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                                  Exhibit (10)(yy)

                                 LEASE AGREEMENT

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                             Dated November 1, 1997


                                 By and between



             THE INDUSTRIAL DEVELOPMENT BOARD OF THE TOWN OF ADDISON


                                       and


                    CAVALIER HOMES OF ALABAMA, a division of
              Cavalier Manufacturing, Inc. a Delaware corporation












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


         The interest of The Industrial Development Board of the Town of Addison
in any rents, revenues and receipts derived by it under this Lease Agreement has
been assigned to First  Commercial  Bank,  as Trustee under the Trust  Indenture
dated as of November 1, 1997.

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This  Lease  Agreement  was  prepared  by  Heyward  C.  Hosch of Walston, Wells,
Anderson & Bains, LLP, Financial  Center,  505  20th  Street  North,  Suite 500,
Birmingham, Alabama 35203

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<PAGE>



STATE OF ALABAMA

WINSTON COUNTY

                                 LEASE AGREEMENT
                                 ---------------

         LEASE  AGREEMENT  dated as of November 1, 1997,  between THE INDUSTRIAL
DEVELOPMENT   BOARD  OF  THE  TOWN  OF  ADDISON,   a  public   corporation   and
instrumentality  under  the laws of the State of  Alabama  (the  "Issuer"),  and
CAVALIER  HOMES OF  ALABAMA,  a division  of  Cavalier  Manufacturing,  Inc.,  a
Delaware corporation (the "User").

                                    Recitals

         Pursuant to and for the  purposes  expressed in Division 1 of Article 4
of Chapter 54 of Title 11 of the Code of Alabama  1975,  the Issuer and the User
have  executed  and  delivered  this  Lease  Agreement  simultaneously  with the
issuance and sale by the Issuer of its $2,000,000 Industrial Development Revenue
Bonds (Cavalier  Homes of Alabama  Project),  dated November 1, 1997,  under and
pursuant to that certain Trust  Indenture  dated as of November 1, 1997 from the
Issuer to First  Commercial  Bank,  as  trustee,  to  finance  the  acquisition,
construction  and installation of a "project" within the meaning of the Enabling
Law, as more particularly described in said Trust Indenture.

         NOW,  THEREFORE,  for and in  consideration  of the  premises,  and the
mutual covenants and agreements herein contained, the Issuer and the User hereby
covenant, agree and bind themselves as follows:


                                    ARTICLE 1
                                    ---------

                                   Definitions
                                   -----------

         For all purposes of this Lease Agreement:

         (a)      Capitalized  terms used herein without  definition  shall have
         the respective meanings assigned thereto in the Indenture.

         (b)      The following general rules of construction shall apply:

                  (1)   The terms defined  in this  Article  have  the  meanings
         assigned to them in this  Article and include the plural as well as the
         singular.


                                        1

<PAGE>



                  (2)   All  accounting  terms not otherwise defined herein have
         the meanings assigned to them, and all computations herein provided for
         shall  be  made,  in  accordance  with  generally  accepted  accounting
         principles.  All references  herein to "generally  accepted  accounting
         principles"  refer  to such  principles  as they  exist  at the date of
         application thereof.

                  (3)   All  references   in  this   instrument   to  designated
         "Articles",  "Sections"  and other  subdivisions  are to the designated
         Articles,  Sections and  subdivisions  of this instrument as originally
         executed.

                  (4)   The terms "herein", "hereof" and  "hereunder"  and other
         words of similar  import  refer to this Lease  Agreement as a whole and
         not to any particular Article, Section or other subdivision.

         (c)      The following terms shall have the following meanings:

         Abatement  Agreement  means  that  certain  Abatement  Agreement  dated
January 28, 1997 among the User and the Issuer with respect to the  abatement of
certain taxes with respect to the Project.

         Additional  Rental Payments shall mean the payments to be made pursuant
to Section 5.03.

         Basic  Rental  Payments  shall mean the  Payments  payable  pursuant to
Section 5.02.

         Bond Fund shall mean the fund  established  pursuant to Section 8.01 of
the Indenture.

         Bond  Guaranty  shall mean that  certain Bond  Guaranty and  Continuing
Disclosure  Agreement  dated November 1, 1997,  executed by User in favor of the
Trustee.

         Bond  Payment  Date  shall  mean each date on which any  principal  of,
premium (if any) or  interest  on the Bonds is due and  payable  (whether on the
maturity  or  due  dates   thereof,   by  call  for  optional  or  mandatory  or
extraordinary redemption, or by acceleration).

         Construction  Fund shall mean the fund established  pursuant to Section
7.02 of the Indenture.

         Credit Documents shall mean  collectively that certain Credit Agreement
dated  November  1,  1997  between  the  Credit  Obligor  and the  User  and all
agreements,  documents,  guaranties,  instruments,  notes,  notices,  and  other
writings executed and delivered by the User or any other person or persons which
evidence or provide security for the obligations of the User with respect to the
Letter of Credit,  including any  amendments or  supplements to any thereof from
time to time entered into pursuant to the applicable provisions thereof, until a
Substitute  Letter of  Credit  shall  have been  accepted  by the  Trustee,  and
thereafter "Credit Documents" shall mean collectively all agreements, documents,

                                        2

<PAGE>



instruments,  notes,  notices,  and  other  writings  which  evidence or provide
security for the obligations of the User with respect to such  Substitute Letter
of Credit.

         Credit Obligor Mortgage shall mean that certain Mortgage, Assignment of
Leases and Security Agreement dated as of November 1, 1997 by the Issuer and the
User to the Credit  Obligor as security for the  obligations  of the User to the
Credit Obligor under the Credit Documents.

         Enabling Law shall mean  Division 1 of Article 4 Chapter 54 of Title 11
of the Code of Alabama 1975.

         Environmental Law shall mean and include all laws, rules,  regulations,
ordinances,  judgments, decrees, codes, orders, injunctions,  notices and demand
letters of any Governmental Authority applicable to the User or the Project Site
(including the Comprehensive Environmental Response,  Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.) relating to pollution
or  protection  of human health or the  environment,  including  any relating to
Hazardous Substances.

         Equipment  shall have the meaning  assigned  in Demising  Clause III of
Article 3.

         Financing Documents shall mean the Indenture,  the Lease Agreement, the
Bond Guaranty, the Credit Documents, and the Letter of Credit.

         Governmental   Authority  shall  mean  any  federal,   state,   county,
municipal, or other government,  domestic or foreign, and any agency, authority,
department, commission, bureau, board, court or other instrumentality thereof.

         Hazardous   Substances   shall  mean  and   include   all   pollutants,
contaminants,   toxic  or  hazardous  wastes  and  other  substances  (including
asbestos,  urea  formaldehyde,  foam insulation and materials  containing either
petroleum or any of the substances referenced in Section 101(14) of CERCLA), the
removal of which is required or the manufacture,  use,  maintenance and handling
of which is regulated,  restricted,  prohibited or penalized by an Environmental
Law, or, even though not so  regulated,  restricted,  prohibited  or  penalized,
might pose a hazard to the health and safety of the public or the  occupants  of
the property on which it is located or the  occupants  of the property  adjacent
thereto.

         Improvements  shall have the meaning  assigned in Demising Clause II of
Article 3.

         Indenture  shall mean that certain Trust Indenture dated as of November
1, 1997 between the Issuer and the Trustee as  originally  executed or as it may
from time to time be supplemented, modified or amended by one or more indentures
or other instruments supplemental hereto entered into pursuant to the applicable
provisions thereof.


                                        3

<PAGE>



         Indenture Indebtedness shall mean all indebtedness of the Issuer at the
time secured by the Indenture,  including  without  limitation (i) all principal
of,  premium  (if any) and  interest  on the Bonds and (ii) all  reasonable  and
proper  fees,  charges and  disbursements  of the  Trustee and Paying  Agent for
services performed and disbursements made under the Indenture.

         Internal  Revenue Code shall mean  whichever of the following  shall be
applicable in the context:  the Internal  Revenue Code of 1954, as amended;  the
Internal  Revenue Code of 1986, as amended;  and the transition rules of related
legislation.

         Issuer  shall  mean  The  Industrial  Development  Board of the Town of
Addison,  a public  corporation under the laws of the State of Alabama,  until a
successor  shall have become such pursuant to the  applicable  provisions of the
Indenture and this Lease  Agreement,  and  thereafter  "Issuer"  shall mean such
successor corporation.

         Lease Agreement shall mean this instrument  including any amendments or
supplements  to such  instrument  from time to time entered into pursuant to the
applicable provisions thereof.

         Lease Default shall have the meaning stated in Article 10 of this Lease
Agreement.  A Lease Default shall "exist" if a Lease Default shall have occurred
and be continuing.

         Lease  Term  means the  duration  of the  leasehold  estate  granted in
Section 5.01 of this Lease Agreement.

         Net Proceeds,  when used with respect to any insurance or  condemnation
award,  means the gross proceeds from the insurance or  condemnation  award with
respect to which that term is used  remaining  after  payment of all  reasonable
expenses (including  reasonable attorneys' fees and any extraordinary fee of the
Trustee) incurred in the collection of such gross proceeds.

         Permitted  Encumbrances  means,  as of any  particular  time,  (i)  the
Financing  Documents,  (ii) liens for taxes,  assessments or other  governmental
charges or levies not due and payable or which are currently  being contested in
good faith by appropriate proceedings, (iii) utility, access and other easements
and rights of way, party walls,  restrictions and exceptions that may be granted
or are permitted under this Lease  Agreement,  (iv) any  mechanic's,  laborer's,
materialman's,  supplier's or vendor's lien or right or purchase  money security
interest if payment is not yet due and payable  under the  contract in question,
(v) such minor defects, irregularities,  encumbrances,  easements, rights of way
and  clouds  on title  as do not,  in the  opinion  of an  independent  Counsel,
materially  impair the Project  for the purpose for which it was  acquired or is
held by the Issuer,  and (vi) such  encumbrances,  mortgages,  and other matters
which  appear of public  record  prior to the date of  recording  of this  Lease
Agreement.

         Project  shall  mean  the  Project  Site,  the   Improvements  and  the
Equipment,  as the same may at any time exist, and all other property and rights
referred to or intended so to be in Demising  Clauses I through III,  inclusive,
hereof.

                                        4

<PAGE>



         Project  Costs  shall  mean  all  costs  of  acquiring,   constructing,
equipping and improving the Project, including without limitation:

                  (1)    the   purchase   price   and   related  costs  for  the
         acquisition of real property or any interest therein,

                  (2)    the cost of labor, materials and supplies  furnished or
         used  in  the   acquisition,   construction  and  installation  of  the
         Improvements and the costs of acquiring and installing the Equipment,

                  (3)    acquisition,  transportation and installation costs for
         personal property and fixtures,

                  (4)    fees  for  architectural,  engineering  and supervisory
         services,

                  (5)    expenses  incurred  in  the  enforcement  of any remedy
         against any contractor, subcontractor, materialmen, vendor, supplier or
         surety,

                  (6)    interest  accruing  on  the  Bonds until the Project is
         placed in service,

                  (7)    expenses  incurred  by  the  Issuer  and  the  User  in
         connection  with  the  financing  of  the  Project   including   legal,
         consulting and accounting fees,

                  (8)    reimbursement  to  the  User  for  any of the foregoing
         costs, fees and expenses set forth in (1) through (7) above, paid by it
         with its own funds.

         Project Site shall mean the real property  described in Demising Clause
I of Article 3.

         Rental Payments shall mean  collectively  the Basic Rental Payments and
the Additional Rental Payments.

         State shall mean the State of Alabama.

         Trustee shall mean First  Commercial  Bank,  until a successor  Trustee
shall have become such pursuant to the  applicable  provisions of the Indenture,
and thereafter "Trustee" shall mean such successor.

         Unimproved  when used with reference to the Project Site shall mean any
part of the  Project  Site upon which no part of a building  or other  structure
rests.

         User shall mean  Cavalier  Homes of  Alabama,  a division  of  Cavalier
Manufacturing, Inc., and its successors and assigns, and thereafter "User" shall
mean such persons.


                                        5

<PAGE>



                                    ARTICLE 2
                                    ---------

                                 Representations
                                 ---------------

         SECTION 2.01  Representations by the Issuer
                       -----------------------------

         The Issuer makes the following representations

         (a)   The Issuer is  duly  incorporated  under  the  provisions  of the
Enabling Law and has the power to enter into the  transactions  contemplated  by
this Lease Agreement and to carry out its obligations  hereunder.  The Issuer is
not in  default under any of the  provisions  contained  in its  certificate  of
incorporation,  its by-laws,  or in the laws of the State.  By proper  corporate
action the Issuer has duly  authorized  the execution and delivery of this Lease
Agreement, the Indenture, and the Bonds.

         (b)   The Issuer has determined  that the  issuance  of the Bonds,  the
acquisition,  construction  and  equipping of the Project and the leasing of the
Project to the User will promote industry,  develop trade and further the use of
the  agricultural  products and natural and human resources of the State and the
development and preservation of said resources.

         (c)   The Bonds will be issued and delivered contemporaneously with the
delivery of this Lease Agreement.

         SECTION 2.02  Representations by the User
                       ---------------------------

         The User makes the following representations:

         (a)   The User is duly organized and validly  existing as a corporation
under the laws of the State of Delaware, is duly qualified to do business in the
State of Alabama,  is not in violation  of any  provisions  of its  documents of
organization or the laws of the State of Delaware or Alabama, has power to enter
into  this  Lease  Agreement,  and by  proper  action  has duly  authorized  the
execution and delivery of this Lease Agreement.

         (b)   The User  has  the  corporate  power  and  authority  to own  its
properties,  carry  on the  business  in  which  it is  presently  engaged,  and
consummate the transactions  contemplated by the Financing Documents to which it
is a party.

         (c)   By proper corporate  action  the  User has  duly  authorized  the
execution,  delivery and performance of the Financing Documents to which it is a
party and the consummation of the transactions contemplated therein.


                                        6

<PAGE>



         (d)   The User has obtained all consents, approvals, authorizations and
orders of, and made all  filings  with,  each  Governmental  Authority  that are
required  to be  obtained  or made by it as a  condition  to the  execution  and
delivery of the Financing Documents to which it is a party.

         (e)   The execution and delivery by the User of the Financing Documents
to  which  it  is a  party  and  the  consummation  by it  of  the  transactions
contemplated  therein will not conflict with, be in violation of, or result in a
default  under,  its  articles of  incorporation  or bylaws,  or any  agreement,
contract,  instrument,  order,  writ,  decree or judgment to which the User is a
party or is subject.

         (f)   The Financing Documents  to which the User is a party  constitute
legal, valid and binding obligations of the User and are enforceable against the
User in accordance  with the terms of such  instruments,  except as  enforcement
thereof  may be limited by (i) the  exercise  of  judicial  discretion  and (ii)
bankruptcy,  insolvency,  or other  similar laws  affecting the  enforcement  of
creditors' rights, to the extent constitutionally applicable.

         (g)   There is no action, suit,  proceeding,  inquiry  or investigation
pending before any Governmental  Authority,  or threatened  against or affecting
the  User or its  properties,  that (a)  involves  (i) the  consummation  of the
transactions  contemplated  by,  or  the  validity  or  enforceability  of,  the
Financing Documents, (ii) its organization,  (iii) the election or qualification
of its  directors or officers,  (iv) its powers,  or (b) could have a materially
adverse effect upon the financial condition or operations of the User.

         (h)   The User is not an "investment company" or a company "controlled"
by an "investment  company", as such terms are defined in the Investment Company
Act of 1940, as amended.

         (i)   The  financing of  the Project through  the issuance of the Bonds
and  the leasing  of the  Project to  the User has  induced the User to enlarge,
expand and improve existing operations in the State as provided in the  Enabling
Law.

         (j)   The User  intends  to  operate  the  Project  for  manufacturing,
production,   assembling,   processing,   storing  and   distribution   of  such
agricultural,  manufactured or mineral  products as the User shall determine and
in such a manner that it will  constitute a "project"  within the meaning of the
Enabling Law.

         (k)   This Lease Agreement  is  necessary  to promote  and  further the
financial and economic  interests of the User and the  assumption by the User of
its obligations hereunder will result in direct financial benefits to the User.


                                    ARTICLE 3
                                    ---------


                                        7

<PAGE>



                                Demising Clauses
                                ----------------

         The  Issuer,  for and in  consideration  of the  rents,  covenants  and
agreements hereinafter reserved, mentioned and contained on the part of the User
to be paid,  kept and  performed,  does hereby demise and lease to the User, and
the User  does  hereby  lease,  take and hire  from the  Issuer,  the  following
property:

                                       I.

                  The real property  described on Exhibit A hereto and all other
         real  property,  or  interests  therein,  acquired  by the Issuer  with
         proceeds of the Bonds or with funds  advanced or paid  pursuant to this
         Lease  Agreement  (the "Project  Site"),  together with all  easements,
         permits,  licenses,   rights-of-way,   contracts,   leases,  tenements,
         hereditaments,   appurtenances,   rights,   privileges  and  immunities
         pertaining or applicable to said real property.

                                       II.

                  All  buildings,  structures  and  other  improvements  now  or
         hereafter  constructed  or  situated  on the  Project  Site,  including
         without  limitation  all buildings,  structures and other  improvements
         constructed  on the  Project  Site with  proceeds  of the Bonds or with
         funds  advanced or paid by the User  pursuant  to this Lease  Agreement
         (the "Improvements").

                                      III.

                  The  machinery,  equipment,  personal  property  and  fixtures
         described  on  Exhibit  B  attached  hereto  and all  other  machinery,
         equipment, personal property and fixtures acquired with the proceeds of
         the Bonds or with funds  advanced or paid by the User  pursuant to this
         Lease  Agreement,  together  with all  personal  property  and fixtures
         acquired  in  substitution  therefor  or as a  renewal  or  replacement
         thereof (the "Equipment").

SUBJECT, HOWEVER, to Permitted Encumbrances.



                                    ARTICLE 4
                                    ---------

                           Acquisition of the Project
                           --------------------------

         SECTION 4.01  Agreement to Acquire
                       --------------------

         (a)   Simultaneously  with  the  delivery  of  this Lease Agreement the
Issuer shall cause the Bond proceeds to be deposited  in the Construction  Fund.
The  Issuer  shall  cause  the  Bond  proceeds  to  be  advanced  to the User by
withdrawal  from  the  Construction Fund, in accordance with the requirements of

                                        8

<PAGE>



the Indenture,  for  the  payment  of  Project  Costs  at such times and in such
amounts as shall be directed by the  User.  The  Bond  proceeds  shall  be  used
solely for the payment of Project Costs as provided in the Indenture.

         (b)   The  User  will  acquire  and  construct  the  Project  with  all
reasonable dispatch and due diligence and will cause the Project to be placed in
service as promptly as practicable.  The Issuer will not execute any contract or
purchase orders for the Project without the prior written consent of the User.

         (c)   Compliance  with  laws  and  regulations necessary to realize any
sales and use tax exemption with respect to the  acquisition,  construction  and
equipping of the Project  shall be the sole  responsibility  of the User and the
Issuer does not assume any  responsibility or give any assurance with respect to
any possible exemption from sales and use taxes.

         (d)   The  User  may,  with  the  prior  written  consent of the Credit
Obligor except as provided below, cause  changes or amendments to be made in the
plans and specifications for such acquisition and construction  of the  Project,
provided  (1) such  changes  or  amendments  will not  change  the nature of the
Project to the extent that it would not  constitute a "project" as authorized by
the Enabling Law, and (2) such changes or amendments will not materially  affect
the utility of the  Project  for its  intended  use.  The User may,  without the
consent of the Credit Obligor,  make changes to the plans and specifications for
the  Project  which do not  increase  the total cost of the Project by more than
$100,000 in the aggregate  for all such changes.  The Issuer will make only such
changes or amendments in the plans and  specifications  for the  acquisition and
construction of the Project as may be requested in writing by the User.

         (e)   The Issuer and the User shall  from time to time each  appoint by
written instrument an agent or agents authorized to act for each respectively in
any or all matters  relating to the acquisition and  construction of the Project
and  payments  to be  made  out  of the  Construction  Fund.  One of the  agents
appointed by the User shall be  designated  its Project  Supervisor.  Either the
Issuer or the User may from time to time revoke,  amend or  otherwise  limit the
authorization of any agent appointed by such party to act on such party's behalf
or designate  another  agent or agents to act on such party's  behalf,  provided
that there shall be at all times at least one agent  authorized to act on behalf
of the  Issuer,  and at least one agent  (who shall be the  Project  Supervisor)
authorized  to act on behalf of the User,  with  reference to all the  foregoing
matters.  The Project  Supervisor  at any time  designated by the User is hereby
irrevocably  appointed as agent for the Issuer to issue and execute,  for and in
the name and behalf of the Issuer and without any further  approval of the board
of directors or any officer,  employee or other agent thereof, a payment request
or requisition on the Construction Fund.

         (f)   In the event the proceeds derived  from the sale of the Bonds are
insufficient  to pay in full all Project  Costs,  the User shall be obligated to
complete the acquisition and  construction of the Project at its own expense and
the User  shall pay any such  deficiency  and shall  save the  Issuer  whole and
harmless from any obligation to pay such deficiency. The User shall not by

                                        9

<PAGE>



reason of the payment of such  deficiency  from its own funds be entitled to any
diminution in Rental Payments.



         SECTION 4.02  No Warranty of Suitability of Issuer
                       ------------------------------------

         THE USER  RECOGNIZES  THAT  SINCE  THE  PLANS  AND  SPECIFICATIONS  FOR
ACQUIRING AND  CONSTRUCTING THE PROJECT ARE FURNISHED BY IT, THE ISSUER MAKES NO
WARRANTY,  EITHER EXPRESS OR IMPLIED, NOR OFFERS ANY ASSURANCES THAT THE PROJECT
WILL BE SUITABLE FOR THE USER'S  PURPOSES OR NEEDS OR THAT THE PROCEEDS  DERIVED
FROM THE SALE OF THE BONDS WILL BE SUFFICIENT TO PAY IN FULL ALL PROJECT COSTS.

         SECTION 4.03  Pursuit of Remedies Against Vendors, Contractors and
                       ----------------------------------------------------
Subcontractors and Their Sureties
---------------------------------

         The User may, in its own name or in the name of the  Issuer,  prosecute
or defend  any  action or  proceeding  or take any other  action  involving  any
vendor, contractor, subcontractor or surety under any contract or purchase order
for acquisition and  construction of the Project which the User deems reasonably
necessary, and the Issuer hereby irrevocably appoints the User as its agent with
respect to any such action or proceeding and agrees that it will cooperate fully
with the User and will take all action  requested by the User in any such action
or proceeding. Any amounts recovered by way of damages, refunds,  adjustments or
otherwise in connection with the foregoing  shall be paid into the  Construction
Fund and applied as provided for funds on deposit therein. The User will pay all
costs, fees and expenses incurred which are not paid from the Construction Fund.

         SECTION 4.04  Completion of the Project
                       -------------------------

         (a)   The  completion  of the Project shall be evidenced to the Trustee
by a certificate signed by the Project Supervisor  on behalf of the User stating
that (1)  construction of the Improvements has been completed in accordance with
the plans and  specifications  approved by the User,  (2) the Equipment has been
acquired  and  installed in  accordance  with the User's  instructions,  (3) all
Project Costs have been paid, and (4) all facilities and improvements  necessary
in  connection  with the Project have been  acquired and installed and all costs
and expenses  incurred in connection  therewith have been paid.  Notwithstanding
the foregoing,  such certificate  shall state that it is given without prejudice
to any rights against any vendor, contractor,  subcontractor or other person not
a party to this Lease Agreement  which exist at the date of such  certificate or
which may  subsequently  come into being. The Issuer and the User will cooperate
in causing such certificate to be furnished to the Trustee.


                                       10

<PAGE>



         (b)   After the  delivery of the  aforesaid certificate to the Trustee,
any  moneys then remaining in the Construction  Fund shall be transferred to the
Bond Fund and applied as provided therein.


                                    ARTICLE 5
                                    ---------

                             Duration of Lease Term
                              and Rental Provisions
                              ---------------------

         SECTION 5.01  Duration of Term
                       ----------------

         The term of this Lease  Agreement  and of the lease  herein  made shall
begin on the date of the delivery of this Lease  Agreement  and,  subject to the
provisions of this Lease Agreement, shall continue until midnight of November 1,
2007.  The Issuer  will  deliver to the User  possession  of the  Project on the
commencement date of the Lease Term,  subject to the inspection and other rights
reserved in this Lease Agreement, and the User will accept possession thereof at
such time;  provided,  however,  the Issuer will be permitted such possession of
the Project as shall be necessary and  convenient for it to construct or install
any additions or improvements  and to make any repairs or restorations  required
or permitted to be constructed,  installed or made by the Issuer pursuant to the
provisions hereof.

         SECTION 5.02  Basic Rental Payments; Draws Under Letter of Credit
                       ---------------------------------------------------

         (a)   On or before 10:00 a.m. (Birmingham,  Alabama  time) on each Bond
Payment Date, the User shall pay to the Trustee,  for the account of the Issuer,
as Basic Rent for the use an occupancy  of the  Project,  an amount equal to the
principal of, premium (if any) and interest on the Bonds due and payable on such
Bond Payment Date; provided,  however, that (i) any amount already on deposit in
the Bond Fund on the due date of such Basic Rental Payment and available for the
payment of the principal of,  premium (if any) and interest on the Bonds on such
Bond  Payment  Date shall be credited  against  the amount of such Basic  Rental
Payment,  and (ii) any amount  drawn by the  Trustee  pursuant  to the Letter of
Credit for the payment of the principal of, premium (if any) and interest on the
Bonds on such Bond  Payment  Date shall be credited  against  such Basic  Rental
Payment.

         (b)   On  each  Bond  Payment  Date  prior  to  10:00 a.m. (Birmingham,
Alabama time) the Trustee shall, without making any prior claim or demand on the
User for the payment of Basic Rental Payments  with respect to Bonds make a draw
on the Letter of Credit in an amount  equal  to  the  amount  of  principal  of,
premium (if any) and  interest on the Bonds due and payable on such Bond Payment
Date.  The  User  shall  receive a credit against Basic Rental  Payments for the
amount so drawn.


                                       11

<PAGE>



         (c)   The User hereby authorizes and directs the Trustee to draw moneys
under the Letter of Credit in  accordance  with the  provisions of the Indenture
and this  Lease  Agreement  to the extent  necessary  to pay the  principal  of,
premium (if any) and interest on the Bonds when due and payable  pursuant to the
Indenture and the Letter of Credit.

         (d)   All Basic Rental  Payments  shall  be made in  funds  immediately
available to the Trustee at its  Principal  Office on or before the related Bond
Payment Date.

         (e)   If  any  Basic  Rental  Payment  is  due  on a day which is not a
Business Day,  such payment may be made on the first  succeeding  day which is a
Business Day with the same effect as if made on the day such payment was due.

         (f)   The User acknowledges,  covenants,  and  agrees  that  until  the
Indenture  Indebtedness  is paid in full the User shall make Basic Rent Payments
in such amounts and at such times as shall be necessary to enable the Trustee to
pay in full in accordance  with the Indenture the principal of, premium (if any)
and interest on the Bonds when and as the same becomes due and payable.

         SECTION 5.03  Additional Rental Payments
                       --------------------------

         (a)   The User shall make Additional Rental Payments as follows:

               (1)   the  acceptance fee of the Trustee and the annual (or other
         regular)  fees,  charges  and  expenses  of the  Trustee and the Paying
         Agent.

               (2)   any  amount  to which the  Trustee  may be  entitled  under
         Section 13.07 of the Indenture; and

               (3)   the  reasonable  expenses  of  the Issuer  incurred  at the
         request of the User, or in the  performance  of its duties under any of
         the Financing Documents, or in connection with any litigation which may
         at  any  time  be  instituted  involving  the  Project,  the  Financing
         Documents,  or in the  pursuit  of any  remedies  under  the  Financing
         Documents.

         (b)   All Additional Rental Payments shall be due and payable within 10
days after receipt by the User of an invoice therefor.

         SECTION 5.04  Advances by Issuer or Trustee
                       -----------------------------

         If the User shall fail to perform  any of its  covenants  in this Lease
Agreement,  the Issuer or the  Trustee  may,  at any time and from time to time,
after written  notice to the User if no Lease Default  exists,  make advances to
effect  performance  of any such  covenant  on behalf of the User.  Any money so
advanced by the Issuer or the  Trustee,  together  with  interest at the base or
prime rate of the Trustee plus 2%, shall be paid upon demand.


                                       12

<PAGE>



         SECTION 5.05  Indemnity of Issuer, Trustee and Paying Agent
                       ---------------------------------------------

         (a)   The User  covenants  and  agrees to pay and to indemnify and hold
the Issuer and the Trustee (and  each officer,  director,  employee,  member and
agent  of  each  thereof)  harmless  against,  any and all liabilities,  losses,
damages,  claims  or  actions  (including  all  reasonable  attorneys' fees  and
expenses of the Issuer and  Trustee),  of any nature  whatsoever incurred by the
Issuer and the Trustee without gross negligence  or willful  misconduct on their
part arising from or in connection  with their performance  or observance of any
covenant or condition on their part to be observed or performed under any of the
Financing  Documents,  including  without  limitation, (i) any injury to, or the
death of, any person or  any damage to property at the Project, or in any manner
growing out of or connected with the use, nonuse, condition or occupation of the
Project or any part thereof, (ii) any damage, injury, loss or destruction of the
Project, (iii) any other act or event occurring  upon, or affecting, any part of
the  Project,  (iv)  violation  by  the  User  of  any  contract,  agreement  or
restriction affecting  the  Project  or  the use  thereof  of which the User has
notice and which shall have existed at the commencement of the Lease Term hereof
or shall have been approved  by the User, or of any law, ordinance or regulation
affecting the Project or  any part thereof or  the ownership,  occupancy  or use
thereof,  (v) any violation of,  or non-compliance  of  the  Project  Site with,
Environmental Laws, or the presence of Hazardous  Substances now or hereafter on
or under or included in the Project  Site  and  any  investigation,  clean up or
removal of,  or  other remedial action or response  costs with  respect  to, any
Hazardous  Substances  now or  hereafter  located on or under or included in the
Project Site, or any part thereof, that may be required by any Environmental Law
or Governmental Authority (specifically including without limitation any and all
liabilities, damages, fines, penalties, response  costs, investigatory  or other
costs pursuant to the  Comprehensive  Environmental  Response,  Compensation and
Liability  Act  of  1980,  as  amended, 42  U.S.C.  Sections  9601  et seq.) and
including without limitation claims alleging non-compliance  with  Environmental
Laws which seek relief under or are based on  state or common law  theories such
as trespass or  nuisance,  and  (vi)  liabilities, losses,  damages,  claims  or
actions arising out of the offer and sale of the  Bonds or  a subsequent sale or
distribution of any of the Bonds, unless the same resulted from a representation
or warranty of the Issuer or the Trustee in any  of the  Financing  Documents or
any certificate delivered by the Issuer or the Trustee  pursuant  thereto  being
false or misleading in a material respect and  such  representation  or warranty
was not based upon a similar representation or warranty of the User furnished to
the Issuer or the Trustee in connection therewith.

         (b)   The User hereby agrees that the Issuer and the Trustee  shall not
incur  any  liability  to  the  User,  and  shall  be  indemnified  against  all
liabilities,  in  exercising  or  refraining  from  asserting,   maintaining  or
exercising any right,  privilege or power of the Issuer or the Trustee under any
of the  Financing  Documents  if the Issuer or the Trustee as the case may be is
acting in good  faith and  without  willful  misconduct  or in  reliance  upon a
written request by the User.

         (c)   If any indemnifiable party  (whether  the Issuer or the  Trustee)
shall be obligated to pay any claim,  liability  or loss,  and if in  accordance
with all  applicable  provisions  of this Section the User shall be obligated to
indemnify and hold such indemnifiable party harmless against such

                                       13

<PAGE>



claim,  liability  or loss,  then,  in such case,  the User shall have a primary
obligation to pay such claim,  liability or loss on behalf of such indemnifiable
party and may not defer  discharge of its indemnity  obligation  hereunder until
such indemnifiable party shall have first paid such claim, liability or loss and
thereby incurred actual loss.

         (d) The  covenants of  indemnity by the User  contained in this Section
shall survive the  termination of this Lease Agreement with respect to events or
occurrences  happening  prior to or upon the termination of this Lease Agreement
and shall  remain in full force and effect until the  commencement  of an action
with respect to any such event or occurrence shall be prohibited by law.

         SECTION 5.06  Obligations of User Unconditional
                       ---------------------------------

         The  obligation  of the User to make all Rental  Payments and all other
payments provided for herein and to perform and observe the other agreements and
covenants  on its part herein  contained  shall be absolute  and  unconditional,
irrespective  of any rights of  set-off,  recoupment  or  counterclaim  it might
otherwise have against the Issuer.  The User will not suspend or discontinue any
such  payment or fail to perform  and observe  any of its other  agreements  and
covenants contained herein or terminate any of the Financing Documents,  for any
cause whatsoever,  including,  without limiting the generality of the foregoing,
any acts or  circumstances  that may  constitute  an  eviction  or  constructive
eviction,  failure of  consideration or commercial  frustration of purpose,  the
invalidity or unenforceability of the Bonds or any of the Financing Documents or
any provision thereof, the invalidity or unconstitutionality of the Enabling Law
or any provision  thereof,  any damage to or  destruction  of the Project or any
part thereof, the taking by eminent domain of title to or the right to temporary
use of all or any part of the Project, any failure of the Credit Obligor to make
a payment  pursuant  to the  Letter of Credit or to  reinstate  the  appropriate
amount thereof,  any change in the tax or other laws or administrative  rulings,
actions or  regulations  of the United  States of America or of the State or any
political or taxing subdivision of either thereof,  or any failure of the Issuer
to perform and observe any  agreement or covenant,  whether  express or implied,
any duty,  liability or  obligation  arising out of or in  connection  with this
Lease Agreement.  Notwithstanding  the foregoing,  the User may, at its own cost
and  expense  and in its own name or in the  name of the  Issuer,  prosecute  or
defend  any  action or  proceeding,  or take any other  action  involving  third
persons which the User deems reasonably  necessary in order to secure or protect
its rights of use and occupancy and the other rights  hereunder.  The provisions
of the first and second  sentences of this  Section  shall apply only so long as
any of the Bonds remains Outstanding.

         SECTION 5.07  This Lease a Net Lease
                       ----------------------

         The  User  recognizes,  understands  and  acknowledges  that  it is the
intention  hereof that this Lease  Agreement  be a net lease and that as long as
any of the Bonds are  Outstanding all Basic Rent be available for payment of the
principal of, premium (if any) and interest on the Bonds and

                                       14

<PAGE>



that all Additional Rent shall be available for the purposes specified therefor.
This Lease Agreement shall be construed to effectuate such intent.


                                    ARTICLE 6

                     Maintenance, Alterations, Replacements,
                               Taxes and Insurance
                     ---------------------------------------

         SECTION 6.01  Maintenance and Repairs, Alterations and Improvements,
                       ------------------------------------------------------
Party Walls; and Liens; Utility Charges
---------------------------------------

         (a)   The User shall,  at its own  expense, (1) keep the  Project in as
reasonably safe condition as its operations  permit,  (2) from time to time make
all necessary and proper repairs,  renewals and replacements thereto,  including
external and structural repairs, renewals and replacements, and (3) pay all gas,
electric, water, sewer and other charges for the operation, maintenance, use and
upkeep of the Project.

         (b)   The User  may,  at its  own  expense,  make  structural  changes,
additions, improvements, alterations or replacements to the Improvements that it
may deem desirable,  provided such structural changes, additions,  improvements,
alterations  or  replacements  do not change the  character  of the Project as a
"project"  under  the  Enabling  Law,  and that  such  additions,  improvements,
alterations or replacements will not adversely affect the utility of the Project
or substantially  reduce its value. All such changes,  additions,  improvements,
alterations and replacements whether made by the User or the Issuer shall become
a part of the Project and shall be covered by this Lease Agreement.

         (c)   The User may connect or "tie-in"  walls of the  Improvements  and
utility and other facilities located on the Project Site to other structures and
facilities owned or leased by it on real property  adjacent to the Project Site.
The User may use as a party  wall  any wall of the  Improvements  which is on or
contiguous to the boundary  line of real property  owned or leased by it, and in
the event of such use,  each party hereto  hereby grants to the other a ten-foot
easement  adjacent  to any  such  party  wall  for the  purpose  of  inspection,
maintenance,   repair  and   replacement   thereof  and  the  tying  in  of  new
construction.  If the User utilizes any wall of the Improvements as a party wall
for the purpose of tying in new construction  that will be utilized under common
control  with the  Project,  the User may also remove any  non-loadbearing  wall
panel in the party wall; provided however, if the adjacent property ceases to be
operated  under  common  control with the  Project,  the User shall,  at its own
expense, install wall panels similar in quality to those that have been removed.
Prior  to the  exercise  of any  one or  more  of the  rights  granted  by  this
subsection (c), the User shall demonstrate to the reasonable satisfaction of the
Issuer and  Trustee  that the  operation  of the Project  will not be  adversely
affected by the exercise of such rights.


                                       15

<PAGE>



         (d)   The  Issuer  shall  also,  upon  request  of the User, grant such
utility  and other similar  easements over,  across or under the Project Site as
shall be necessary or convenient for the furnishing of utility and other similar
services to the Project or to real property adjacent to or near the Project Site
and  owned  or  leased  by  the  User;  provided  that  such easements shall not
adversely affect the operation of the facilities forming a part of the Project.

         SECTION 6.02  Removal of, Substitution and Replacement for Equipment
                       ------------------------------------------------------

         If the  User  in its  sole  discretion  determines  that  any  item  of
Equipment has become inadequate, obsolete, worn-out, unsuitable,  undesirable or
unnecessary in the operation of the Project,  the User may remove such Equipment
from the  Improvements  or the Project Site and (on behalf of the Issuer)  sell,
trade in,  exchange or  otherwise  dispose of it without any  responsibility  or
accountability  to the Issuer or the Trustee  therefor,  provided  that the User
shall either:

                  (a)   substitute and install in or on the  Project  Site other
         personal  property  or  fixtures  which shall (1) have equal or greater
         utility  (but not  necessarily  the  same  value  or  function)  in the
         operation  of the  Project,  (2) be free of all liens and  encumbrances
         except for purchase money liens or encumbrances  reasonably  acceptable
         to the Trustee, (3) be the sole property of the Issuer,  subject to the
         demise hereof, (4) be held by the User on the same terms and conditions
         as the items  originally  comprising the Equipment,  and (5) not impair
         the Project or change the nature of the  Project as a  "project"  under
         the Enabling Law; or

                  (b)   forthwith upon  such  sale  apply  the  price or  amount
         obtained  upon  the sale of such  Equipment  to the  redemption  of the
         principal of the Bonds in accordance with the terms thereof.

         SECTION 6.03  Installation of Machinery and Equipment Owned or Leased
                       -------------------------------------------------------
by the User or Subject to a Security Interest in Third Parties
--------------------------------------------------------------

         (a)   The User, may, at its own expense, or permit any sublessee of the
Project to, at its own expense, install at the Project any machinery,  equipment
or other personal  property which will  facilitate the operation of the Project.
Any such  property  which is  installed  and does not  constitute  a part of the
Project under the terms of this Lease Agreement shall be and remain the property
of the User or such  sublessee  and may be removed  thereby at any time while no
Event of Default exists under this Lease Agreement; provided, that any damage to
the Project  occasioned  by such removal  shall be repaired by such party at its
own expense.

         (b)   If (i) any machinery,  equipment or other  personal  property  is
leased by the User or the User shall have  granted a  security  interest  in any
such property in connection with the acquisition  thereof by the User, (ii) such
property is installed or is located on the Project Site, and (iii) such property
does  not  constitute  a part of the  Project  under  the  terms  of this  Lease
Agreement,  then the  lessor of such  property  or the party  holding a security
interest therein, as the  case may be, may remove such property from the Project

                                       16

<PAGE>



Site  even though an Event of Default  may then exist  hereunder  or this  Lease
Agreement may have been  terminated  following  an  Event  of Default hereunder,
provided, that the  foregoing  permission  to  remove  shall  be  subject to the
agreement by such lessor or  secured  party  to  repair  at  its own expense an
damage to the Project occasioned by such removal.

         SECTION 6.04  Insurance
                       ---------

         (a)   The User will take out and continuously  maintain  in effect  the
following  insurance with respect to the Project,  paying as the same become due
all premiums with respect thereto:

               (1)   Insurance  to the extent of the full insurable value of the
         Project against loss or damage by fire, tornado,  windstorm,  flood and
         other hazards and casualties,  with uniform standard  extended coverage
         endorsement  limited  only as may be provided in the  standard  form of
         extended coverage endorsement at the time in use in the State.

               (2)    Insurance  against liability for bodily injury to or death
         of persons and for damage to or loss of property  occurring on or about
         the Project or in any way related to the  condition or operation of the
         Project,  in the minimum  amounts of $1,000,000  for death of or bodily
         injury to any one person,  $3,000,000  for all death and bodily  injury
         claims  resulting  from any one  accident,  and  $500,000  for property
         damage.

               (3)   Flood  insurance under the national flood insurance program
         established  by the Flood  Disaster  Protection  Act of 1973, as at any
         time  amended,  only  during  such times  while the Project is eligible
         under such program, in an amount at least equal to the principal amount
         of the Bonds  Outstanding  or to the  maximum  limit of  coverage  made
         available  with  respect to the Project  under said Act,  whichever  is
         less.

               (4)   Title  insurance  in an amount equal to the initial  stated
         amount of the Letter of Credit,  insuring  the  mortgage on the Project
         created by the Financing Documents subject to no liens and encumbrances
         other than such  encumbrances  as shall be  approved by the Trustee and
         the Credit  Obligor.  Any  proceeds  of such title  insurance  shall be
         applied,  at the  direction  of the Credit  Obligor,  to cure the title
         defect in respect of which such proceeds are made available or shall be
         deposited  with the Trustee and applied to the  redemption of the Bonds
         in accordance with the terms thereof.

               (5)   Use  and occupancy  insurance (or business  interruption or
         risk  insurance)  covering  suspension  or  interruption  of the User's
         operations at the Project in whole or in part,  with such exemptions as
         are customarily imposed by insurers, covering a period of suspension or
         interruption  of at least six months with a minimum  limit in an amount
         equal to 100% of the maximum  amount to be paid as Rental  Payments and
         other  payments  under  Article 5 hereof during the then current or any
         subsequent year.


                                       17

<PAGE>



               (6)   During  the period of acquisition  and  construction of any
         part of the Project  builders' risk insurance in the amount of the full
         replacement  value of the Project against all losses which are normally
         covered by such  builders'  risk  insurance.  The User may  satisfy its
         obligations  with respect to the  builder's  risk  insurance by causing
         such insurance to be carried by a construction  contractor for any part
         of the Project.

         (b)   All policies  evidencing  the  insurance required by the terms of
the  preceding  paragraph  shall  be  taken  out  and  maintained  in  generally
recognized  responsible  insurance  companies,  qualified  under the laws of the
State to assume the respective risks  undertaken.  All such  insurance  policies
shall name as either loss payee or additional insureds the  Credit Obligor,  the
Issuer and the Trustee (as their  respective  interests  shall appear) and shall
contain, where appropriate, standard  mortgage clauses  providing for all losses
thereunder in  excess  of  $50,000  to be paid to the Trustee; provided that all
losses (including  those  in  excess  of  $50,000) may  be adjusted by the User,
subject, in the case of any single loss in excess of $50,000, to the approval of
the Trustee. The User may insure under a blanket policy or policies.

         (c)   Each insurance  policy  required  to  be  carried by this Section
shall contain,  to the extent obtainable,  an agreement  by the insurer that (1)
the User  may not,  without the  consent of the Credit  Obligor,  the Issuer and
Trustee,  cancel  such  insurance or sell,  assign or dispose of any interest in
such insurance,  policy or any proceeds  thereof,  (2) such insurer shall notify
the Credit  Obligor,  the Issuer and the Trustee if any premium is not paid when
due or if any such policy is not renewed prior to the  expiration  thereof,  and
(3) such insurer shall not materially  amend or cancel any such policy except on
30 days' prior written notice to the Credit Obligor, the Issuer and the Trustee.

         (d)   The User  shall  deposit  with  the  Trustee  a  certificate   or
certificates  of the  respective  insurers  attesting the fact that all policies
evidencing the insurance required to be carried by this Section are in force and
effect.  Upon the  expiration of any such policy,  the User shall furnish to the
Trustee  evidence  reasonably  satisfactory  to the Trustee that such policy has
been  renewed  or  replaced  by  another  policy or that  there is no  necessity
therefor under this Lease Agreement.


                                    ARTICLE 7
                                    ---------

                          Provisions Respecting Damage,
                          Destruction and Condemnation
                          ----------------------------

         SECTION 7.01  Damage and Destruction
                       ----------------------

         (a)   If no Lease Default shall have occurred and be continuing and the
Letter of Credit is in effect  and the Credit  Obligor  has not  dishonored  any
draws thereunder and there has not been instituted  insolvency  proceedings with
respect to the Credit Obligor, then all Net Proceeds of insurance resulting from

                                       18

<PAGE>



claims  for  losses  in  respect  of damage to or destruction of the Project (in
whole or in part) shall be applied as provided in the Credit Obligor Mortgage.

         (b)   If no Lease Default shall have occurred and be continuing and the
Letter of Credit is not in effect,  or if the Credit  Obligor has dishonored any
draw  thereunder or if there has been  instituted  insolvency  proceedings  with
respect to the Credit  Obligor,  then the  following  provisions  shall apply in
event of damage to or destruction of the Project (in whole or in part):

                  (1)   If the Project is destroyed  (in whole or in part) or is
         damaged  the User  shall  continue  to make  Rental  Payments  and will
         promptly  give  written  notice of such damage and  destruction  to the
         Trustee and the Issuer.  All Net Proceeds of insurance  resulting  from
         claims for such losses  shall be paid to the Trustee and  deposited  in
         the  Construction  Fund,  whereupon  (i) the User, or the Issuer at the
         User's direction,  shall proceed promptly to repair, rebuild or restore
         the property damaged or destroyed to  substantially  the same condition
         in  which  it  existed  prior  to the  event  causing  such  damage  or
         destruction,   with  such  changes,   alterations   and   modifications
         (including the  substitution  and addition of other property) as may be
         desired  by the User  and as will not  impair  the  operating  unity or
         productive  capacity  of the  Project or its  character  as a "project"
         under the Enabling Law, and (2) the Issuer shall cause  withdrawals  to
         be made from the  Construction  Fund to pay the  costs of such  repair,
         rebuilding or restoration,  either on completion thereof or as the work
         progresses.  The balance (if any) of Net Proceeds  remaining  after the
         payment of all of the costs of such repair,  rebuilding or  restoration
         shall be  applied to the  redemption  of Bonds in  accordance  with the
         provisions  thereof and of the Indenture,  or, if none of the Bonds are
         then Outstanding, shall be paid to the User.

                  (2)   In the event the Net Proceeds are not sufficient to  pay
         in full the costs of repairing, rebuilding and restoring the Project as
         provided in this Section,  the User shall nonetheless complete the work
         thereof  and shall pay that  portion of the costs  thereof in excess of
         the amount of said proceeds or shall pay to the Trustee for the account
         of the Issuer the moneys  necessary  to  complete  said work.  The User
         shall not by reason of the  payment of such  excess  costs  (whether by
         direct payment thereof or payment to the Trustee  therefor) be entitled
         to any reimbursement  from the Issuer or any abatement or diminution of
         the Rental Payments hereunder.

                  (3)   Anything   in   this    Section    to    the    contrary
         notwithstanding, if, as a result of such damage or destruction the User
         is entitled to exercise an option to purchase the Project and duly does
         so  in  accordance  with  the  applicable  provisions  of Section 11.03
         hereof,  then  neither  the  User  nor  the Issuer shall be required to
         repair, rebuild or restore the property  damaged or  destroyed,  and so
         much (which may be all) of any Net Proceeds referable to such damage or
         destruction as shall be necessary to provide for  full  payment  of the
         Indenture  Indebtedness  shall  be paid to the  Trustee  and the excess
         thereafter remaining (if any) shall be paid to the User.


                                       19

<PAGE>



         (c)   If a Lease Default has occurred and is continuing, and the Letter
of Credit  is not in  effect  or the  Credit  Obligor  has  dishonored  any draw
thereunder or there has been instituted  insolvency  proceedings with respect to
the Credit Obligor, then all Net Proceeds of insurance resulting from claims for
losses in respect to damage to or  destruction  of the  Project  (in whole or in
part) shall be applied to the  redemption  of the Bonds in  accordance  with the
terms thereof.

         SECTION 7.02  Condemnation
                       ------------

         (a)   If no Lease Default shall have occurred and be continuing and the
Letter of Credit is in effect  and the Credit  Obligor  has not  dishonored  any
draws thereunder and there has not been instituted  insolvency  proceedings with
respect to the Credit Obligor,  then all Net Proceeds  resulting from any taking
by  eminent  domain of the  Project  (in whole or in part)  shall be  applied as
provided in the Credit Obligor Mortgage.

         (b)   If no Lease Default shall have occurred and be continuing and the
Letter of Credit is not in effect,  or if the Credit  Obligor has dishonored any
draw  thereunder or if there has been  instituted  insolvency  proceedings  with
respect to the Credit  Obligor,  then the  following  provisions  shall apply in
event of any taking by eminent domain of the Project (in whole or in part):

                  (1)   In the event that title to, or the temporary use of, the
         Project or any part  thereof  shall be taken under the  exercise of the
         power of eminent domain and as a result thereof the User is entitled to
         exercise  an  option  to  purchase  the  Project  and  duly  does so in
         accordance with the applicable  provisions of Section 11.03 hereof,  so
         much (which may be all) of the Net  Proceeds  referable to such taking,
         including  the  amounts  awarded to the Issuer and the  Trustee and the
         amount  awarded  to the User for the  taking  of all or any part of the
         leasehold  estate  of the User in the  Project  created  by this  Lease
         Agreement,  as shall be  necessary  to provide for full  payment of the
         Indenture  Indebtedness  shall be paid to the Trustee and the excess of
         such Net Proceeds remaining (if any) shall be paid to the User.

                  (2)   If as a result of such taking, the User is not  entitled
         to  exercise  an  option  to  purchase the Project  under Section 11.03
         hereof,  or,  having  such  option,  fails  to  exercise  the  same  in
         accordance with the terms  thereof  or  notifies  the  Issuer  and  the
         Trustee in writing that it does not propose to  exercise  such  option,
         the User shall be obligated to continue to make the Rental Payments and
         the entire Net Proceeds hereinabove referred  to shall,  be paid to the
         Trustee and  applied in one or more of the  following  ways as shall be
         directed in writing by the User:

                           (i)  To the restoration of the remaining improvements
                  located  on  the  Project  Site  to  substantially   the  same
                  condition in which they  existed  prior to the exercise of the
                  power of eminent domain;

                           (ii)  To  the   acquisition,   by   construction   or
                  otherwise,  by the  Issuer  of  other  lands  or  improvements
                  suitable for the User's operations at the Project, which land

                                       20

<PAGE>



                  or  improvements  shall be  deemed a part of the  Project  and
                  available  for use  and  occupancy  by the  User  without  the
                  payment of any Rental Payments other than that herein provided
                  to the same extent as if such land or other  improvements were
                  specifically  described  herein and demised hereby,  and which
                  land or  improvements  shall be acquired by the Issuer subject
                  to no liens or encumbrances.

                  (3)   Any balance of such Net  Proceeds  remaining  after  the
         application thereof as provided in subsection (b) of this Section shall
         be applied to the redemption of the Bonds in accordance  with the terms
         thereof,  or, if the Indenture  Indebtedness is paid in full,  shall be
         paid to the User.

                  (4)   The Issuer shall  cooperate  fully  with the User in the
         handling  and  conduct  of  any  prospective  or  pending  condemnation
         proceeding  with  respect to the Project or any part thereof and shall,
         to the extent it may lawfully do so, permit the User to litigate in any
         such proceeding in the name and behalf of the Issuer. In no event shall
         the Issuer settle,  or consent to the settlement of, any prospective or
         pending  condemnation  proceeding  without the prior written consent of
         the User.

                  (5)   The User shall be  entitled  to the Net  Proceeds of any
         award or  portion  thereof  made for  damage  to or  taking  of its own
         property not included in the  Project,  provided  that any Net Proceeds
         resulting from the taking of all or any part of the leasehold estate of
         the User in the Project  created by this Lease  Agreement shall be paid
         and applied in the manner provided in this Section 7.02.

         (c)   If a Lease Default has occurred and is continuing, and the Letter
of Credit  is not in  effect  or the  Credit  Obligor  has  dishonored  any draw
thereunder or there has been instituted  insolvency  proceedings with respect to
the Credit Obligor,  then all Net Proceeds of condemnation awards resulting from
condemnation  of the  Project  (in  whole or in part)  shall be  applied  to the
redemption of the Bonds in accordance with the terms thereof.


                                    ARTICLE 8
                                    ---------


                Assignment, Subleasing, Mortgaging and the Bonds
                ------------------------------------------------

         SECTION 8.01  Provisions Relating to Assignment and Subleasing
                       ------------------------------------------------

         With the  consent  of the  Trustee  and the Credit  Obligor,  except as
provided  below,  the User may assign  this Lease  Agreement  and the  leasehold
interest created hereby and may sublet the Project or any part thereof, subject,
however, to the following conditions:


                                       21

<PAGE>



                  (1)   No such assignment  or  subleasing  and no  dealings  or
         transactions  between  the Issuer or the  Trustee  and any  assignee or
         sublessee shall in any way relieve the User from primary  liability for
         any of its obligations  hereunder.  In the event of any such assignment
         or subleasing  the User shall continue to remain  primarily  liable for
         the payment of all Rental Payments herein provided to be paid by it and
         for  the  performance  and  observance  of  the  other  agreements  and
         covenants on its part herein  provided to be performed  and observed by
         it.

                  (2)   The User will not assign the leasehold  interest created
         hereby nor sublease the Project to any person unless the  operations of
         such assignee or sublessee are consistent  with, and in furtherance of,
         the purpose of the  Enabling  Law.  The User  shall,  prior to any such
         assignment or sublease,  demonstrate to the reasonable  satisfaction of
         the Trustee that the  operations  of such  assignee or  sublessee  will
         preserve the character of the Project as a "project" under the Enabling
         Law,  if  applicable,  and  deliver  to the  Trustee an Opinion of Bond
         Counsel acceptable to the Trustee to the effect that such assignment or
         sublease will not cause the interest on the Bonds to be Taxable.

                  (3)   The  User  shall,  within  30  days  after  the delivery
         thereof, furnish to the Issuer and the Trustee a true and complete copy
         of each such assignment or sublease.

         SECTION 8.02  Assignment of Lease Agreement and Rents by the Issuer
                       -----------------------------------------------------

         The  Issuer  has,  simultaneously  with  the  delivery  of  this  Lease
Agreement,  assigned its interest in and pledged any money receivable under this
Lease Agreement (other than certain rights to indemnification and reimbursement)
to the  Trustee  as  security  for  payment of the  Bonds,  and the User  hereby
consents  to  such  assignment  and  pledge.  The  Issuer  has in the  Indenture
obligated  itself to follow the  instructions  of the Trustee or the Owners or a
certain  percentage  thereof in the election or pursuit of any  remedies  herein
vested in it. The Trustee shall have all rights and remedies  herein accorded to
the Issuer and any  reference  herein to the  Issuer  shall be deemed,  with the
necessary  changes in detail,  to include the  Trustee,  and the Trustee and the
registered owners of the Bonds are deemed to be third party beneficiaries of the
covenants,  agreements and representations of the User herein contained. Neither
the Issuer nor the User will unreasonably  withhold any consent herein or in the
Indenture required of either of them. The User shall not be deemed to be a party
to the  Indenture  or the Bonds and  reference  in this Lease  Agreement  to the
Indenture and the Bonds shall not impose any  liability or  obligation  upon the
User other than its specific  obligations  and  liabilities  undertaken  in this
Lease Agreement.

         SECTION 8.03  Transfer or Encumbrance Created by Issuer; Corporate
                       ----------------------------------------------------
Existence of Issuer
-------------------

         (a)   Without the prior  written  consent  of the  Trustee,  the Credit
Obligor,  and the User,  the  Issuer (1) will not sell,  transfer  or convey the
Project or any part thereof, except as provided

                                       22

<PAGE>



in this Lease Agreement, and (2) will not create or incur or suffer or permit to
be created or incurred or to exist any mortgage,  lien, charge or encumbrance on
the Project or any part thereof.

         (b)   The Issuer shall  not  consolidate  with or merge  into any other
corporation  or transfer its property  substantially  as an entirety,  except as
provided in the Indenture.

         SECTION 8.04  Redemption of Bonds
                       -------------------

         (a)   The  Issuer  will  redeem  any  or  all  of  the  Bonds  upon the
occurrence of any event  or  contingency  requiring  the mandatory redemption of
Bonds, all in  accordance  with  the  applicable provisions of the Bonds and the
Indenture.

         (b)   If no Lease Default exists, the Issuer will exercise any right of
optional  redemption  with respect to the Bonds only upon the written request of
the User.


                                    ARTICLE 9
                                    ---------

                              Covenants of the User
                              ---------------------

         Until the Indenture Indebtedness is paid in full:

         (a)   The  User  shall  not  do  or  permit  anything to be done at the
Project that will affect, impair or  contravene  any policies of insurance  that
may be carried on the Project.  The User will, in the use of the Project and the
public ways abutting the same comply with all lawful requirements, the violation
of  which  would  have  a  material  adverse  effect  on  the  Project,  of  all
governmental bodies; provided, however, the User may, at its own expense in good
faith contest the validity or applicability of any such requirement.

         (b)   The User shall permit the Issuer, the Trustee, the Credit Obligor
and their duly authorized agents at all reasonable times to enter upon,  examine
and inspect the Project.

         (c)   The User will maintain proper books  of  record  and  account, in
which full and correct entries  will  be  made,  in  accordance  with  generally
accepted accounting  principles, of all its business and affairs. The User shall
furnish  to the Trustee with reasonable promptness such financial information of
the User as the Trustee shall reasonably request.

         (d)   The User will duly pay and discharge all taxes,  assessments  and
other  governmental  charges and liens lawfully imposed on the User and upon the
properties of the User, and the Project; provided, however, the User will not be
required to pay any taxes,  assessments or other governmental charges so long as
in good  faith it shall  contest  the  validity  thereof  by  appropriate  legal
proceedings,  the User has given notice of such contest to the Trustee, the User
has established adequate reserves therefor, and no part of the Project shall, in

                                       23

<PAGE>



the opinion of the Trustee, be subject to loss or forfeiture.

         (e)   The User will comply with all valid laws, ordinances, regulations
and requirements applicable to it or to its property and the Project.

         (f)   Except as otherwise permitted in the Credit  Documents,  the User
will maintain and preserve its existence as a corporation  under the laws of the
State of Delaware and will not voluntarily  dissolve  without first  discharging
its  obligations  under this  Agreement  and will not in any manner  transfer or
convey any  substantial  portion of its properties,  assets or licenses  without
receipt of present and adequate consideration therefor.

         (g)   The User will do, execute, acknowledge  and deliver  such further
acts, conveyances,  mortgages, financing statements and assurances as the Issuer
or the Trustee  shall  require for  accomplishing  the purposes of the Financing
Documents.  The User will cause this Lease  Agreement,  any  amendments  to this
Lease Agreement and other instruments of further assurance,  including financing
statements and continuation statements, to be promptly recorded,  registered and
filed, and at all times to be kept recorded, registered and filed in such places
as may be required by law fully to preserve and protect the rights of the Issuer
and the Trustee to all property comprising the Project.


                                   ARTICLE 10
                                   ----------

                         Events of Default and Remedies
                         ------------------------------

         SECTION 10.01  Events of Default
                        -----------------

         Any one or more of the following  shall  constitute an event of default
(a "Lease  Default")  under this Lease  Agreement  (whatever the reason for such
event and  whether  it shall be  voluntary  or  involuntary  or be  effected  by
operation  of law or pursuant to any  judgment,  decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

                  (1)   default in the payment of any Basic Rental Payment  when
         such Basic Rental Payment becomes due and payable; or

                  (2)   default  in the performance,  or breach, of any covenant
         or warranty of the User in this Lease Agreement  (other than a covenant
         or  warranty,  a  default  in  the  performance  or  breach of which is
         elsewhere in this Section specifically  described), and the continuance
         of such default or breach for a period of 30 days after  there has been
         given,  by  registered  or  certified  mail, to the User and the Credit
         Obligor by the Issuer or  by the  Trustee  a written notice  specifying
         such default or breach and requiring it to be remedied and stating that
         such  notice  is a "notice of default" hereunder, provided that if such

                                       24

<PAGE>



         default  is  of  a  kind  which cannot  reasonably be cured within such
         thirty-day  period,  the User  shall have a  reasonable  period of time
         within which to cure such default,  provided that it begins to cure the
         default  promptly after its receipt of such written notice and proceeds
         in good faith, and with due diligence, to cure such default; or

                  (3)   The dissolution or liquidation of the User or the filing
         by the User of a voluntary  petition in  bankruptcy,  or failure by the
         User promptly to lift any execution,  garnishment or attachment of such
         consequence  as will impair its ability to carry on its  operations  at
         the Project,  or the User's  seeking of or consenting to or acquiescing
         in the  appointment  of a  receiver  of all or  substantially  all  its
         property  or of the  Project,  or the  adjudication  of the  User  as a
         bankrupt,  or any  assignment  by  the  User  for  the  benefit  of its
         creditors,  or the entry by the User into an agreement  of  composition
         with its  creditors,  or if a  petition  or answer is filed by the User
         proposing  the   adjudication   of  the  User  as  a  bankrupt  or  its
         reorganization,  arrangement or debt readjustment  under any present or
         future federal  bankruptcy  code or any similar federal or state law in
         any  court,  or if any such  petition  or  answer is filed by any other
         person and such  petition  or answer  shall not be stayed or  dismissed
         within 60 days.

                  (4)   The occurrence of an event of  default  under any of the
         other Financing Documents; or

                  (5)   Receipt by the Trustee of written notice from the Credit
         Obligor that an event of default has occurred and is  continuing  under
         the Credit  Documents or any other related  documents to which the User
         and the Credit Obligor are parties signatory thereto.

         SECTION 10.02  Remedies on Default
                        -------------------

         Whenever any such Lease Default shall have happened and be  continuing,
the Issuer or the Trustee may, with the consent of the Credit Obligor,  take any
of the following remedial steps:

                  (1)   Declare  all  installments of Basic  Rental Payments for
         the remainder of the Lease Term  to be  immediately  due  and  payable,
         whereupon the same shall become immediately due and payable;

                  (2)   Reenter the  Project,  without  terminating  this  Lease
         Agreement,  and,  upon ten days' prior  written  notice to the User and
         Credit  Obligor,  relet the Project or any part thereof for the account
         of the User, for such term (including a term extending beyond the Lease
         Term) and at such  rentals  and upon such other  terms and  conditions,
         including  the right to make  alterations  to the  Project  or any part
         thereof, as the Issuer may, with the approval of the Trustee and Credit
         Obligor, deem advisable,  and such reentry and reletting of the Project
         shall not be construed as an election to terminate this Lease Agreement
         nor  relieve  the  User  of its  obligations  to  pay  Basic  Rent  and
         Additional Rent or to perform any of its other  obligations  under this
         Lease Agreement, all of which shall survive such reentry and reletting,

                                       25

<PAGE>



         and  the User shall  continue to pay Basic Rent and all Additional Rent
         provided for in this Lease  Agreement until the end of  the Lease Term,
         less the net proceeds,  if any,  of any  reletting of the Project after
         deducting all of the Issuer's and Trustee's expenses in connection with
         such reletting, including, without limitation, all  repossession costs,
         brokers' commissions, attorneys' fees, alteration costs and expenses of
         preparation for reletting;

                  (3)   Terminate this Lease  Agreement,  exclude  the User from
         possession  of the Project  and, if the Issuer or Trustee  elects so to
         do,  lease the same for the  account of the  Issuer,  holding  the User
         liable  for all  rent  due up to the  date  such  lease is made for the
         account of the Issuer; or

                  (4)   Take whatever legal proceedings may appear  necessary or
         desirable  to  collect  the  Rental  Payments  then  due,   whether  by
         declaration  or otherwise,  or to enforce any obligation or covenant or
         agreement of the User under this Lease Agreement or by law.

         SECTION 10.03  Availability of Remedies
                        ------------------------

         (a)   No remedy herein conferred  upon or reserved to the Issuer or the
Trustee is intended to be exclusive of any other  available  remedy or remedies,
but each and every such remedy shall be  cumulative  and shall be in addition to
every other remedy given under this Lease Agreement or now or hereafter existing
at law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or shall be
construed  to be a waiver  thereof but any such right or power may be  exercised
from time to time and as often as may be deemed expedient.

         (b)   In  the  event  any  agreement  contained in this Lease Agreement
should be breached  by either  party and  thereafter  waived by the  other party
such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.

         (c)   All rights, remedies  and powers provided by this  Article may be
exercised  only  to the  extent  the  exercise  thereof  does  not  violate  any
applicable  provision of law in the  premises,  and all the  provisions  of this
Article are intended to be subject to all applicable mandatory provisions of law
which  may be  controlling  in the  premises  and to be  limited  to the  extent
necessary  so that  they  will  not  render  this  Lease  Agreement  invalid  or
unenforceable.

         SECTION 10.04  Agreement to Pay Attorneys' Fees and Expenses
                        ---------------------------------------------

         In the event the User should  default  under any of the  provisions  of
this Lease  Agreement  and the Issuer or the  Trustee (in its own name or in the
name and on  behalf  of the  Issuer)  should  employ  attorneys  or incur  other
expenses  for the  collection  of  rent or the  enforcement  of  performance  or
observance  of  any  obligation  or  agreement  on  the  part of the User herein

                                       26

<PAGE>



contained, the User will on demand therefor pay to the Issuer or the Trustee (as
the case may be) the reasonable fee of such attorneys and such other  reasonable
expenses so incurred.


                                   ARTICLE 11
                                   ----------

                                     OPTIONS
                                     -------

         SECTION 11.01  Options to Terminate
                        --------------------

         The User shall have, if it is not in default  hereunder,  the option to
cancel or  terminate  the term of this  Lease  Agreement  at any time after full
payment of the Indenture Indebtedness and termination of the Letter of Credit by
giving the Issuer  notice in writing of such  termination  and such  termination
shall  forthwith  become  effective.  This Lease Agreement may not be terminated
prior to payment in full of the Indenture  Indebtedness  even if all amounts due
hereunder have been paid in full.

         SECTION 11.02  Option to Renew
                        ---------------

         There shall be no option to renew the term of this Lease Agreement.

         SECTION 11.03  Option to Purchase Prior to Payment of the Bonds
                        ------------------------------------------------

         (a)   The User, if not in  default  hereunder, shall have the option to
purchase  the  Project  at any time prior to the full  payment of the  Indenture
Indebtedness if any of the following shall have occurred:

                  (i)   The Project or any part  thereof shall have been damaged
         or destroyed (A) to such extent that,  in the  opinion of the User,  it
         cannot  be  reasonably  restored  within a period  of four  consecutive
         months  substantially to the condition  thereof  immediately  preceding
         such damage or destruction,  or (B) to such extent that, in the opinion
         of the User, the User is thereby  prevented from carrying on its normal
         operations at the Project for a period of four consecutive  months,  or
         (C) to such extent that the cost of restoration thereof would exceed by
         more  than  $50,000  the Net  Proceeds  of  insurance  carried  thereon
         pursuant to the requirements of this Lease Agreement; or

                  (ii)   Title  to  the  Project  or  any  part  thereof  or the
         leasehold  estate  of  the  User  in the Project  created by this Lease
         Agreement or any part thereof  shall have been taken under the exercise
         of the power of eminent domain by any governmental authority or person,
         firm or corporation acting under governmental authority,  which  taking
         may  result,  in  the  opinion  of  the User, in the User being thereby
         prevented from  carrying on its normal  operations at the Project for a
         period of four consecutive months; or


                                       27

<PAGE>



                  (iii)   As a result of any changes in the Constitution  of the
         State  or the  Constitution  of the  United  States  of  America  or of
         legislative or administrative  action (whether state or Federal), or by
         final  decree,  judgment or order of any court or  administrative  body
         (whether  state or Federal)  entered  after the contest  thereof by the
         User in good  faith,  this Lease  Agreement  shall have  become void or
         unenforceable  or impossible  of  performance  in  accordance  with the
         intent and purpose of the parties as expressed  herein, or unreasonable
         burdens or excessive  liabilities shall have been imposed on the Issuer
         or the User,  including without limitation,  the imposition of taxes of
         any  kind  on the  Project  or the  income  or  profits  of the  Issuer
         therefrom,  or upon the interest of the User therein,  which taxes were
         not being imposed on the date of this Lease Agreement;

         (b)   To exercise such option, the User shall, within 30 days following
the event  authorizing  the exercise of such option,  give written notice to the
Issuer and to the Trustee  and shall  specify  therein the date of closing  such
purchase, which date shall be not less than 30 days from the date such notice is
mailed,  and shall make arrangements  satisfactory to the Trustee for the giving
of the required  notice for the  redemption  of the Bonds.  The  purchase  price
payable by the User in the event of its  exercise of the option  granted in this
Section shall be that amount required to pay in full all Indenture  Indebtedness
and shall be paid to the Trustee.

         (c)   Upon the exercise  of the option granted in this  Section and the
payment of the option price, any Net Proceeds of insurance or condemnation award
then on hand or thereafter received shall be paid to the User.

         SECTION 11.04  Option to Purchase Project After Payment of the
                        -----------------------------------------------
Indenture Indebtedness
----------------------

         (a)   The  User  shall  have the option to purchase  the Project at any
time following  full payment of the Indenture Indebtedness for a purchase  price
of  $10.00.  To  exercise  the  option  granted  in this Section, the User shall
notify  the  Issuer of its  intention  so to exercise  such option  prior to the
proposed  date of purchase  and shall on the date of purchase pay such  purchase
price to the Issuer.  The User may not purchase  the Project prior to payment in
full of all Indenture Indebtedness even if all amounts due hereunder  shall have
been paid in full.

         (b)   In the event the option  granted in this  Section 11.04  has  not
been exercised prior to the end of  the  Lease  Term,  then  said  option  shall
automatically  be  considered  to be  exercised  upon the end of the Lease  Term
unless the User gives  written  notice  prior  thereto that it does not elect to
exercise such option.

         SECTION 11.05  Option to Purchase Portions of Project Site
                        -------------------------------------------

         (a)   The User, if not in default  hereunder,  shall have the option to
purchase any Unimproved portion of the Project Site at any time and from time to
time with the prior  written  consent of the  Trustee  and for a purchase  price
equal  to  the  pro-rata  cost  of  such  portion  of  the Project Site to be so

                                       28

<PAGE>



purchased,  provided  that  the User furnish the Issuer and the Trustee with the
following:




                  (1)   A notice  in  writing containing (i) an  adequate  legal
         description  of that  portion of the Project Site with respect to which
         such  option is to be  exercised,  which  portion  may  include  rights
         granted in party walls, the right to "tie-into" existing utilities, the
         right to connect and join any building,  structure or improvement  with
         existing  structures,  facilities and improvements on the Project Site,
         and the right of ingress or egress to and from the public highway which
         shall not interfere with the use and occupancy of existing  structures,
         improvements and buildings,  and (ii) a statement that the User intends
         to exercise such option to purchase such portion of the Project Site on
         a date stated.

                  (2)    A certificate of  an  Independent  Engineer  or  of  an
         Independent Architect made and dated not more than 90 days prior to the
         date of the  purchase  and stating  that,  in the opinion of the person
         signing  such  certificate,  (i) the portion of the  Project  Site with
         respect  to  which  the  option  is  exercised  is not  needed  for the
         operation of the then  existing  Project and (ii) the severance of such
         portion of the Project Site and the location or construction thereon of
         buildings,  structures  and  improvements,  if any, will not impair the
         usefulness  of the then  existing  Project or the means of ingress  and
         egress to and from the  remaining  portions of the Project or impair or
         deny highway access,  rail access or utility services to such remaining
         portions of the Project.

                  (3)   An amount of money equal to the  purchase price computed
         as provided in this Section,  which amount shall be paid to the Trustee
         and applied to the redemption of the Bonds in accordance with the terms
         thereof.

         (b)   Upon  receipt  of  the  notice  and  certificate required in this
Section to be furnished  by the User and the  payment by the User to the Trustee
of  the  purchase  price,  the  Issuer  will  promptly  deliver  to the User the
documents referred to in Section 11.06.

         (c)   If such option relates to portions  of the Project  Site on which
transportation  or utility  facilities  are located,  the Issuer shall retain an
easement  to use  such  transportation  or  utility  facilities  to  the  extent
necessary for the efficient operation of the Project.

         (d)   No purchase effected  under the provisions  of this Section shall
affect the  obligation of the User for the payment of Rent and other payments in
the amounts and at the times provided in this Lease Agreement or the performance
of any other  agreement,  covenant or  provision  hereof,  and there shall be no
abatement  or  adjustment  in  Rent by reason of the release of any such portion

                                       29

<PAGE>



of the  Project  Site and the  obligations  of the User  shall  continue  in all
respects as provided in this Lease Agreement, excluding, however, any portion of
the Project Site so purchased.

         SECTION 11.06  Conveyance of Exercise of Option to Purchase
                        --------------------------------------------

         At the closing of the  purchase  pursuant to the exercise of any option
to purchase granted herein,  the Issuer shall upon receipt of the purchase price
deliver to the User documents conveying to the User the property with respect to
which such option was  exercised,  as such property then exists,  subject to the
following: (a) all easements or other rights, if any, required to be reserved by
the Issuer under the terms and  provisions of the option being  exercised by the
User; (b) those liens and encumbrances,  if any, to which title to said property
was  subject  when  conveyed to the  Issuer;  (c) those  liens and  encumbrances
created by the User or to the creation or suffering of which the User consented;
and (d) those liens and  encumbrances  resulting from the failure of the User to
perform or observe any of the  agreements  on its part  contained  in this Lease
Agreement.


                                   ARTICLE 12
                                   ----------

                              Internal Revenue Code
                              ---------------------

         SECTION 12.01  Covenants Regarding Section 103 and Sections 141-150
                        ----------------------------------------------------
of the Code
-----------

         (a)   The Issuer and the User do each hereby covenant and agree for the
benefit of the Owners that neither the Issuer nor the User will take any action,
omit to take any  action,  permit any action to be taken or fail to require  any
action to be taken,  which would cause the interest on the Bonds to be or become
includable in gross income for federal  income  taxation.  Without  limiting the
generality of the foregoing, the User covenants and agrees that (a) the proceeds
of the Bonds shall not be used or applied in such manner as to cause any Bond to
be or become an  "arbitrage  bond" as that term is defined in Section 148 of the
Code, (b) ninety-five percent (95%) or more of the net proceeds will be used for
the  acquisition,  construction,  reconstruction,  or  improvement  of  land  or
property of a character  subject to the allowance for  depreciation,  within the
meaning of Section  144(a) of the Code, (c) the proceeds will be used solely for
the  acquisition  and  construction  of  the  Project,  which  shall  constitute
facilities  solely for the  manufacturing,  including  processing,  of  tangible
personal property,  or for issuance expenses,  or shall be rebated to the United
States of America as provided in this Lease Agreement and the Indenture,  and no
part of the  proceeds  will be used by the User,  directly  or  indirectly,  for
working  capital or to finance  inventory,  or to acquire any  facility or asset
which may not be financed, in whole or in part, with the proceeds of obligations
the  interest  on which is  excludable  from  gross  income for  federal  income
taxation,  (d)  the  net  proceeds  shall  not  be  used  for  the  acquisition,
construction,  reconstruction  or  improvement of any property which would cause
the average maturity of the Bonds to exceed one hundred twenty percent (120%) of
the average  reasonably  expected economic life of the facilities  financed with
the net proceeds of the Bonds, within the meaning of Section 147(b) of the Code,

                                       30

<PAGE>



(e) none  of  the net proceeds shall be used to acquire (directly or indirectly)
any land (or any  interest  therein)  to be used for farming  purposes; (f) less
than twenty-five  percent (25%) of the net proceeds  shall  be  used to  acquire
(directly or indirectly)  the  Project  Site  or any other land (or any interest
therein), (g) none of the net proceeds  shall be used to acquire any property or
any interest  therein  (including,  without  limitation,  buildings, structures,
facilities,  improvements,  equipment, machinery or other personal property) the
first use of which  property  was  not  pursuant  to  such  acquisition with the
proceeds,  (h) neither  the  Bonds  nor  any  proceeds  therefrom  shall ever be
federally guaranteed, as such term is defined  in  Section  149(b) of  the Code,
except as  expressly  permitted by said Section 149(b), (i) neither the User nor
any related  person  shall ever have  allocated to it and outstanding tax-exempt
facility-related bonds (as such term is used in Section 144(a) (10) of the Code)
in an aggregate  principal  amount  exceeding  $40,000,000,  (j) no party  shall
ever be allowed to use or otherwise occupy or derive any benefit whatsoever from
the Project, or any part thereof, if the effect of the foregoing shall result in
a test period beneficiary (as defined in Section 144(a) (10) of the Code) having
allocated to it and outstanding in excess of $40,000,000 in aggregate  principal
amount of tax-exempt facility related bonds, (k) no more than two percent of the
face amount of the Bonds shall be used to pay issuance costs.

         (b)   The  Issuer  has  elected  and  does  hereby  elect  to  have the
provisions relating to the  $10,000,000  limit in Section  144(a)(4) of the Code
apply to the Bonds.

         (c)   The Issuer and the User will each cooperate  to assure compliance
with the provisions of Section 12.03 of this Lease  Agreement and Article XVI of
the Indenture.

         SECTION 12.02  User's Obligation Upon Determination of Taxability
                        --------------------------------------------------

         (a)   Upon the occurrence of a Determination of Taxability, the Trustee
shall notify the User in writing that all Outstanding  Bonds shall be subject to
mandatory redemption on the date specified by the Trustee in accordance with the
Indenture  irrespective  of  whether  the  User has  violated  any  covenant  or
representation  in this Lease Agreement.  Within seven days after the receipt of
such notice the User shall  purchase  the Project  from the Issuer for the price
specified in subsection (b) of this Section,  which purchase price shall be paid
to the Trustee.

         (b)   The price payable  by the User for the project  in the event of a
Determination  of Taxability shall be equal to the amount required to redeem the
Bonds in  accordance  with the terms  thereof  and to pay in full all  Indenture
Indebtedness. There shall be credited against such payment otherwise required by
this  paragraph all amounts which have been paid to the Trustee  pursuant to the
Letter of Credit with respect to such payment of the Bonds then Outstanding.

         (c)   Any other options of the User to purchase  the  Project  shall be
superseded by its mandatory  obligation to purchase the Project pursuant to this
section 12.02.

         SECTION 12.03  Federal Rebate Payments
                        -----------------------

                                       31

<PAGE>



         The provisions of Article XVI of the Indenture are incorporated  herein
by reference,  and the User shall comply with said  provisions and shall perform
and discharge all obligations, duties and responsibilities imposed upon the User
under said Article,  including  without  limitation  the payment of all required
rebates to the United States of America.


                                   ARTICLE 13
                                   ----------

                        Provisions of General Application
                        ---------------------------------

         SECTION 13.01  Covenant of Quiet Enjoyment
                        ---------------------------

         So long as the  User  performs  and  observes  all  the  covenants  and
agreements on its part herein  contained,  it shall  peaceably and quietly have,
hold and enjoy the  Project  during the Lease Term  subject to all the terms and
provisions hereof.

         SECTION 13.02  Investment of Funds
                        -------------------

         The Issuer  shall cause any money held as a part of the  Special  Funds
which  may by the  terms of the  Indenture  be  invested  to be so  invested  or
reinvested  by the Trustee  solely at the request of, and solely as directed by,
the User and as provided in the Indenture.

         SECTION 13.03  Issuer's Liabilities Limited
                        ----------------------------

         (a)   The covenants and  agreements  contained in this Lease  Agreement
shall never  constitute  or give rise to a personal or  pecuniary  liability  or
charge against the general credit of the Issuer, and in the event of a breach of
any such  covenant or  agreement,  no personal or pecuniary  liability or charge
payable directly or indirectly from the general assets or revenues of the Issuer
shall arise therefrom. Nothing contained in this Section, however, shall relieve
the Issuer from the observance  and  performance of the covenants and agreements
on its part contained herein.

         (b)   No recourse under or upon any covenant or agreement of this Lease
Agreement shall be had against any past,  present or future officer or member of
the governing body of the Issuer, or of any successor either directly or through
the Issuer, whether by virtue of any constitution, statute or rule of law, or by
the  enforcement of any assessment or penalty or otherwise;  it being  expressly
understood that this Lease Agreement is solely a corporate obligation,  and that
no personal  liability  whatever shall attach to, or is or shall be incurred by,
any  officer  or member of the  governing  body of the  Issuer or any  successor
corporation,  or any of them,  under or by reason of the covenants or agreements
contained in this Lease Agreement.

         SECTION 13.04  Prior Agreements
                        ----------------


                                       32

<PAGE>



         Excepting the Abatement  Agreement and any deed, bill of sale, or other
instrument by which the Project,  any part thereof,  or any interest therein has
been  transferred  and conveyed by the User to the Issuer,  this Lease Agreement
shall  completely  and fully  supersede all prior  agreements,  both written and
oral, between the Issuer and the User relating to the acquisition of the Project
Site, the construction of the Improvements,  the acquisition and installation of
the Equipment,  the leasing of the Project and any options to purchase.  Neither
the  Issuer  nor the User  shall  hereafter  have any  rights  under  such prior
agreements,  except as otherwise herein provided,  but shall look solely to this
Lease  Agreement for definition  and  determination  of all of their  respective
rights, liabilities and responsibilities relating to the Project.

         SECTION 13.05  Execution Counterparts
                        ----------------------

         This Lease Agreement may be executed in several  counterparts,  each of
which shall be an original  and all of which  shall  constitute  but one and the
same instrument.

         SECTION 13.06  Binding Effect; Governing Law
                        -----------------------------

         This  Lease  Agreement  shall  inure to the  benefit  of,  and shall be
binding upon, the Issuer, the User and their respective  successors and assigns.
This Lease Agreement shall be governed exclusively by the applicable laws of the
State.

         SECTION 13.07  Enforceability
                        --------------

         In the  event  any  provision  of this  Lease  Agreement  shall be held
invalid or  unenforceable by any court of competent  jurisdiction,  such holding
shall not invalidate or render unenforceable any other provision hereof.

         SECTION 13.08  Article and Section Captions
                        ----------------------------

         The Article and Section  headings  and  captions  contained  herein are
included  for  convenience  only and shall not be  considered  a part  hereof or
affect in any manner the construction or interpretation hereof.

         SECTION 13.09  Notices
                        -------

         (a)   Any request,  demand, authorization,  direction, notice, consent,
or other document provided or permitted by this Lease Agreement to be made upon,
given or furnished to, or filed with,  the Issuer,  the User, the Trustee or the
Credit Obligor shall be sufficient for every purpose hereunder if in writing and
(except as  otherwise  provided in this Lease  Agreement)  either (i)  delivered
personally to the party or, if such party is not an  individual,  to an officer,
or  other  legal  representative  of the  party  to whom  the  same is  directed
(provided  that  any  document  delivered  personally  to the  Trustee  must  be
delivered to a corporate  trust  officer at its  Principal  Office during normal
business hours) at the hand delivery  address  specified in  Section 1.10 of the

                                       33

<PAGE>



Indenture or (ii) mailed by first-class,  registered or certified mail,  postage
prepaid,  addressed as specified in Section 1.10 of the  Indenture.  Any of such
parties may change the address for receiving  any such notice or other  document
by giving notice of the change to the other parties as provided in this Section.

         (b)   Any such notice or other document shall be deemed  delivered when
actually  received  by the party to whom  directed  (or, if such party is not an
individual,  to an officer,  or other legal  representative of the party) at the
address  specified  pursuant to this  Section,  or, if sent by mail,  three days
after such notice or document is  deposited in the United  States  mail,  proper
postage prepaid, addressed as provided above.

         SECTION 13.10  Amendment of Indenture and this Lease Agreement
                        -----------------------------------------------

         (a)   The  Issuer  will  not  cause  or  permit  the  amendment  of the
Indenture  or  the  execution of any  amendment or  supplement  to the Indenture
without the prior  written  consent  of  the User and  the Credit  Obligor.  The
Issuer and the  User shall have no  power to modify,  alter,  amend or terminate
this  Lease  Agreement  without the prior written consent of the Credit Obligor.
Prior to the payment in full of the Indenture  Indebtedness,  the Issuer and the
User  shall have  no  power  to  modify,  alter,  amend  or terminate this Lease
Agreement without the prior  written  consent  of the  Trustee  and then only as
provided in the Indenture.

         (b)   This  Lease  Agreement  may not be amended unless there has first
been delivered to the Trustee and the User an opinion of Bond Counsel  that such
action  will not,  whether  solely  or in  conjunction  with any  other  fact or
circumstance, cause the interest on the Bonds to be or to become Taxable.


                                       34

<PAGE>



         IN WITNESS WHEREOF, the Issuer and the User have each caused this Lease
Agreement to be executed in its name,  under seal, and the same attested,  by an
officer  thereof duly authorized  thereunto,  and the parties hereto have caused
this Lease Agreement to be dated as of November 1, 1997.

                                               THE INDUSTRIAL DEVELOPMENT BOARD
                                                OF THE TOWN OF ADDISON, ALABAMA


                                               By /s/ Kenneth Suddith
                                                 -------------------------------
                                                           Chairman

S E A L

Attest: /s/ Gary Hyatt
        ----------------------------
            Its Secretary


                                               CAVALIER HOMES OF ALABAMA,
                                                 a division of Cavalier
                                                   Manufacturing, Inc.


                                               By /s/ James C. Caldwell
                                                 -------------------------------
                                                       Its President



                                       35

<PAGE>



STATE OF ALABAMA                    )
WINSTON COUNTY                      )

         I, the  undersigned,  a Notary  Public  in and for said  County in said
State,  hereby  certify  that  Kenneth  Suddith  whose  name  as Chairman of The
Industrial  Development Board of the Town of Addison, a public  corporation,  is
signed to the foregoing  Lease  Agreement  and who is known to me,  acknowledged
before  me on this day  that,  being  informed  of the  contents  of said  Lease
Agreement,  he, as such  officer  and with  full  authority,  executed  the same
voluntarily for and as the act of said public corporation.

         Given under my hand and seal this the 13th day of November, 1997.

                                             /s/ Elizabeth Davis
                                            ------------------------------------
                                                         Notary Public

NOTARIAL SEAL

My commission expires:  12/05/00
                        --------


                                       36

<PAGE>



STATE OF ALABAMA                    )
WINSTON COUNTY                      )

         I, the  undersigned,  a Notary  Public  in and for said  County in said
State,  hereby  certify  that James C.  Caldwell,  name as President of Cavalier
Homes of  Alabama,  a  division  of  Cavalier  Manufacturing,  Inc.,  a Delaware
corporation, is signed to the foregoing Lease Agreement, and who is known to me,
acknowledged  before me on this day that, being informed of the contents of said
Lease Agreement, he, as such officer and with full authority,  executed the same
voluntarily for and as the act of said corporation.

         Given under my hand and seal this the 12th day of November, 1997.


                                            /s/ Heyward C. Hosch, III
                                            ------------------------------------
                                                         Notary Public

NOTARIAL SEAL

My commission expires:  June 19, 2000
                      _______________


                                       37

<PAGE>



                                    EXHIBIT A

         COMMENCE  AT THE NORTH  EAST  CORNER OF SECTION  32,  TOWNSHIP 9 SOUTH,
RANGE 6 WEST, WINSTON COUNTY ALABAMA:

         THENCE  NORTH 89 DEGREES  49  MINUTES 00 SECONDS  WEST 89.34 FEET TO AN
IRON PIN SET:

         THENCE  NORTH 89 DEGREES 49 MINUTES 00 SECONDS  WEST 1000.00 FEET TO AN
IRON PIN SET:

         THENCE  NORTH 89 DEGREES 49 MINUTES 00 SECONDS  WEST  931.60 FEET TO AN
IRON PIN SET:

         THENCE  SOUTH 1 DEGREES 54 MINUTES 00 SECONDS  WEST  982.57  FEET TO AN
IRON PIN SET THE POINT OF BEGINNING FOR THE PROPERTY HEREIN DESCRIBED:

         THENCE  SOUTH 36 DEGREES 27 MINUTES 40 SECONDS  EAST  625.27 FEET TO AN
IRON PIN SET ON THE WEST MARGIN OF A COUNTY ROAD:

         THENCE  ALONG SAID  MARGIN  SOUTH 5 DEGREES 50 MINUTES 59 SECONDS  EAST
83.74 FEET TO A POINT:

         THENCE  ALONG SAID  MARGIN  SOUTH 1 DEGREES 40 MINUTES 03 SECONDS  EAST
427.95 FEET TO AN IRON PIN SET:

         THENCE  AROUND A CURVE TO THE LEFT WITH A RADIOS  OF 195.96  FEET AND A
LENGTH OF 195.34 FEET AND A CHORD OF SOUTH 29 DEGREES 08 MINUTES 23 SECONDS EAST
187.35 FEET TO AN IRON PIN SET:

         THENCE  LEAVING  SAID ROAD NORTH 89 DEGREES 32 MINUTES 54 SECONDS  WEST
760.46 FEET TO AN IRON PIN FOUND:

         THENCE  NORTH 1 DEGREES 54 MINUTES 02 SECONDS  EAST  712.67 FEET TO THE
POINT OF BEGINNING AND CONTAINING 10.50 ACRES MORE OR LESS:




<PAGE>



                                    EXHIBIT B
                                       TO
                                 LEASE AGREEMENT
                          DATED AS OF NOVEMBER 1, 1997
                                     BETWEEN
             THE INDUSTRIAL DEVELOPMENT BOARD OF THE TOWN OF ADDISON
                                       AND
                CAVALIER HOMES OF ALABAMA, a division of Cavalier
                               Manufacturing, Inc.



                                 EQUIPMENT LIST
                                 --------------


                  Description of Personal Property and Fixtures
                  ---------------------------------------------

         Heating and air  conditioning  and  ventilating  equipment,  electrical
equipment,  plumbing fixtures and furnishings,  fire detection,  suppression and
extinguishment  apparatus,  equipment and fixtures,  and building  materials and
supplies to be incorporated in the Project.





<PAGE>



                                 LEASE AGREEMENT

                                TABLE OF CONTENTS

RECITALS.......................................................................1


                                    ARTICLE 1
                                    ---------

                                    Definitions..............................  1
                                    -----------

                                    ARTICLE 2
                                    ---------

                                 Representations
                                 ---------------

         SECTION 2.01  Representations by the Issuer.........................  6
         SECTION 2.02  Representations by the User...........................  7

                                    ARTICLE 3
                                    ---------

                                    Demising Clauses.........................  8
                                    ----------------

                                    ARTICLE 4
                                    ---------

                           Acquisition of the Project
                           --------------------------

         SECTION 4.01  Agreement to Acquire..................................  9
         SECTION 4.02  No Warranty of Suitability of Issuer.................. 10
         SECTION 4.03  Pursuit of Remedies Against Vendors, Contractors and
                  Subcontractors and Their Sureties.......................... 10
         SECTION 4.04  Completion of the Project............................. 10

                                    ARTICLE 5

                             Duration of Lease Term
                              and Rental Provisions
                              ---------------------

         SECTION 5.01  Duration of Term...................................... 11
         SECTION 5.02  Basic Rental Payments; Draws Under Letter of Credit... 11
         SECTION 5.03  Additional Rental Payments............................ 12
         SECTION 5.04  Advances by Issuer or Trustee......................... 12
         SECTION 5.05  Indemnity of Issuer, Trustee and Paying Agent......... 13
         SECTION 5.06  Obligations of User Unconditional..................... 14
         SECTION 5.07  This Lease a Net Lease................................ 14


<PAGE>




                                    ARTICLE 6
                                    ---------

                     Maintenance, Alterations, Replacements,
                               Taxes and Insurance
                     ----------------------------------------

         SECTION 6.01  Maintenance and Repairs, Alterations and Improvements,
                                    Party Walls; and Liens; Utility Charges.. 15
         SECTION 6.02  Removal of, Substitution and Replacement for
                                    Equipment................................ 16
         SECTION 6.03  Installation of Machinery and Equipment Owned or
                                    Leased by the User or Subject to a
                                    Security Interest in Third Parties....... 16
         SECTION 6.04  Insurance............................................. 17

                                    ARTICLE 7
                                    ---------

                          Provisions Respecting Damage,
                          Destruction and Condemnation
                          -----------------------------

         SECTION 7.01  Damage and Destruction................................ 18
         SECTION 7.02  Condemnation.......................................... 20

                                    ARTICLE 8
                                    ---------


                Assignment, Subleasing, Mortgaging and the Bonds
                ------------------------------------------------

         SECTION 8.01  Provisions Relating to Assignment and
                                    Subleasing............................... 21
         SECTION 8.02  Assignment of Lease Agreement and Rents
                                    by the Issuer............................ 22
         SECTION 8.03  Transfer or Encumbrance Created by Issuer;
                                    Corporate Existence of Issuer............ 22
         SECTION 8.04  Redemption of Bonds................................... 23

                                    ARTICLE 9
                                    ---------

                                    Covenants of the User.................... 23
                                    ---------------------

                                   ARTICLE 10
                                   ----------

                         Events of Default and Remedies
                         ------------------------------

         SECTION 10.01  Events of Default.................................... 24
         SECTION 10.02  Remedies on Default.................................. 25
         SECTION 10.03  Availability of Remedies............................. 26
         SECTION 10.04  Agreement to Pay Attorneys' Fees and Expenses........ 26


<PAGE>





                                   ARTICLE 11
                                   ----------

                                    OPTIONS
                                    -------

         SECTION 11.01  Options to Terminate................................. 27
         SECTION 11.02  Option to Renew...................................... 27
         SECTION 11.03  Option to Purchase Prior to Payment of the Bonds..... 27
         SECTION 11.04  Option to Purchase Project After Payment of the
                                    Indenture Indebtedness................... 28
         SECTION 11.05  Option to Purchase Portions of Project Site.......... 28
         SECTION 11.06  Conveyance of Exercise of Option to Purchase......... 29

                                   ARTICLE 12
                                   ----------

                              Internal Revenue Code
                              ---------------------

         SECTION 12.01  Covenants Regarding Section 103 and Sections
                                    141-150 of the Code...................... 30
         SECTION 12.02  User's Obligation Upon Determination of Taxability... 31
         SECTION 12.03  Federal Rebate Payments.............................. 31


                                   ARTICLE 13
                                   ----------

                        Provisions of General Application
                        ---------------------------------

         SECTION 13.01  Covenant of Quiet Enjoyment.......................... 32
         SECTION 13.02  Investment of Funds.................................. 32
         SECTION 13.03  Issuer's Liabilities Limited......................... 32
         SECTION 13.04  Prior Agreements..................................... 32
         SECTION 13.05  Execution Counterparts............................... 33
         SECTION 13.06  Binding Effect; Governing Law........................ 33
         SECTION 13.07  Enforceability....................................... 33
         SECTION 13.08  Article and Section Captions......................... 33
         SECTION 13.09  Notices.............................................. 33
         SECTION 13.10  Amendment of Indenture and this Lease Agreement...... 34



TESTIMONIAL...................................................................35
SIGNATURES....................................................................35
ACKNOWLEDGMENTS............................................................36-37



<PAGE>


EXHIBIT A
EXHIBIT B