREIN), FREEDOM FROM TRADEMARK, PATENT OR COPYRIGHT
INFRINGEMENT, FREEDOM FROM LATENT DEFECTS (WHETHER OR NOT DISCOVERABLE),
CONDITION, MANUFACTURE, DESIGN, SERVICING OR COMPLIANCE WITH APPLICABLE LAW; it
being agreed that all such risks, as between Lessor and Lessee, are to be borne
by Lessee; and Lessor's agreement to enter into this Lease and any Equipment
Schedule is in reliance upon the freedom from and complete negation of liability
or responsibility for the specific matters waived and disclaimed herein. Lessor
is not responsible for any direct, indirect, incidental or consequential damage
to or losses resulting from the installation, operation or use of the Equipment
or any products manufactured thereby. All assignable warranties made by the
Supplier to Lessor are hereby assigned to Lessee for and during the term of this
Lease and Lessee agrees to resolve all such claims directly with the Supplier.
Provided that no default or Default has occurred and is then continuing, Lessor
fully shall cooperate with Lessee with respect to the resolution of such claims,
in good faith and by appropriate proceedings at Lessee's expense. Any such claim
shall not affect in any manner the unconditional obligation of Lessee to make
rent payments hereunder.

        9.     FEES AND TAXES.    (a) To the extent permitted by law, Lessee
shall file any necessary report and return for, shall pay promptly when due,
shall otherwise be liable to reimburse Lessor (on an after-tax basis) for, and
agrees to indemnify and hold Lessor harmless from: (i) all titling, recordation,
documentary stamp and other fees; and (ii) taxes (other than taxes calculated
solely on the basis of net income or capital gains), assessments and all other
charges or withholdings of any nature (together with any penalties, fines or
interest thereon); arising at any time upon or relating to the Equipment or this
Lease or the delivery, acquisition, ownership, use, operation or leasing or
other disposition of the Equipment, or upon the rent, whether the same be
assessed to Lessor or Lessee (any of the foregoing, an "Imposition"). (b) If any
report, return or property listing, or any Imposition is, by law, required to be
filed by, assessed or billed to, or paid by, Lessor, Lessee at its own expense
will do all things required to be done by Lessor (to the extent permitted by
law) in connection therewith and is hereby authorized by Lessor to act on behalf
of Lessor in all respects, including the contest or protest, in good faith and
by appropriate proceedings, of the validity of any Imposition, or the amount
thereof.

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Lessor agrees fully to cooperate with Lessee in any such contest, and Lessee
agrees promptly to indemnify Lessor for all reasonable expenses incurred by
Lessor in the course of such cooperation. An Imposition or Claim (as hereinafter
defined) therefor shall be paid, subject to refund proceedings, if failure to
pay would adversely affect the title or rights of Lessor. Provided that no
default or Default has occurred and is continuing, if (at any time during or
after the term of this Lease) Lessor obtains a refund of any Imposition which
has been paid (by Lessee, or by Lessor and for which Lessor has been reimbursed
by Lessee), Lessor shall promptly pay to Lessee the net amount of such refund to
the extent actually received. Lessee will cause all billings of such charges to
Lessor to be made to Lessor in care of Lessee and will, in preparing any report
or return required by law, show the ownership of the Equipment in Lessor, and
shall send a copy of any such report or return to Lessor. If Lessee fails to pay
any such charges when due, except any Imposition being contested in good faith
and by appropriate proceedings as above provided for a reasonable period of
time, Lessor at its option may do so, in which event the amount so paid
(including any penalty or interest incurred as a result of Lessee's failure),
plus interest thereon at the Late Charge Rate, shall be paid by Lessee to Lessor
with the next periodic payment of rent. (c) As used herein, the term "Lessor"
shall mean and include Lessor and the consolidated Federal taxpayer group of
which Lessor is a member.

        10.   INTENT, TITLE AND LIENS.    (a) The parties intend and agree that
the Equipment shall remain personal property, and that Lessor's title thereto
not be impaired, notwithstanding the manner in which it may be affixed to any
real property. Lessee shall obtain and deliver to Lessor, from any person having
an interest in the property where the Equipment is to be located, waivers of any
lien, encumbrance or interest which such person might have or hereafter obtain
or claim with respect to the Equipment. (b) It is the express intention of the
parties hereto that (1) each Equipment Schedule, incorporating by reference the
terms of this Lease, constitutes a true "lease" and a "finance lease" as such
terms are defined in the Uniform Commercial Code Article 2A - Leases ("Article
2A") (whether or not Article 2A is then in effect in the State) and not a sale
or retention of security interest; and (2) title to the Equipment shall at all
times remain in Lessor, and Lessee shall acquire no ownership, property, rights,
equity, or interest other than a leasehold interest with the exclusive right to
use the Equipment, solely as Lessee subject to the terms and conditions hereof.
If, notwithstanding the express intent of the parties, a court of competent
jurisdiction determines that any Equipment Schedule is not a true lease, but is
rather a sale and extension of credit, a lease intended for security, a loan
secured by the Equipment specified in such Equipment Schedule, or other similar
arrangement, the parties agree that in such event: (i) (A) in order to secure
the prompt payment and performance as and when due of all of Lessee's
obligations (both now existing and hereafter arising) under each such Equipment
Schedule, Lessee shall be deemed to have granted, and it hereby grants, to
Lessor a first priority security interest in the following (whether now existing
or hereafter created): the Equipment leased pursuant to such Equipment Schedule
and all replacements, substitutions, accessions, and proceeds (cash and
non-cash; but without power of sale), including the proceeds of all insurance
policies, thereof, and (B) Lessee agrees that with respect to the Equipment, in
addition to all of the other rights and remedies available to Lessor hereunder
upon the occurrence of a Default, Lessor shall have all of the rights and
remedies of a first priority secured party under the UCC; and (ii) (A) the
principal amount of any such obligation shall be an amount equal to the
aggregate Total Invoice Cost of all Equipment (to be amortized as provided in
Clause (D) below, (B) the term of any such obligation shall be the same as the
term specified for such Equipment in the related Equipment Schedule, (C) the
payments under any such obligation shall be the regular installments of rent
specified in the Equipment Schedule for such Equipment, and (D) any such
obligation shall be at an interest rate that is equal to the lesser of the
maximum lawful rate permitted by applicable law or the effective interest rate
calculated on the basis of the foregoing principal amount, term and payments as
if the principal amount were amortized over the term of the obligation to a
balloon payment of fifty-nine (59) percent at the twenty-first (21) quarter of
the term. For purposes of this sub-part (b), this Lease, the Equipment Schedule,
or a photocopy of either thereof may be filed as a financing statement under the

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UCC. (c) Lessee may not dispose of any of the Equipment except to the extent
expressly provided herein, notwithstanding the fact that proceeds constitute a
part of the Equipment. (d) Lessee further agrees to maintain the Equipment free
from all claims, liens, attachments, rights of others and legal processes
("Liens") of creditors of Lessee or any other persons, other than Liens for
fees, taxes, levies, duties or other governmental charges of any kind, Liens of
mechanics, materialmen, laborers, employees or suppliers and similar Liens
arising by operation of law incurred by Lessee in the ordinary course of
business for sums that are not yet delinquent or are being contested in good
faith by negotiations or by appropriate proceedings which suspend the collection
thereof (provided, however, that such proceedings do not involve any substantial
danger (as determined in Lessor's sole reasonable discretion) of the sale,
forfeiture or loss of the Equipment or any interest therein). Lessee will
defend, at its own expense, Lessor's title to the Equipment from such claims,
Liens or legal processes. Lessee shall also notify Lessor immediately upon
receipt of notice of any Lien affecting the Equipment in whole or in part.

        11.   INSURANCE.    Lessee shall obtain and maintain all-risk insurance
coverage with respect to the Equipment insuring against, among other things:
casualty coverage, including loss or damage due to fire and the risks normally
included in extended coverage, malicious mischief and vandalism, for not less
than the greater of the full replacement value or the Stipulated Loss Value (as
defined in Section 12 hereof); and public liability coverage, including both
personal injury and property damage with a combined single limit per occurrence
of not less than the amount specified in the Equipment Schedule, subject to such
deductible as is reasonably acceptable to Lessor. All said insurance shall be in
commercially reasonable form and amount, and with companies reasonably
satisfactory to Lessor. All insurance for loss or damage to the Equipment shall
provide that losses, if any, shall be payable to Lessor as loss payee and Lessee
shall utilize its reasonable efforts to have all checks relating to any such
losses delivered promptly to Lessor. Lessor shall be named as an additional
insured with respect to all such liability insurance. Lessee shall pay the
premiums therefor and deliver to Lessor evidence satisfactory to Lessor of such
insurance coverage. Lessee shall cause to be provided to Lessor, not less than
fifteen (15) days prior to the scheduled expiration or lapse of such insurance
coverage, evidence satisfactory to Lessor of renewal or replacement coverage.
Each insurer shall agree, by endorsement upon the policy or policies issued by
it or by independent instrument furnished to Lessor, that (a) it will give
Lessor thirty (30) days' prior written notice of the effective date of any
material alteration or cancellation of such policy; and (b) insurance as to the
interest of any named additional insured or loss payee other than Lessee shall
not be invalidated by any actions, inactions, breach of warranty or conditions
or negligence of Lessee or any person other than Lessor with respect to such
policy or policies. The proceeds of such insurance payable as a result of loss
of or damage to the Equipment shall be applied as required by the provisions of
Section 12 hereof.

        12.   LOSS AND DAMAGE.    Lessee assumes the risk of direct and
consequential loss and damage to the Equipment from all causes (other than such
as may be caused by the gross negligence or willful misconduct of Lessor).
Except as provided in this Section for discharge upon payment of Stipulated Loss
Value, no loss or damage to the Equipment or any part thereof shall release or
impair any obligations of Lessee under this Lease. Lessee agrees that Lessor
shall not incur any liability to Lessee for any loss of business, loss of
profits, expenses, or any other Claims resulting to Lessee by reason of any
failure of or delay in delivery or any delay caused by any non-performance,
defective performance, or breakdown of the Equipment, nor shall Lessor at any
time be responsible for personal injury or the loss or destruction of any other
property resulting from the Equipment (other than such as may be caused by the
gross negligence or willful misconduct of Lessor). In the event of loss or
damage to any item of Equipment which does not constitute a Total Loss (as
hereinafter defined), Lessee shall, at its sole cost and expense, promptly
repair and restore such item of the Equipment to the condition required by this
Lease. Provided that no default or Default has occurred and is continuing, upon
receipt of evidence reasonably satisfactory to Lessor of completion of such
repairs, Lessor will apply any net insurance proceeds received by Lessor on
account of such loss to the cost of

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repairs. Upon the occurrence of the actual or constructive total loss of any
item of the Equipment, or the loss, disappearance, theft or destruction of any
item of the Equipment or damage to any item of the Equipment to such extent as
shall make repair thereof uneconomical or shall render any item of the Equipment
permanently unfit for normal use for any reason whatsoever, or the condemnation,
confiscation, requisition, seizure, forfeiture or other taking of title to or
use of any item of the Equipment or the imposition of any Lien thereon by any
governmental authority (as established to the reasonable satisfaction of Lessor
and Lessee; any such occurrence being herein referred to as a "Total Loss"),
during the term of this Lease, Lessee shall give prompt notice thereof to
Lessor. On the next date for the payment of rent, Lessee shall pay to Lessor the
rent due on that date plus the Stipulated Loss Value of the item or items of the
Equipment with respect to which the Total Loss has occurred and any other sums
due hereunder with respect to that Equipment (less any insurance proceeds or
condemnation award actually paid). Upon making such payment, this Lease and the
obligation to make future rental payments shall terminate solely with respect to
the Equipment or items thereof so paid for and (to the extent applicable) Lessee
shall become entitled thereto AS IS WHERE IS without warranty, express or
implied, with respect to any matter whatsoever. Lessor shall deliver to Lessee a
bill of sale transferring and assigning to Lessee without recourse or warranty,
all of Lessor's right, title and interest in and to such Equipment. Lessor shall
not be required to make and may specifically disclaim any representation or
warranty as to the condition of the Equipment or any other matters. As used in
this Lease, "Stipulated Loss Value" shall mean the product of the Total Invoice
Cost (designated on the appropriate Equipment Schedule) of the Equipment and the
applicable percentage factor set forth on the Schedule of Stipulated Loss Values
attached to the Equipment Schedule. Stipulated Loss Value shall be determined as
of the next date on which a payment of rent is or would be due after a Total
Loss or other termination of an Equipment Schedule, after payment of any rent
due on such date, and the applicable percentage factor shall be that which is
set forth with respect to such rent payment. After payment of the final payment
of rent due under the original term of this Lease and during any renewal term
thereof, Stipulated Loss Value shall be determined as of the date of termination
of such Equipment Schedule (absent any renewal thereof) or, if during a renewal
term, on the next date on which a payment of rent is or would be due after a
Total Loss or other termination of such renewal term, after payment of any rent
due on such date, and the applicable percentage factor shall be the last
percentage factor set forth on the Schedule of Stipulated Loss Values attached
to such Equipment Schedule.

        13.   REDELIVERY.    Upon the expiration or earlier termination of the
term of any Equipment Schedule (or of any renewal thereof, if applicable),
Lessee shall, at its own expense, return the Equipment as provided herein to
Lessor within ten (10) days (a) in the same condition as when delivered to
Lessee hereunder, ordinary wear and tear resulting from proper use thereof
excepted, (b) in such operating condition as is capable of performing its
originally intended use, (c) having been used, operated, serviced and repaired
in accordance with, and otherwise complying with, Section 7 hereof, and (d) free
and clear of all Liens whatsoever except Liens resulting from claims against
Lessor not relating to the ownership of such Equipment. Lessee shall return the
Equipment by delivering it, fully crated and ready to be shipped, at the
location to which the Equipment was originally delivered or to which the
Equipment was relocated with Lessor's consent. In addition to Lessor's other
rights and remedies hereunder, if the Equipment is not returned in a timely
fashion, or if repairs are necessary to place any items of Equipment in the
condition required in this Section, Lessee shall continue to pay to Lessor per
diem rent at the last prevailing lease rate under the applicable Equipment
Schedule with respect to such items of Equipment, for the period of delay in
redelivery, or for the period of time reasonably necessary to accomplish such
repairs together with the cost of such repairs, as applicable. Lessor's
acceptance of such rent on account of such delay or repair does not constitute a
renewal of the term of the related Equipment Schedule or a waiver of Lessor's
right to prompt return of the Equipment in proper condition.

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        14.   INDEMNITY.    Lessee assumes and agrees to indemnify, defend and
keep harmless Lessor, and any assignee of Lessor's rights and obligations under
any Equipment Schedule and this Lease, its agents and employees ("Indemnitees"),
from and against any and all Claims (other than such as may directly and
proximately result from the gross negligence or willful misconduct of, such
Indemnitees), by paying (on an after-tax basis) or otherwise discharging same,
when and as such Claims shall become due, including Claims arising on account of
(a) any Lease Document, or (b) the Equipment, or any part thereof, including the
ordering, acquisition, delivery, or installation of the Equipment, the
possession, maintenance, use, condition, ownership or operation of any item of
Equipment, and by whomsoever owned, used or operated, during the term of any
Equipment Schedule with respect to that item of Equipment, the existence of
latent and other defects (whether or not discoverable by Lessor or Lessee) any
claim in tort for negligence or strict liability, and any claim for patent,
trademark or copyright infringement, or the loss, damage, destruction, removal,
return, surrender, sale or other disposition of the Equipment, or any item
thereof, or for whatever other reason whatsoever. Lessor shall give Lessee
prompt notice of any Claim hereby indemnified against and Lessee shall be
entitled to control the defense thereof, so long as no default or Default has
occurred and is then continuing; provided, however, that Lessor shall have the
right to approve defense counsel selected by Lessee. For the purposes of this
Lease, the term "Claims" shall mean (to the extent made by third parties) all
claims, allegations, harms, judgments, good faith settlements entered into,
suits, actions, debts, obligations, damages (whether incidental, consequential
or direct), demands (for compensation, indemnification, reimbursement or
otherwise), losses, penalties, fines, liabilities (including strict liability),
charges that Lessor has incurred or for which it is responsible, in the nature
of interest, Liens, and costs (including attorneys' fees and disbursements and
any other legal or non-legal expenses of investigation or defense of any Claim,
whether or not such Claim is ultimately defeated or enforcing the rights,
remedies or indemnities provided for hereunder, or otherwise available at law or
equity to Lessor), of whatever kind or nature, contingent or otherwise, matured
or unmatured, foreseeable or unforeseeable, by or against any person.

        15.   DEFAULT.    (a) A default shall be deemed to have occurred
hereunder and under an Equipment Schedule ("Default") if (1) Lessee shall fail
to make any payment of rent hereunder or under an Equipment Schedule as and when
due and such failure shall continue unremedied for a period of three
(3) Business Days after oral or written (as determined by Lessor) notice thereof
to Lessee by Lessor; or (2) Lessee shall fail to obtain and maintain the
insurance required herein; (3) Lessee shall fail to perform or observe any other
covenant, condition or agreement to be performed or observed by it under any
Lease Document and such failure shall continue unremedied for a period of thirty
(30) days after written notice thereof to Lessee by Lessor; provided, however,
that if such failure can be cured but cannot be cured within such thirty (30)
day period, and Lessee commences efforts to effect such cure within such thirty
(30) day period and diligently pursues such efforts, then Lessee shall have an
additional period of sixty (60) days to remedy such failure; or (4) Lessee shall
(i) be generally not paying its debts as they become due; or (ii) make any
filing for the purpose of invoking the protection of any bankruptcy or
insolvency law, or any such law is invoked against or with respect to Lessee or
its property, and any such petition filed against Lessee is not dismissed within
sixty (60) days; or (5) Lessee shall make or permit any unauthorized Lien
against, or assignment or transfer of, this Lease, an Equipment Schedule, the
Equipment, or any interest therein; or (6) any certificate, statement,
representation, warranty or audit contained herein or furnished with respect
hereto by or on behalf of Lessee proving to have been false in any material
respect at the time as of which the facts therein set forth were stated or
certified, or having omitted any substantial contingent or unliquidated
liability or Claim against Lessee; or (7) Lessee shall be in default under any
material (i.e., for an amount in excess of Five Millions Dollars
($5,000,000.00)) obligation for borrowed money, for the deferred purchase price
of property or any lease agreement, and (i) the applicable grace period with
respect thereto shall have expired, and (ii) if such default is other than a
monetary default, then the obligee under such obligation shall have commenced
the exercise of any of its remedies available with

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respect to such obligation; or (8) Lessee shall have terminated its corporate
existence, consolidated with, merged into, or conveyed (except in connection
with any bona fide financing arrangement) substantially all of its assets as an
entirety to any person (such actions being referred to as an "Event"), unless
not less than sixty (60) days prior to such Event: (i) such person executes and
delivers to Lessor an agreement satisfactory in form and substance to Lessor, in
its sole discretion, containing such person's effective assumption, and its
agreement to pay, perform, comply with and otherwise be liable for, in a due and
punctual manner, all of Lessee's obligations having previously arisen, or then
or thereafter arising, under any and all of the Lease Documents; and (ii) Lessor
is satisfied as to the creditworthiness of such person, based solely upon such
person's conformance to the standard criteria then used by Lessor for such
purposes; or (9) as a result of or in connection with a Change of Control,
Lessee's Debt to Tangible Net Worth equals or exceeds two and one-half (2.5)
times the ratio of Lessee's Debt to Tangible Net Worth as of the date of this
Lease, without the prior written consent of Lessor. As used herein, "Change of
Control" shall mean either (i) a person becomes the owner or holder of 50% or
more of the outstanding voting securities of Lessee; and/or (ii) a person shall
have the contractual power presently to designate 50% or more of the directors
of Lessee; and "Debt" shall mean Lessee's total liabilities which, in accordance
with GAAP, would be included in the liability side of a balance sheet; and
"Tangible Net Worth" shall mean Lessee's tangible net worth including the sum of
the par or stated value of all outstanding capital stock, surplus and undivided
profits, less any amounts attributable to goodwill, patents, copyrights, mailing
lists, catalogs, trademarks, bond discount and underwriting expenses,
organization expense and other intangibles. Accounting terms used herein shall
be as defined, and all calculations hereunder shall be made, in accordance with
GAAP. (b) The occurrence of a Default with respect to any Equipment Schedule
shall, at the sole discretion of Lessor, constitute a Default with respect to
any or all Equipment Schedules to which it is then a party. Notwithstanding
anything set forth herein, Lessor may exercise all rights and remedies hereunder
independently with respect to each Equipment Schedule.

        16.   REMEDIES.    Without limiting Lessor's other rights hereunder, if
Lessee shall fail to pay any amount of rent hereunder or under any Equipment
Schedule within sixty (60) days after the same shall have become due, Lessee
automatically shall be deemed to be in default hereunder and under said
Equipment Schedule and all of Lessee's rights, but not its obligations, under
such Equipment Schedule and in and to the Equipment leased thereunder
automatically shall be cancelled, whereupon Lessee's right to possess and use
such Equipment immediately shall cease; and Lessee hereby agrees that the
foregoing shall occur without act or notice as a condition thereto, and any such
requirement of any act or notice under applicable law is hereby expressly and
irrevocably waived to the extent permitted thereunder. Upon the occurrence of
any other Default under the provisions of Section 15 hereof (including the
failure to make any payment of rent as and when due), Lessor may, at its option,
declare this Lease and such Equipment Schedule to be in default. At any time
after cancellation of an Equipment Schedule or after declaration by Lessor that
such Equipment Schedule is in default, Lessor may, in addition to any other
remedies provided herein or by applicable law, exercise one or more of the
following remedies as Lessor in its sole discretion shall elect:

        (a)   Require Lessee to assemble any or all of the Equipment at the
location to which the Equipment was delivered or the location to which such
Equipment may have been moved by Lessee or such other location in reasonable
proximity to either of the foregoing as Lessor shall designate; and/or to return
promptly, at Lessee's expense, any or all of the Equipment to Lessor at the
location, in the condition and otherwise in accordance with all of the terms of
Section 13 hereof; and/or take possession of and render unusable by Lessee any
or all of the Equipment, wherever it may be located, without any court order or
other process of law and without liability for any damages occasioned by such
taking of possession (other than to premises) (any such taking of possession
shall constitute an automatic cancellation of the Equipment Schedule pertaining
thereto, as it applies to those items taken without further notice, and such
taking of possession shall not prohibit Lessor from exercising its other
remedies hereunder).

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        (b)   Sell, re-lease or otherwise dispose of any or all of the
Equipment, whether or not in Lessor's possession, in a commercially reasonable
manner at public or private sale with notice to Lessee (the parties agreeing
that ten (10) days' prior written notice shall constitute adequate notice of
such sale), with the right of Lessor to purchase and apply the net proceeds of
such disposition, after deducting all costs of such disposition (including but
not limited to costs of transportation, possession, storage, refurbishing,
advertising and brokers' fees), to the obligations of Lessee pursuant to this
sub-part (b), with Lessee remaining liable for any deficiency and with any
excess being retained by Lessor; or retain any or all of the Equipment; and
recover from Lessee damages, not as a penalty, but herein liquidated for all
purposes as follows:

        (1)   if Lessor elects to dispose of the Equipment under an Equipment
Schedule pursuant to a lease which is substantially similar to this Lease and
such Equipment Schedule: an amount equal to the sum of (A) any accrued and
unpaid rent under this Lease and such Equipment Schedule as of the date of
commencement (the "Commencement Date") of the term of the new lease, and (B) (i)
the present value as of the Commencement Date of the total rent for the then
remaining term of such Equipment Schedule, minus (ii) the present value as of
the Commencement Date of the rent under the new lease applicable to that period
of the new lease term which is comparable to the then remaining term of such
Equipment Schedule, and (C) any incidental damages allowed under Article 2A,
less expenses saved by Lessor in consequence of the Default ("Incidental
Damages");

        (2)   if Lessor elects to retain the Equipment or to dispose of the
Equipment under an Equipment Schedule by sale, by re-lease (pursuant to a lease
which is not substantially similar to this Lease and such Equipment Schedule),
or otherwise: an amount equal to the sum of (A) any accrued and unpaid rent as
of the date Lessor repossesses the Equipment or such earlier date as Lessee
tenders possession of the Equipment to Lessor in accordance with the provisions
of Section 13 hereof, (B) (i) the present value as of the date determined under
clause (A) of the total rent for the then remaining term of such Equipment
Schedule, minus (ii) the present value, as of that certain date which may be
determined by taking a reasonable opportunity to repossess and remarket the
Equipment, of the "market rent" (as computed pursuant to Article 2A) at the
place where the Equipment was located on that date, computed for the same lease
term, and (C) any Incidental Damages (provided, however, that if the measure of
damages provided is inadequate to put Lessor in as good a position as
performance would have, the damages shall be the present value of the profit,
including reasonable overhead, Lessor would have made from full performance by
Lessee, together with any incidental damages allowed under Article 2A, due
allowance for costs reasonably incurred and due credit for payments or proceeds
of disposition);

        (3)   if, with respect to an Equipment Schedule, Lessor has not
repossessed the Equipment, or if Lessor has repossessed the Equipment or Lessee
has tendered possession of the Equipment to Lessor and Lessor is unable after
reasonable effort to dispose of the Equipment at a reasonable price or the
circumstances reasonably indicate that such an effort will be unavailing: an
amount equal to the sum of (A) accrued and unpaid rent as of the date of entry
of judgment in favor of Lessor, (B) the present value as of the date determined
under clause (A) of the rent for the then remaining term of such Equipment
Schedule, and (C) any Incidental Damages. Lessor may dispose of the Equipment at
any time before collection of a judgment for damages. If the disposition is
before the end of the remaining term of such Equipment Schedule, Lessor's
recovery against Lessee for damages will be governed by sub-part (b)(1) or (2)
(as applicable), and Lessor will cause an appropriate credit to be provided
against any judgment for damages to the extent that the amount of the judgment
exceeds the applicable recovery pursuant to sub-part (b)(1) or (2).

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        (c)   In lieu of the damages specified in sub-part (b), with respect to
each applicable Equipment Schedule, Lessor may recover from Lessee, as
liquidated damages for loss of a bargain and not as a penalty, an amount
calculated as the sum of: (1) the greater of either (A) the Stipulated Loss
Value of the Equipment (determined as of the next date on which a payment is or
would have been due after the occurrence of the subject Default), together with
all other sums due under such Equipment Schedule as of such determination date
or (B) all sums due and to become due under such Equipment Schedule for the full
term thereof (including any tax indemnities becoming due as a result of the
Default, and any mandatory purchase or renewal options which Lessee has
contracted to pay) (provided that all sums becoming due after the occurrence of
such Default shall be discounted to present value as of the date of payment by
Lessee) plus Lessor's estimated residual interest in the Equipment; plus (2) the
amount of all commercially reasonable costs and expenses incurred by Lessor in
connection with repossession, recovery, storage, repair, sale, re-lease or other
disposition of the Equipment, including reasonable attorneys' fees and costs
incurred in connection therewith or otherwise resulting from the Default; minus
(3) if Lessor has repossessed the Equipment, the amount calculated pursuant to
clause (B) (ii) of sub-part (b)(1) or (2) (as applicable). Notwithstanding the
foregoing, in the event such Equipment Schedule and Lessee's rights thereunder
automatically are cancelled pursuant to the first sentence of this Section 16,
the amounts payable under clause (1) of this paragraph (c) automatically shall
become due and payable on the date of such cancellation, without notice or
demand, except as otherwise may be provided in writing by Lessor.

        (d)   Cancel such Equipment Schedule as to any or all of the Equipment.

        (e)   Proceed by appropriate court action, either at law or in equity
(including an action for specific performance), to enforce performance by Lessee
or to recover damages associated with such Default; or exercise any other right
or remedy available to Lessor at law or in equity.

        Within fifteen (15) Business Days after written notice by Lessor of a
Default under this Lease, Lessee may elect by written notice to Lessor to
purchase the Equipment on that date which is thirty (30) days after such notice
from Lessor (the "Purchase Date"). On the Purchase Date, Lessee shall pay to
Lessor, in cash, an amount equal to the sum of: (x) the greater of the
Stipulated Loss Value of the Equipment (determined as of the next date on which
a payment is or would have been due after the occurrence of the Default), or the
then Fair Market Value (as defined in Rider No. 1 attached to this Lease) of the
Equipment, plus (y) all other sums then due hereunder or under each Equipment
Schedule (including, without limitation, all reasonable legal fees and other
expenses incurred by reason of any default or Default or the commencement of the
exercise of Lessor's remedies, and all other pre-judgment and post-judgment
enforcement related activities; together with all taxes or charges upon sale
(excluding any taxes calculated on the basis of net income or capital gains to
Lessor). Upon receipt of such notice from Lessee, Lessor temporarily shall cease
the exercise of its remedies hereunder until the Purchase Date. Upon
satisfaction of Lessee's obligations hereunder on the Purchase Date, Lessor
shall deliver to Lessee a bill of sale transferring and assigning to Lessee
without recourse or warranty, except (with respect to the status of title
conveyed) in respect of Lessor's acts, all of Lessor's right, title and interest
in and to the Equipment. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the condition of the
Equipment or any other matters. If Lessee fails to satisfy its obligations under
this paragraph on the Purchase Date, Lessee's option hereunder shall terminate
and Lessor may exercise all rights and remedies available to it hereunder or at
law or in equity.

        All amounts to be present valued shall be discounted at a rate equal to
the discount rate of the Federal Reserve Bank of Richmond in effect on the
applicable date. Unless otherwise provided above, a cancellation of any
Equipment Schedule shall occur only upon written notice by Lessor to Lessee and

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only with respect to such items of the Equipment as Lessor specifically elects
to cancel in such notice. Except as to such items of the Equipment with respect
to which there is a cancellation, this Lease and the Equipment Schedules not so
cancelled shall remain in full force and effect and Lessee shall be and remain
liable for the full performance of all its obligations hereunder and thereunder.
Lessee shall be liable for all reasonable legal fees and other expenses incurred
by reason of any default or Default or the exercise of Lessor's remedies,
including all reasonable expenses incurred in connection with the return of any
Equipment in accordance with the terms of Section 13 hereof or in placing such
Equipment in the condition required by said Section, and all other pre-judgment
and post-judgment enforcement related activities. No right or remedy referred to
in this Section is intended to be exclusive, but each shall be cumulative and
shall be in addition to any other remedy referred to above or otherwise
available at law or in equity, and may be exercised concurrently or separately
from time to time. The failure of Lessor to exercise the rights granted
hereunder upon any Default by Lessee shall not constitute a waiver of any such
right upon the continuation or reoccurrence of any such Default. In no event
shall the execution of an Equipment Schedule constitute a waiver by Lessor of
any pre-existing Default in the performance of the terms and conditions hereof.

        17.   ASSIGNMENT.    (a) WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR
(WHICH SHALL NOT UNREASONABLY BE WITHHELD), LESSEE WILL NOT ASSIGN, TRANSFER OR
ENCUMBER ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER OR UNDER ANY EQUIPMENT
SCHEDULE, OR ITS LEASEHOLD INTEREST, SUBLET THE EQUIPMENT OR OTHERWISE PERMIT
THE EQUIPMENT TO BE OPERATED OR USED BY, OR TO COME INTO OR REMAIN IN THE
POSSESSION OF, ANYONE BUT LESSEE. In considering whether to consent to any such
proposed assignment, transfer or encumbrance, Lessor may consider (among other
matters) whether Lessee is to remain primarily liable under this Lease and under
each Equipment Schedule notwithstanding any such contemplated assignment,
transfer or encumbrance. Any unpermitted assignment, transfer, encumbrance,
delegation or sublease by Lessee shall be void ab initio. (b) Lessor may assign
any or all of its rights, obligations, title and interest hereunder, or the
right to enter into any Equipment Schedule, or may resell (through syndication,
assignment, participation or placements) an interest in any or all of the
Equipment, this Lease or any Equipment Schedule. Lessee agrees that it will pay
all rent and other amounts payable under each Equipment Schedule to the "Lessor"
named therein; provided, however, if Lessee receives written notice of an
assignment from Lessor, Lessee will pay all rent and other amounts payable under
any assigned Equipment Schedule to such assignee or as instructed by Lessor and
such assignee. Each Equipment Schedule, incorporating by reference the terms and
conditions of this Lease, constitutes a separate instrument of lease subject to
the terms and conditions of such Equipment Schedule and of this Lease, and the
"Lessor" named therein or its assignee shall have all rights as "Lessor"
thereunder separately exercisable by such named Lessor or assignee as the case
may be, exclusively and independently of Lessor or any assignee with respect to
other Equipment Schedules executed pursuant hereto. Lessee agrees to confirm in
writing receipt of any notice of assignment, syndication, participation or
placement, as reasonably may be requested by Lessor or any such assignee or
participant (collectively, the "Assignee"). Lessee hereby waives and agrees not
to assert against any such Assignee any defense, setoff, recoupment, claim or
counterclaim which Lessee has or may at any time hereafter have against Lessor
or any person other than such Assignee, for any reason whatsoever. Lessee will
provide reasonable assistance to Lessor in whatever manner necessary in order to
permit Lessor to complete any resale, syndication, assignment, participation or
placement of the transaction contemplated by this Lease. Lessee agrees that any
such assignment shall not materially change Lessee's duties or obligations under
the Lease or any Equipment Schedule nor materially increase Lessee's risks or
burdens. Upon such assignment and except as may otherwise be provided therein
all references in this Lease to Lessor shall include such Assignee. (c) Subject
always to the foregoing, this Lease and each Equipment Schedule inure to the
benefit of, and are binding upon, the successors and assigns of the parties
hereto and thereto, as the case may be.

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        18.   MISCELLANEOUS.    (a) This Lease, the Riders annexed hereto, each
Equipment Schedule and any commitment letter between the parties, constitute the
entire agreement between the parties with respect to the subject matter hereof
and thereof and shall not be rescinded, amended or modified in any manner except
by a document in writing executed by both parties. (b) Any provision of this
Lease which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. (c) The
representations, warranties and covenants of Lessee herein shall be deemed to be
continuing and to survive the execution and delivery of this Lease, each
Equipment Schedule and any other Lease Documents through and during the term of
this Lease. Each execution by Lessee of an Equipment Schedule shall be deemed a
reaffirmation and warranty that there shall have been no material adverse change
in the business or financial condition of Lessee from the date of execution
hereof. With respect to each Equipment Schedule, the obligations of Lessee under
Sections 7, 8, 9, 10, 13 and 14 hereof, together with any of Lessee's
obligations under the other provisions of this Lease (as incorporated therein)
which have accrued but not been fully satisfied, performed or complied with
prior to the cancellation or termination of such Equipment Schedule, shall
survive the cancellation or termination thereof to the extent necessary for the
full and complete performance of such obligations. (d) Lessor represents and
covenants to Lessee that (I) Lessor has full authority to enter into this Lease
and any other Lease Documents to which it may become a party, and so long as no
default or Default occurs with respect to an Equipment Schedule, neither Lessor
nor any person authorized by Lessor shall interfere with Lessee's right to
peaceably and quietly possess and use the Equipment during the term thereof,
subject to the terms and provisions hereof; and (2) in the event Lessor
encumbers the Equipment in any manner to any third party to secure any
obligations of Lessor to such third party, Lessor shall cause such third party
to agree in writing that so long as no Default occurs hereunder, such third
party shall not interfere with Lessee's right to peaceably and quietly possess
and use the Equipment during the term of this Lease, subject to the terms and
provisions hereof, and shall be bound by all the terms of this Lease, including
(without limitation) Lessee's rights to renew this Lease and/or purchase the
Equipment, all as provided herein. (e) Expenses incurred by Lessor in connection
with (1) the filing or recording of real property waivers and Uniform Commercial
Code statements, and (2) lien search reports and copies of filings with respect
to Lessee and/or the Equipment, shall be for the account of Lessee and shall be
payable by Lessee within ten (10) days of demand. (f) If Lessee fails to perform
any of its obligations hereunder with respect to an Equipment Schedule, Lessor
shall have the right, but shall not be obligated, to effect such performance,
and the amount of any out of pocket and other reasonable expenses of Lessor
incurred in connection with such performance, together with interest thereon at
the Late Charge Rate, shall be payable by Lessee upon demand. Lessor's effecting
such compliance shall not be a waiver of Lessee's default. (g) Lessee
irrevocably appoints Lessor as Lessee's attorney-in-fact (which power shall be
deemed coupled with an interest) to execute, endorse and deliver any UCC
statements and any documents and checks or drafts relating to or received in
payment for any loss or damage under the policies of insurance required by the
provisions of Section 11 hereof, but only to the extent that the same relates to
the Equipment. (h) LESSOR AND LESSEE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH LESSEE AND/OR LESSOR MAY BE PARTIES ARISING OUT OF OR IN ANY
WAY PERTAINING TO THIS LEASE. LESSEE AUTHORIZES LESSOR TO FILE THIS PROVISION
WITH THE CLERK OR JUDGE OF ANY COURT HEARING ANY SUCH CLAIM. IT IS HEREBY AGREED
AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL
CLAIMS AGAINST PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS LEASE. THIS WAIVER IS KNOWINGLY, WILLINGLY
AND VOLUNTARILY MADE BY THE PARTIES AND THE PARTIES HEREBY ACKNOWLEDGE THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY

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OR NULLIFY ITS EFFECT. LESSOR AND LESSEE FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED IN THE SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE
HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. (i) All notices
(excluding billings and communications in the ordinary course of business)
hereunder shall be in writing, personally delivered, delivered by overnight
courier service, sent by facsimile transmission (with confirmation of receipt),
or sent by certified mail, return receipt requested, addressed to the other
party at its respective address stated below the signature of such party or at
such other address as such party shall from time to time designate in writing to
the other party; and shall be effective from the date of receipt. (j) This Lease
and all of the other Lease Documents shall not be effective unless and until
accepted by execution by an officer of Lessor at the address, in the State of
New York (the "State"), as set forth below the signature of Lessor. THIS LEASE
AND ALL OF THE OTHER LEASE DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER, SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE (WITHOUT REGARD TO
THE CONFLICT OF LAWS PRINCIPLES OF THE STATE), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
EQUIPMENT. The parties agree that any action or proceeding arising out of or
relating to this Lease may be commenced in any state or Federal court in the
State, and agree that a summons and complaint commencing an action or proceeding
in any such court shall be properly served and shall confer personal
jurisdiction if served personally or by certified mail to it at its address
hereinbelow set forth, or as it may provide in writing from time to time, or as
otherwise provided under the laws of the State. (k) This Lease and all of the
other Lease Documents may be executed in any number of counterparts and by
different parties hereto or thereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together consist of but one and the same instrument; provided, however,
that to the extent that this Lease and/or the Equipment 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 herein or
therein may be created through the transfer or possession of this Lease in and
of itself without the transfer or possession of the original of such Equipment
Schedule and incorporating the Lease by reference; and no security interest in
this Lease and an Equipment Schedule may be created by the transfer or
possession of any counterpart of such Equipment Schedule other than the original
thereof, which shall be identified as the document marked "Original" and all
other counterparts shall be marked "Duplicate".

        19.   DEFINITIONS AND RULES OF CONSTRUCTION.    (a) The following terms
when used in this Lease or in any of the Equipment Schedules have the following
meanings: (1) "applicable law" or "law": any law, rule, regulation, ordinance,
order, code, common law, interpretation, judgment, directive, decree, treaty,
injunction, writ, determination, award, permit or similar norm or decision of
any governmental authority; (2) "business day": any day, other than a Saturday,
Sunday, or legal holiday for commercial banks under the laws of the State; (3)
"UCC" or "Uniform Commercial Code": the Uniform Commercial Code as in effect in
the State or in any other applicable jurisdiction; and any reference to an
article (including Article 2A) or section thereof shall mean the corresponding
article or section (however termed) of any such other applicable version of the
Uniform Commercial Code; (4) "governmental authority": any federal, state,
county, municipal, regional or other governmental authority, agency, board,
body, instrumentality or court, in each case, whether domestic or foreign; and
(5) "person": any individual, corporation, partnership, joint venture, or other
legal entity or a governmental authority, whether employed, hired, affiliated,
owned, contracted with, or otherwise related or unrelated to Lessee or Lessor.
(b) The following terms when used herein or in any of the Equipment Schedules
shall be construed as follows: "herein," "hereof," "hereunder," etc.: in, of,
under, etc. this Lease or such other Lease Document in which such term appears
(and not merely in, of,

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under, etc. the section or provision where the reference occurs); "including":
containing, embracing or involving all of the enumerated items, but not limited
to such items unless such term is followed by the words "and limited to," or
similar words; and "or": at least one, but not necessarily only one, of the
alternatives enumerated. Any defined term used in the singular preceded by "any"
indicates any number of the members of the relevant class. Any Lease Document or
other agreement or instrument referred to herein means such agreement or
instrument as supplemented and amended from time to time. Any reference to
Lessor or Lessee shall include their permitted successors and assigns. Any
reference to a law shall also mean such law as amended, superseded or replaced
from time to time. Unless otherwise expressly provided herein to the contrary,
all actions that either party takes or is required to take under any Lease
Document shall be taken at such parties' sole cost and expense, and all such
costs and expenses shall constitute Claims and be covered by Section 14 hereof.
To the extent Lessor is required to give its consent or approval with respect to
any matter, the reasonableness of Lessor's withholding of such consent shall be
determined based on the then existing circumstances; provided, that Lessor's
withholding of its consent shall be deemed reasonable for all purposes if
(i) the taking of the action that is the subject of such request, would result
in (A) an impairment of Lessor's rights, title or interests hereunder or under
any Equipment Schedule or other Lease Document, or to the Equipment, or
(B) expose Lessor to any Claims, or (ii) to the extent Lessee fails to provide
promptly to Lessor any filings, certificates, opinions or indemnities specified
by Lessor to Lessee in writing.

        IN WITNESS WHEREOF, the parties hereto have caused this Equipment Lease
Agreement to be duly executed, under seal, as of the day and year first above
set forth.

LASALLE NATIONAL LEASING CORPORATION   APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor
 
 
 
Lessee
 
 
By:
 
/s/ Thomas M. Jaschik

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[SEAL]
 
By:
 
/s/ Anthony J. Allott

--------------------------------------------------------------------------------

 
[SEAL]

Name:
 

--------------------------------------------------------------------------------

 
Name:
 

--------------------------------------------------------------------------------

Title:
 

--------------------------------------------------------------------------------

 
Title:
 

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502 Washington Avenue
Suite 800 Towson, Maryland 21204
Facsimile: (410) 769-9313
 
3 Centennial Drive
Peabody, Massachusetts 01960
Facsimile:

15

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LASALLE NATIONAL LEASING CORPORATION

RIDER NO. 1

To and part of Equipment Lease Agreement dated as of the _29TH_ day of December,
1997 (the "Lease"), between LASALLE NATIONAL LEASING CORPORATION, its successors
and assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC. ("Lessee").

        A.    LESSEE RENEWAL.    (1) Provided that Lessee is not then in
Default, unless Lessee shall have exercised its option to purchase the
Equipment, Lessee shall renew this Lease, at the expiration of the original term
of this Lease, with respect to all but not less than all of the Equipment, on
the terms and conditions of this Lease, for a renewal term of twelve (12)
quarters at a quarterly rent equal to the quarterly rent prevailing on the last
day of the original term of this Lease.

        (2)   Provided that Lessee is not then in Default, Lessee shall have the
option to renew this Lease, at the expiration of the initial renewal term of
this Lease, with respect to all but not less than all of the Equipment, on the
terms and conditions of this Lease, for a negotiated renewal term (as provided
in Section A.(3) hereof at a periodic rent equal to the Fair Market Rental Value
of such Equipment determined at the time of renewal pursuant to the terms of
Section A.(3) hereof. If Lessee desires to exercise this option it shall give
Lessor written notice of its election to renew at least one hundred twenty (120)
days before expiration of the initial renewal term of this Lease with respect to
the first Equipment Schedule to be executed under this Lease. Such election
shall be effective with respect to all Equipment leased under all Equipment
Schedules. Thereafter, Lessee shall engage in negotiations with Lessor to
determine the additional renewal term and the periodic rent to be paid during
the renewal term.

        (3)   For purposes of Section A.(2) hereof, "Fair Market Rental Value"
shall be deemed to be an amount equal to the rental, as installed and in use,
obtainable in an arms' length transaction between a willing and informed lessor
and a willing and informed lessee under no compulsion to lease (and assuming
that, as of the date of determination, the Equipment is in at least the
condition required by Section 13 of this Lease), determined as follows: After
Lessee provides notice pursuant to Section A.(2) hereof, the parties shall
attempt to agree on: (x) a renewal term based upon the then remaining useful
life of the Equipment and (y) the Fair Market Rental Value. In the event Lessor
and Lessee are unable to agree within fifty (50) days on either or both the
renewal term or Fair Market Rental Value, either or both the renewal term and/or
the Fair Market Rental Value shall be determined (as necessary), at Lessee's
expense, by an appraiser (who must be associated with a professional
organization of equipment or personal property appraisers, such as the American
Society of Appraisers), and the determination of such appraiser shall be binding
on the parties hereto.

        B.    OPTIONS TO PURCHASE.    (1) Provided that Lessee is not then in
Default, Lessee shall have the option to purchase, upon the expiration of the
twenty-first (21st) quarter of the original term of this Lease (the "Early
Termination Date"), all but not less than all of the Equipment upon the
following terms and conditions: If Lessee desires to exercise this option it
shall give Lessor written notice of its election to purchase at least thirty
(30) days and not more than ninety (90) days before the Early Termination Date
with respect to the first Equipment Schedule to be executed under this Lease.
Such election shall be effective with respect to all Equipment leased under all
Equipment Schedules. On the Early Termination Date with respect to each
Equipment Schedule, Lessee shall pay to Lessor in cash the Purchase Price for
the Equipment so purchased, determined as hereinafter provided. The Purchase
Price of the Equipment shall be an amount equal to fifty-nine (59) percent of
the original Total Invoice Cost of the Equipment (as specified on the Equipment
Schedule), together with all taxes and charges upon sale (excluding any taxes
calculated on the basis of net income or capital gains to Lessor). Lessor and
Lessee agree that the Purchase Price represents a reasonable prediction of the
Fair Market Value of the Equipment at the time the option is exercisable.

16

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        (2)   Provided that Lessee is not then in Default, Lessee shall have the
option to purchase, upon the expiration of the original term of this Lease, all
but not less than all of the Equipment upon the following terms and conditions:
If Lessee desires to exercise this option it shall give Lessor written notice of
its election to purchase at least one hundred twenty (120) days before
expiration of the original term of this Lease with respect to the first
Equipment Schedule to be executed under this Lease. Such election shall be
effective with respect to all Equipment leased under all Equipment Schedules.
Thereafter, Lessee shall engage in negotiations with Lessor to determine the
Purchase Price for the Equipment. At the expiration of the original term of this
Lease, Lessee shall pay to Lessor in cash the Purchase Price for the Equipment
so purchased, determined as hereinafter provided. The Purchase Price of
Equipment shall be an amount equal to the greater of: (x) thirty-five (35)
percent of the original Total Invoice Cost of the Equipment (as specified on the
Equipment Schedule), or (y) the Fair Market Value of the Equipment determined
pursuant to Section B.(4); together with all taxes and charges upon sale
(excluding any taxes calculated on the basis of net income or capital gains to
Lessor).

        (3)   Provided that Lessee is not then in Default, Lessee shall have the
option to purchase, upon the expiration of any renewal term of this Lease, all
but not less than all of the Equipment upon the following terms and conditions:
If Lessee desires to exercise this option it shall give Lessor written notice of
its election to purchase at least one hundred twenty (120) days before
expiration of the applicable renewal term of this Lease with respect to the
first Equipment Schedule to be executed under this Lease. Such election shall be
effective with respect to all Equipment leased under all Equipment Schedules.
Thereafter, Lessee shall engage in negotiations with Lessor to determine the
Purchase Price for the Equipment. At the expiration of the applicable renewal
term of this Lease, Lessee shall pay to Lessor in cash the Purchase Price for
the Equipment so purchased, determined as hereinafter provided. The Purchase
Price of the Equipment shall be an amount equal to its then Fair Market Value
determined pursuant to Section B.(4), together with all taxes and charges upon
sale (excluding any taxes calculated on the basis of net income or capital gains
to Lessor).

        (4)   For purposes of Sections B.(2) and B.(3), "Fair Market Value"
shall be deemed to be an amount equal to the sale price of the Equipment, as
installed and in use, obtainable in an arms' length transaction between a
willing and informed buyer and a willing and informed seller under no compulsion
to sell (and assuming that, as of the date of determination, the Equipment is in
at least the condition required by Section 13 of this Lease), determined as
follows:. After Lessee provides notice pursuant to Sections B.(2) or B.(3)
hereof, the parties shall attempt to agree on the Fair Market Value of the
Equipment. In the event Lessor and Lessee are unable to agree within fifty (50)
days on such Fair Market Value, then the Fair Market Rental Value shall be
determined, at Lessee's expense, by an appraiser (who must be associated with a
professional organization of equipment or personal property appraisers, such as
the American Society of Appraisers) chosen by Lessee, and the determination of
such appraiser shall be binding on the parties hereto.

        (5)   Notwithstanding any election of Lessee to purchase, the provisions
of this Lease shall continue in full force and effect until the passage of
ownership of the Equipment upon the date of purchase. On the date of purchase,
Lessor shall deliver to Lessee a bill of sale transferring and assigning to
Lessee without recourse or warranty, except (with respect to the status of title
conveyed) in respect of Lessor's acts, all of Lessor's right, title and interest
in and to the Equipment. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the condition of the
Equipment or any other matters.

        C.    EARLY RETURN OPTION.    (1) Provided that Lessee is not then in
Default, Lessee shall have the option to terminate this Lease with respect to
each Equipment Schedule on that date which is twenty-one (21) quarters after the
Base Lease Commencement Date (the "Termination Date") with respect to such
Equipment Schedule, and to return the Equipment to Lessor, upon the following
terms and conditions: if Lessee desires to exercise this option, it shall give
Lessor written notice of its election to terminate and return at least one
hundred eighty (180) days before the Termination Date with

17

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respect to the first Equipment Schedule to be executed under this Lease. Such
election shall be effective with respect to all Equipment leased under all
Equipment Schedules. On the Termination Date, Lessee shall return the Equipment
described on the applicable Equipment Schedule to Lessor in accordance with the
provisions of, and in compliance with the conditions required by, Section 13 of
this Lease; and Lessee shall pay to Lessor by certified check or wire transfer
(whichever method Lessor so elects) a return penalty calculated as forty-five
(45) percent of the original Total Invoice Cost of the Equipment described on
the applicable Equipment Schedule.

        (2) Notwithstanding any election of Lessee hereunder, the provisions of
this Lease shall continue in full force and effect until the return of the
Equipment in compliance with the provisions hereof and the payment of the return
penalty as provided herein.

LASALLE NATIONAL LEASING CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor
Lessee
By:
/s/ Thomas M. Jaschik

--------------------------------------------------------------------------------

[SEAL]
By:
/s/ Anthony J. Allott

--------------------------------------------------------------------------------

[SEAL]

LASALLE NATIONAL LEASING CORPORATION

--------------------------------------------------------------------------------

RIDER NO. 2

        To and part of Equipment Lease Agreement dated as of the 29TH day of
December, 1997 (the "Lease"), between LASALLE NATIONAL LEASING CORPORATION, its
successors and assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC.
("Lessee").

        A.    ADDITIONAL REPRESENTATIONS AND WARRANTIES OF LESSEE FOR
SALE-LEASEBACK. Lessee represents and warrants that: (1) The sale of those
certain items of equipment specified on the schedule attached to each Equipment
Bill of Sale (collectively the "Bill of Sale") executed by Lessee, and the
execution, delivery and performance of the Bill of Sale (a) have been duly
authorized by all necessary corporate action on the part of Lessee; (b) do not
require the consent of any stockholder, trustee or holders of any indebtedness
of Lessee except such as have been duly obtained; and (c) do not and will not
contravene any law, governmental rule, regulation or order now binding on
Lessee, or the charter or by-laws of Lessee, or contravene the provisions of, or
constitute a default under, or result in the creation of any lien or encumbrance
upon the property of Lessee under, any indenture, mortgage, contract or other
agreement to which Lessee is a party or by which it or its property is bound.
(2) The Bill of Sale transfers to Lessor valid title to the equipment described
on the schedule attached thereto free and clear of any and all encumbrances,
liens, charges or defects. No filing or recordation must be made, no notice must
be given, and no other action must be taken with respect to any state or local
jurisdiction, or any person, in order to preserve to Lessor all the rights
transferred by the Bill of Sale.

18

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        B.    ADDITIONAL AUTHORIZATION.    Lessor's obligations under the Lease
are further conditioned upon Lessor having received the Bill of Sale and an
opinion of counsel for Lessee as to the matters set forth in paragraph A above.

LASALLE NATIONAL LEASING CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor
Lessee
By:
/s/ Thomas M. Jaschik

--------------------------------------------------------------------------------

[SEAL]
By:
/s/ Anthony J. Allott

--------------------------------------------------------------------------------

[SEAL]

LASALLE NATIONAL LEASING CORPORATION

--------------------------------------------------------------------------------

RIDER NO. 3

        To and part of Equipment Lease Agreement dated as of the 29TH day of
December, 1997 (the "Lease"), between LASALLE NATIONAL LEASING CORPORATION, its
successors and assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC.
("Lessee").

TAX INDEMNITY.

        (1)    Lessee represents and warrants that: (a) it believes that it is
reasonable to estimate that the useful life of the Equipment exceeds the lease
term (including any interim and fixed rental renewal periods) by the greater of
one (1) year or twenty (20) percent of such estimated useful life, and that said
Equipment will have a value at the end of the lease term, including any fixed
rate renewal period, of at least twenty (20) percent of the Total Invoice Cost
of the Equipment, without including in such value any increase or decrease for
inflation or deflation during the original lease term (all as evidenced by the
certificate of a qualified party to be provided at Lessee's expense to Lessor
prior to the commencement of the lease term); and (b) the Equipment is, and will
be used by Lessee so as to remain, property eligible for the MACRS Deductions
(as defined below).

        (2)   (a) If by reason of (i) any act or failure to act of Lessee
(including a breach of any covenant of Lessee set forth in Section 4 of the
Lease), or (ii) the misrepresentation of or breach by Lessee of any of the
warranties and representations set forth in Section 3 of the Lease or Section
(1) of this Rider, Lessor in computing its taxable income or liability for tax,
shall lose, or shall not have, or shall lose the right to claim or there shall
be disallowed or recaptured for Federal and/or state income tax purposes, in
whole or in part, the benefit of MACRS Deductions; or (b) Lessor shall become
liable for additional tax as a result of Lessee having added an attachment or
made an alteration to the Equipment, including (without limitation) any such
attachment or alteration which would increase the productivity or capability of
the Equipment so as to violate the provisions of Rev. Proc. 75-21, 1975-1 C.B.
715, or Rev. Proc. 79-48, 1979-2 C.B. 529 (as either or both may hereafter be
modified or superseded); hereinafter referred to as a "Loss"; then Lessee shall
pay Lessor the Tax Indemnification Payment as additional rent and Lessor shall
revise the Schedule(s) of Stipulated Loss Values to reflect the Loss. As used
herein, "MACRS Deductions" shall mean the deductions under Section 167 of the
Internal Revenue Code of 1986, as now or hereafter amended (the "Code")
determined in accordance with the modified Accelerated Cost Recovery System with
respect to the Total Invoice Cost of any item of the Equipment using the
accelerated method set forth in Section 168(b)(1) or 168(b)(2) of the or (iii)
the enactment or promulgation of any change in the Code as in effect on the date
of this Lease for property assigned to the class of property specified in the
Equipment Schedule pertaining thereto;

19

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"Lessor" shall be deemed to include the consolidated Federal taxpayer group of
which Lessor is a member; and "Tax Indemnification Payment" shall mean such
amount as, after consideration of (i) all taxes required to be paid by Lessor in
respect of the receipt thereof under the laws of any governmental or taxing
authority in the United States, and (ii) the amount of any interest or penalty
which may be payable by Lessor in connection with the Loss, shall be required to
cause Lessor's after-tax net return (the "Net Return") to be equal to, but no
greater than, the Net Return computed consistently with current tax laws (and
with the assumption that Lessor is taxed at the highest marginal Federal and
state tax rates) as of the date of this Lease that would have been available to
Lessor had the Loss not occurred.

        (3)   Lessor promptly shall notify Lessee in writing of such Loss and
Lessee shall pay to Lessor the Tax Indemnification Payment within thirty (30)
days of such notice. For these purposes, a Loss shall occur upon the earliest
of: (a) the happening of any event (such as disposition or change in use of any
item of the Equipment) which will cause such Loss; (b) the payment by Lessor to
the Internal Revenue Service or state taxing authority of the tax increase
(including an increase in estimated taxes) resulting from such Loss; (c) the
date on which the Loss is realized by Lessor; or (d) the adjustment of the tax
return of Lessor to reflect such Loss.

        (4)   The obligations of Lessee under this Section, which accrue during
the term of the Lease, shall survive the expiration or termination of the Lease;
provided, that Lessee's obligations under this Rider shall terminate upon the
later of (i) the first date as of which of the period of limitations for
assessment of additional Federal income tax for each of Lessor's taxable years
which includes any portion of the Lease term has expired, and (ii) the payment
in full of all amounts due under this Rider for which demand has been made prior
to the date determined under clause (i).

LASALLE NATIONAL LEASING CORPORATION   APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor
 
Lessee
By:
 
/s/ Thomas M. Jaschik

--------------------------------------------------------------------------------

 
 
 
By:
 
/s/ Anthony J. Allott

--------------------------------------------------------------------------------

 
[SEAL]

LASALLE NATIONAL LEASING CORPORATION

--------------------------------------------------------------------------------

RIDER NO. 4

To and part of Equipment Lease Agreement dated as of the _29TH__ day of
December, 1997 (the "Lease") between LASALLE NATIONAL LEASING CORPORATION, its
successors and assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC.
("Lessee").

ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.

1.As used herein, the following terms shall have the following meaning:

(a)"Adverse Environmental Condition": shall mean (i) the existence or the
continuation of the existence, of an Environmental Contamination (including,
without limitation, a sudden or non-sudden accidental or non-accidental
Environmental Contamination), of, or exposure to, any substance, chemical,
material, pollutant, Hazardous Substance, odor or audible noise or other release
or emission in, into or onto the environment (including without limitation, the
air, ground, water or any surface) at, in, by, from or related to any Equipment,
(ii) the environmental aspect of the transportation, storage, treatment or
disposal of materials in

20

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connection with the operation of any Equipment, or (iii) the violation, or
alleged violation, of any Environmental Law, permits or licenses of, by or from
any governmental authority, agency or court relating to environmental matters
connected with any of the Equipment.

(b)"Affiliate" shall mean, with respect to any given Person, any Person that
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.

(c)"Environmental Claim" shall mean any accusation, allegation, notice of
violation, claim, demand, abatement or other order on direction (conditional or
otherwise) made in writing by any governmental authority or any Person for
personal injury (including sickness, disease or death), tangible or intangible
property damage, damage to the environment or other adverse affects on the
environment, or for fines, penalties or restrictions, resulting from or based
upon any Adverse Environmental Condition.

(d)"Environmental Contamination" shall mean any actual or threatened release,
spill, emission, leaking, pumping, injection, presence, deposit, abandonment,
disposal, discharge, dispersal, leaching or migration into the indoor or outdoor
environment, or into or out of any of the Equipment, including, without
limitation, the movement of any Hazardous Substance or other substance through
or in the air, soil, surface water, groundwater or property.

(e)"Environmental Law" shall mean any present or future federal, foreign, state
or local law, ordinance, order, rule or regulation and all judicial,
administrative and regulatory decrees, judgments and orders, pertaining to
health, industrial hygiene, the use, disposal or transportation of Hazardous
Substances, Environmental Contamination, or pertaining to the protection of the
environment, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA") (42 U.S.C. ss.9601 ET
SEQ.), the Hazardous Material Transportation Act (49 U.S.C. ss.l80l ET SEQ.),
the Federal Water Pollution Control Act (33 U.S.C. Section l251 ET SEQ.), the
Resource Conservation and Recovery Act (42 U.S.C. ss.690l ET SEQ.), the Clean
Air Act (42 U.S.C. ss.740l ET SEQ.), the Toxic Substances Control Act (15 U.S.C.
ss. 2601 ET SEQ.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. ss.l36l ET SEQ.), the Occupational Safety and Health Act (l9 U.S.C.
ss.65l ET SEQ.), the Noise Control Act of 1972 (42 U.S.C. ss.4901 ET SEQ.), and
the Hazardous and Solid Waste Amendments (42 U.S.C. ss.2601 ET SEQ.), as these
laws have been or may be amended or supplemented, and any successor thereto, and
any analogous foreign, state or local statutes, and the rules, regulations and
orders promulgated pursuant thereto.

(f)"Environmental Loss" shall mean any loss, cost, damage, liability,
deficiency, fine, penalty or expense (including, without limitation, reasonable
attorneys' fees, engineering and other professional or expert fees),
investigation, removal, cleanup and remedial costs (voluntarily or involuntarily
incurred) and damages to, loss of the use of or decrease in value of the
Equipment arising out of or related to any Adverse Environmental Condition.

(g)"Hazardous Substances" shall mean and include hazardous substances as defined
in CERCLA; oil of any kind, petroleum products and their by-products, including,
but not limited to, sludge or residue; asbestos containing materials;
polychlorinated biphenyls; any and all other hazardous or toxic substances;
hazardous waste, as defined in CERCLA; medical waste; infectious waste; those
substances listed in the United States Department of Transportation Table (49
C.F.R. ss.172.101); explosives; radioactive materials; and all other pollutants,
contaminants and other substances regulated or controlled by the Environmental
Laws and any other substance that requires special handling in its collection,
storage, treatment or disposal under the Environmental Laws.

21

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(h)"Person" shall mean any individual, partnership, corporation, trust,
unincorporated organization, government or department or agency thereof and any
other entity

2.Lessee hereby represents, warrants and covenants that: (a) it has
substantially conducted, and will continue to conduct its business operations,
and throughout the term of the Lease will use the Equipment, so as to comply
with all Environmental Laws; (b) as of the date hereof, and as of the date of
execution of each Equipment Schedule, except as have been previously disclosed
in writing by Lessee to Lessor, there are no Hazardous Substances generated,
treated, handled, stored, transported, discharged, emitted, released or
otherwise disposed of in connection with Lessee's use of the Equipment except in
Lessee's ordinary course of business in material compliance with Environmental
Law; and (c) Lessee has, and throughout the term of the Lease will continue to
have in full force and effect all federal, state and local licenses, permits,
orders and approvals required to operate the Equipment in compliance with all
Environmental Laws.

3.Lessee agrees that if required to return the Equipment or any item thereof to
Lessor or Lessor's agents, Lessee shall return such Equipment free from all
Hazardous Substances (other than those Hazardous Substances which are
customarily used by Lessee to lubricate and maintain the Equipment) and
otherwise fully in compliance with all Environmental Laws.

4.Lessee shall fully and promptly pay, perform, discharge, defend, indemnify and
hold harmless Lessor and its Affiliates, and their successors and assigns,
directors, officers, employees and agents, from and against any Environmental
Claim or Environmental Loss.

5.The provisions of this Rider shall survive any expiration or termination of
the Lease.

 
 
 
 
 
  LASALLE NATIONAL LEASING CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor
Lessee By: /s/ Thomas M. Jaschik [SEAL] By: /s/ Anthony J. Allott [SEAL]  

--------------------------------------------------------------------------------

   

--------------------------------------------------------------------------------

 

22

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December 29, 1997

Applied Extrusion Technologies, Inc.
3 Centennial Drive
Peabody, Massachusetts 01960

RE:EQUIPMENT LEASE AGREEMENT DATED DECEMBER 29, 1997

Gentlemen:

        This will confirm the collateral understanding which has been reached
between us with respect to the above-referenced Equipment Lease Agreement (the
"Lease"), between LaSalle National Leasing Corporation and Applied Extrusion
Technologies, Inc.

        In consideration of the sum of Ten Dollars ($10.00) in hand paid, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree to amend Rider No. 1 to the Lease WITH
RESPECT ONLY TO EQUIPMENT SCHEDULE NO. 7, AS FOLLOWS:

1.Paragraph B (1) is amended to delete the reference to "fifty-nine (59)" in the
ninth and tenth line therein and insert in lieu thereof "forty-six (46)";

2.Paragraph B(2) is amended to delete the reference to "thirty-five (35) in the
ninth line therein and insert in lieu thereof "twenty (20)";

3.Paragraph C (1) is amended to delete the reference to "forty-five (45)" in the
tenth line therein and insert in lieu thereof "thirty-four (34)".

        Except as set forth herein, the terms and conditions of the Lease remain
unmodified and in full force and effect.

        If the foregoing accurately sets forth our understanding with respect to
the subject matter hereof, please sign and return the enclosed copy of this
letter and it will constitute an amendment of the Lease pursuant to Section 18
thereof.

 
 
 
LASALLE NATIONAL LEASING CORPORATION       By: /s/ Thomas M. Jaschik

--------------------------------------------------------------------------------

Name: Thomas M. Jaschik
Title: Senior Vice President (SEAL) AGREED:        
APPLIED EXTRUSION TECHNOLOGIES, INC.
 
 
 
By:
/s/ Anthony J. Allott

--------------------------------------------------------------------------------

(SEAL)

 
 
 

Name:

--------------------------------------------------------------------------------

 
Title:

--------------------------------------------------------------------------------

 

23

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December 29, 1997

Applied Extrusion Technologies, Inc.
3 Centennial Drive
Peabody, Massachusetts 01960

RE:EQUIPMENT LEASE AGREEMENT DATED DECEMBER 29, 1997

Gentlemen:

        This will confirm the collateral understanding which has been reached
between us with respect to the above-referenced Equipment Lease Agreement (the
"Lease"), between LaSalle National Leasing Corporation and Applied Extrusion
Technologies, Inc.

        In consideration of the sum of Ten Dollars ($10.00) in hand paid, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree to amend Rider No. 1 to the Lease WITH
RESPECT ONLY TO EQUIPMENT SCHEDULE NO. 6, AS FOLLOWS:

1.Paragraph B (1) is amended to insert "the greater of Fair Market Value or"
before the words "fifty-nine (59)" in the eighth and ninth line therein.

2.Paragraph B (4) is amended to insert "B.(1)" after the word "Sections" in the
first line therein.

        Except as set forth herein, the terms and conditions of the Lease remain
unmodified and in full force and effect.

        If the foregoing accurately sets forth our understanding with respect to
the subject matter hereof, please sign and return the enclosed copy of this
letter and it will constitute an amendment of the Lease pursuant to Section 18
thereof.

 
 
 
LASALLE NATIONAL LEASING CORPORATION
 
 
 
By:
/s/ Thomas M. Jaschik

--------------------------------------------------------------------------------

(SEAL)         Name: Thomas M. Jaschik
Title: Senior Vice President
AGREED:
 
 
 
APPLIED EXTRUSION TECHNOLOGIES, INC.
 
 
 
By:
/s/ Anthony J. Allott

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(SEAL)
 
 
 

Name:

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Title:

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December 29, 1997

Applied Extrusion Technologies, Inc.
3 Centennial Drive
Peabody, Massachusetts 01960

RE:EQUIPMENT LEASE AGREEMENT DATED DECEMBER 29, 1997

Gentlemen:

        This will confirm the collateral understanding which has been reached
between us with respect to the above-referenced Equipment Lease Agreement (the
"Lease"), between LaSalle National Leasing Corporation and Applied Extrusion
Technologies, Inc.

        In consideration of the sum of Ten Dollars ($10.00) in hand paid, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree to amend Rider No. 1 to the Lease WITH
RESPECT ONLY TO EQUIPMENT SCHEDULE NO. 3, AS FOLLOWS:

1.Paragraph B (1) is amended to insert "the greater of" before the words
"fifty-nine (59)" in the eighth and ninth line and to insert "or Fair Market
Value" after the word "percent" in the ninth line therein.

2.Paragraph B (4) is amended to insert "B.(1)" after the word "Sections" in the
first line therein.

        Except as set forth herein, the terms and conditions of the Lease remain
unmodified and in full force and effect.

        If the foregoing accurately sets forth our understanding with respect to
the subject matter hereof, please sign and return the enclosed copy of this
letter and it will constitute an amendment of the Lease pursuant to Section 18
thereof.

 
 
 
LASALLE NATIONAL LEASING CORPORATION
 
 
 
By:
/s/ Thomas M. Jaschik
(SEAL)
AGREED:
 
 
Name: Thomas M. Jaschik
Title: Senior Vice President
  APPLIED EXTRUSION TECHNOLOGIES, INC.        
By:
/s/ Anthony J. Allott

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(SEAL)
 
 
 

Name:

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Title:

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25

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QuickLinks

EQUIPMENT LEASE AGREEMENT
RIDER NO. 2
RIDER NO. 4
December 29, 1997