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                                 LEASE AGREEMENT

                            Dated as of June 1, 2000

                                     between

                     STATE STREET BANK AND TRUST COMPANY OF
                       CONNECTICUT, NATIONAL ASSOCIATION,
               not in its individual capacity, except as expressly
                  provided herein, but solely as Owner Trustee,
                                     Lessor,

                                       and

                          SWEETHEART CUP COMPANY INC.,
                                     Lessee,

                                   relating to

                             Manufacturing Equipment

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THIS  LEASE  HAS BEEN  EXECUTED  IN  SEVERAL  COUNTERPARTS.  ONLY  THE  ORIGINAL
COUNTERPART  MARKED "ORIGINAL  COUNTERPART NO. 1" SHALL CONSTITUTE CHATTEL PAPER
WITHIN THE MEANING OF THE  UNIFORM  COMMERCIAL  CODE.  SEE SECTION 18 HEREOF FOR
INFORMATION CONCERNING THE RIGHTS OF HOLDERS OF THE VARIOUS COUNTERPARTS OF THIS
LEASE.



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                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

ARTICLE I Definitions and Usage................................................1

ARTICLE II Lease of Equipment..................................................1

ARTICLE III Term and Rent......................................................1
               SECTION 3.01.  Basic Term and Renewal Term......................1
                              (a)    Basic Term................................1
                              (b)    Basic Rent................................1
               SECTION 3.02.  Supplemental Rent................................2
               SECTION 3.03.  Method of Payment................................2
               SECTION 3.04.  Late Payment.....................................2
               SECTION 3.05.  Net Lease........................................3

ARTICLE IV Disclaimer of Warranties............................................4
               SECTION 4.01.  Disclaimer of Warranties.........................4

ARTICLE V Liens; Quiet Enjoyment...............................................5
               SECTION 5.01.  Liens............................................5
               SECTION 5.02.  Quiet Enjoyment..................................5
               SECTION 5.03.  Personal Property................................5

ARTICLE VI Operation; Maintenance..............................................6
               SECTION 6.01.  Operation........................................6
               SECTION 6.02.  Maintenance......................................6
               SECTION 6.03.  Replacement of Parts.............................6
               SECTION 6.04.  Relocation.......................................7
                              (a)    Within the United States..................7
                              (b)    Outside the United States.................8
               SECTION 6.05.  Modification.....................................8
               SECTION 6.06.  Warranty Assignments.............................9
               SECTION 6.07.  Property Fire Protection.........................9

ARTICLE VII Early Termination.................................................10
               SECTION 7.01.  Termination for Obsolescence or Business
                              Purposes........................................10
               SECTION 7.02.  Lessor Election to Retain Equipment.............10
               SECTION 7.03.  Qualifying Bids.................................10
                              (a)    Solicitation of Bids.....................10
                              (b)    Procedure If No Sale.....................11
               SECTION 7.04.  Rescission by Lessee............................11
               SECTION 7.05.  Sale Pursuant to Qualifying Bid.................11
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                                TABLE OF CONTENTS
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                                  (continued)
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                                                                            ----

               SECTION 7.06.  Payment Lessee; Notice; Termination of Lease....11

ARTICLE VIII Return of Equipment..............................................12
               SECTION 8.01.  Return of Equipment.............................12
               SECTION 8.02.  Severable Modifications.........................14

ARTICLE IX Damage; Application of Payments; Restoration of Equipment..........15
               SECTION 9.01.  Event of Loss...................................15
                              (a)    Notice of Event of Loss..................15
                              (b)    Lessee Alternatives......................15
               SECTION 9.02.  Application of Payments Upon an Event of Loss...16
               SECTION 9.03.  Loss, Damage, Seizure, Requisition, Application of
                              Payments Not Relating to an Event of Loss.......16
               SECTION 9.04.  Application of Payments During Payment Default,
                              Bankruptcy Default or Lease Event of Default....17
               SECTION 9.05.  Restoration of the Equipment....................17
               SECTION 9.06.  Event of Loss with respect to All Components at a
                              Site............................................18

ARTICLE X Environmental Matters...............................................18
               SECTION 10.01. Environmental Covenants.........................18
               SECTION 10.02. EH&S Reporting..................................19
               SECTION 10.03. Waiver..........................................20

ARTICLE XI Sublease and Assignment............................................20
               SECTION 11.01. Sublease........................................20
               SECTION 11.02. Assignment and Merger...........................22

ARTICLE XII Inspection........................................................22

ARTICLE XIII Lease Events of Default..........................................22
               SECTION 13.01. Lease Events of Default.........................22

ARTICLE XIV Remedies..........................................................24
               SECTION 14.01. Effect of Lease Event of Default................24
               SECTION 14.02. Determinations of Fair Market Sales Value and Fair
                              Market Rental Value.............................27
               SECTION 14.03. No Relief from Termination......................28
               SECTION 14.04. Remedies Cumulative.............................28
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                                TABLE OF CONTENTS
                                -----------------
                                  (continued)
                                                                            Page
                                                                            ----

ARTICLE XV Right To Cure......................................................28

ARTICLE XVI Purchase Options..................................................29
               SECTION 16.01. Early Buyout Option.............................29
                              (a)    Option to Purchase.......................29
                              (b)    Conveyance...............................29
                              (c)    Deferred EBO Payment Amount..............29
               SECTION 16.02. End of Term Purchase Option.....................30
                              (a)    Return Notice............................30
                              (b)    Election to Purchase.....................30
                              (c)    Payment; Conditions......................30
                              (d)    Reconveyance.............................30
               SECTION 16.03. Renewal Option..................................31
                              (a)    Renewal Option...........................31
                              (b)    Computation of Renewal Term Basic Rent...31
                              (c)    Adjustment of Stipulated Loss Value......31
                              (d)    Amendments to this Lease.................31

ARTICLE XVII Further Assurances...............................................32
               SECTION 17.01. Further Action by Lessee........................32
               SECTION 17.02. Environmental, Health and Safety Program........32
                              (a)    EH&S Program.............................32
                              (b)    Provision of Copy........................32
                              (c)    Review...................................32

ARTICLE XVIII Chattel Paper...................................................33
               SECTION 18.01. Chattel Paper...................................33

ARTICLE XIX Insurance.........................................................33
               SECTION 19.01. Insurance.......................................33
                              (a)    Coverage.................................33
                              (b)    Endorsements.............................34
                              (c)    Certifications...........................35
                              (d)    Insurance Report.........................35
                              (e)    General..................................36
               SECTION 19.02. Adjustment of Claims; Payment...................36
                              (a)    No Event of Default......................36
                              (b)    Application of Payments during Existence of
                                     a Lease Event of Default.................37
               SECTION 19.03. Additional Insurance by Lessor and Lessee.......37
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                                TABLE OF CONTENTS
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                                  (continued)
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                                                                            ----

ARTICLE XX Owner Trustee; Owner Participant...................................37
               SECTION 20.01. Successor Trustee; Co-trustee...................37
               SECTION 20.02. Owner Trustee Not Acting in Individual Capacity.38

ARTICLE XXI Collateral........................................................38
               SECTION 21.01. Collateral......................................38

ARTICLE XXII Miscellaneous....................................................38
               SECTION 22.01. Documentary Conventions.........................38
               SECTION 22.02. Revision of Lease Supplements...................38
               SECTION 22.03. True Lease......................................38
               SECTION 22.04. City of Chicago.................................39
<PAGE>

                                 LEASE AGREEMENT

                  LEASE  AGREEMENT  (this  "Lease")  dated  as of June 1,  2000,
between   STATE  STREET  BANK  AND  TRUST  COMPANY  OF   CONNECTICUT,   NATIONAL
ASSOCIATION,  a national banking  association,  not in its individual  capacity,
except as expressly provided herein, but solely as Owner Trustee under the Trust
Agreement,  as lessor  ("Lessor"),  and  SWEETHEART  CUP COMPANY INC., as lessee
("Lessee").

                  In  consideration  of  the  mutual  covenants  and  agreements
contained herein. Lessor and Lessee agree as follows:

                                    ARTICLE I

                              Definitions and Usage
                              ---------------------

                  Unless the context otherwise requires, terms used herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
which also contains rules as to usage.

                                   ARTICLE II

                               Lease of Equipment
                               ------------------

                 Immediately  upon  execution and delivery of all the Operative
Documents on or prior to the Closing Date,  without necessity of any further act
or  evidence  by  either  party  hereto,  the  Equipment  subject  to any  Lease
Supplement  delivered on the Closing Date shall be deemed  examined and accepted
by Lessee for all purposes and shall be deemed delivered and leased by Lessor to
Lessee for the Basic Term as provided in the  respective  Lease  Supplement  and
herein.

                                   ARTICLE III

                                  Term and Rent
                                  -------------

                  SECTION 3.01.  Basic Term and Renewal Term.
                                 ---------------------------

                  (a)  Basic  Term.  The  Basic  Term  for the  Equipment  shall
commence  on the  Basic  Term  Commencement  Date  and  end on  the  Basic  Term
Expiration  Date,  or on such  earlier  date as this Lease  with  respect to the
Equipment may be terminated in accordance with the provisions hereof.

                  (b)  Basic Rent. (i) Lessee shall pay to Lessor an installment
of Basic Rent on each Rent Payment Date during the Basic Term for the  Equipment
set forth in any Lease Supplement, subject to adjustment under Article IX of the
Participation Agreement (which

                                       1
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Article is incorporated by reference herein as if fully set forth herein), equal
to the amount of Basic Rent  specified  for such Rent  Payment  Date in Schedule
II-A to such Lease  Supplement  as the same may be amended  from time to time in
accordance with the terms hereof.  If a Renewal Term is entered into pursuant to
Section  16.03,  Lessee shall pay to Lessor an installment of Renewal Term Basic
Rent on each Rent  Payment Date during the Renewal  Term for the  Equipment  set
forth in the relevant Lease Supplement equal to the amount of Renewal Term Basic
Rent  determined  pursuant to Section  16.03 hereof as  specified  for such Rent
Payment Date in the relevant schedule to such Lease Supplement,  as the same may
be amended from time to time in accordance with the terms hereof.

                  (ii)  The  Lease  Supplements  will  indicate  how and to what
extent  any  installment  of Basic  Rent and  Renewal  Term  Basic Rent is to be
allocated for federal  income tax  purposes,  including the amount of Basic Rent
that shall be  allocated  to each  calendar  year  during the Basic Term and any
initial  rent  holiday.  It is the  intention  of  Lessor  and  Lessee  that the
allocations of Basic Rent set forth in the Lease Supplement constitutes specific
allocations   of  fixed  rent   within   the   meaning   of  Treas.   Reg.  sec.
1.467-1(c)(2)(ii).

                  (iii) If a Renewal  Term is entered  into  pursuant to Section
16.03,  the  Renewal  Term Basic Rent will be payable  quarterly  in arrears and
allocated to the quarterly period ending on the date of such payment. Lessor and
Lessee  agree that each  installment  of Renewal Term Basic Rent will be accrued
over the period commencing on the immediately preceding Rent Payment Date or the
first day of the applicable Renewal Term, as applicable,  and ending on the Rent
Payment Date on which such arrears payment is scheduled to be made.

                  SECTION 3.02.  Supplemental Rent. Lessee shall pay,or cause to
be paid,  promptly  to  Lessor,  or to  whomever  shall be  entitled  thereto as
expressly  provided  herein  or in any  other  Operative  Document,  any and all
Supplemental  Rent (i) payable in connection with the payment of Stipulated Loss
Value as and when the same shall become due and owing, (ii) any interest payable
at the Overdue Rate as provided in Section  3.04 and (iii) all other  amounts of
Supplemental  Rent within 15 days after  written  demand or such other  relevant
period as set forth in any Operative Document.

                  SECTION  3.03. Method of Payment.  All  Rent payable to Lessor
shall be paid by Lessee to Lessor at the Owner Trustee Office,  or at such other
place in the United  States as Lessor  shall  specify to Lessee in writing on at
least 5 Business Days' notice; provided,  however, that, in the case of payments
pursuant  to  Article VI of the  Participation  Agreement  or any Tax  Indemnity
Agreement,  payment shall be made to whomever  shall be entitled  thereto at the
place  designated in Schedule I to the  Participation  Agreement with respect to
such  Person.  Each  payment  of Rent  shall be made by  Lessee  in  funds  with
immediate value prior to 12:00 noon, New York time to the designated account, on
the date when such payment shall be due.

                  SECTION 3.04.  Late Payment.In the event any Rent shall not be
paid by Lessee on its due date, Lessee shall pay to Lessor or the relevant Owner
Participant,  as the case may be, on demand, as Supplemental Rent,  interest (to
the extent permitted by Applicable Laws)

                                      2
<PAGE>

on such overdue amount from the due date thereof to the date of payment  thereof
at the Overdue Rate.

                  SECTION 3.05.  Net  Lease.  THIS  LEASE IS A  NET  LEASE  (AND
EXPENSES ASSOCIATED WITH THE INSTALLATION,  SERVICING, MAINTENANCE AND OPERATION
OF THE  EQUIPMENT  SHALL BE FOR THE ACCOUNT OF LESSEE,  WHETHER OR NOT SO STATED
HEREIN),  AND,  NOTWITHSTANDING  ANY  PROVISION  OF THIS  LEASE OR OF ANY  OTHER
OPERATIVE DOCUMENT TO THE CONTRARY,  LESSEE'S OBLIGATION TO MAKE ALL PAYMENTS OF
RENT AS AND WHEN THE SAME SHALL  BECOME DUE AND PAYABLE IN  ACCORDANCE  WITH THE
TERMS OF THIS  LEASE AND ANY OTHER  OPERATIVE  DOCUMENT  SHALL BE  ABSOLUTE  AND
UNCONDITIONAL  AND SHALL NOT BE SUBJECT TO (I) ANY  ABATEMENT OR  DIMINUTION  BY
SET-OFF, DEDUCTION,  COUNTERCLAIM,  RECOUPMENT,  AGREEMENT, DEFENSE, SUSPENSION,
DEFERMENT,   INTERRUPTION  OR  OTHERWISE,   (II)  ANY  INSOLVENCY,   BANKRUPTCY,
REORGANIZATION  OR SIMILAR  PROCEEDINGS BY OR AGAINST LESSEE, OR (III) ANY OTHER
CIRCUMSTANCE,  HAPPENING OR EVENT  WHATSOEVER,  WHETHER OR NOT SIMILAR TO ANY OF
THE FOREGOING;  NOR SHALL ANY OF THE OBLIGATIONS OF LESSEE TO PAY RENT HEREUNDER
BE OTHERWISE  AFFECTED BY REASON OF ANY DEFECT IN THE TITLE TO, OR ANY DEFECT IN
OR LACK OF FITNESS FOR USE OF OR ANY DAMAGE TO OR LOSS, OR LOSS OF THE USE OF OR
DESTRUCTION  OR THEFT  OF,  ALL OR ANY  PART OF THE  EQUIPMENT  FROM  ANY  CAUSE
WHATSOEVER, THE PROHIBITION OF THE USE OR POSSESSION BY LESSEE OF, OR ANY OUSTER
OR  DISPOSSESSION  BY  PARAMOUNT  TITLE OR  OTHERWISE  OF ALL OR ANY PART OF THE
EQUIPMENT,  THE  INTERFERENCE  WITH SUCH USE OR POSSESSION  BY ANY  GOVERNMENTAL
AUTHORITY  OR  OTHER  PERSON,  OR  THE  INVALIDITY  OR  UNENFORCEABILITY  OR THE
DISAFFIRMANCE  OF  THIS  LEASE,  ANY OF THE  OTHER  OPERATIVE  DOCUMENTS  OR ANY
AGREEMENT  RELATED  THERETO,  OR BY REASON OF ANY FAILURE BY LESSOR OR ANY OTHER
PERSON TO PERFORM  ANY OF ITS  OBLIGATIONS  HEREIN OR THEREIN  CONTAINED,  OR BY
REASON OF ANY LIENS ON ALL OR ANY PART OF THE EQUIPMENT,  OR FOR ANY OTHER CAUSE
WHETHER  SIMILAR OR DISSIMILAR TO THE FOREGOING AND, UNTIL SUCH TIME AS ALL RENT
REQUIRED TO BE PAID UNDER THIS LEASE OR ANY OTHER OPERATIVE  DOCUMENT SHALL HAVE
BEEN PAID,  NEITHER THIS LEASE NOR THE  PARTICIPATION  AGREEMENT SHALL TERMINATE
NOR SHALL LESSEE BE RELEASED,  RELIEVED OR  DISCHARGED  FROM ITS  OBLIGATION  TO
MAKE,  AND NOR SHALL IT  SUSPEND  OR  DISCONTINUE,  ANY  PAYMENT OF RENT FOR ANY
REASON WHATSOEVER  (EXCEPT AS MAY BE EXPRESSLY  PROVIDED  HEREIN),  IT BEING THE
INTENTION OF THE PARTIES HERETO THAT ALL RENT PAYABLE BY LESSEE  HEREUNDER SHALL
CONTINUE  TO BE PAYABLE IN ALL EVENTS IN THE MANNER AND AT THE TIMES  HEREIN AND
IN THE  PARTICIPATION  AGREEMENT  PROVIDED UNLESS THE OBLIGATION TO PAY THE SAME
SHALL BE TERMINATED  PURSUANT TO THE EXPRESS  PROVISIONS OF THIS LEASE.  IN THAT
CONNECTION,  LESSEE HEREBY WAIVES,  TO THE EXTENT  PERMITTED BY APPLICABLE LAWS,
ANY AND ALL RIGHTS WHICH IT MAY NOW

                                       3
<PAGE>

HAVE OR WHICH MAY AT ANY TIME  HEREAFTER  BE  CONFERRED  UPON IT, BY  STATUTE OR
OTHERWISE,  TO  TERMINATE,  CANCEL,  QUIT OR  SURRENDER  THIS  LEASE  EXCEPT  IN
ACCORDANCE  WITH THE  EXPRESS  TERMS  HEREOF AND AGREES  THAT IF, FOR ANY REASON
WHATSOEVER,  THIS LEASE SHALL BE  TERMINATED IN WHOLE OR IN PART BY OPERATION OF
LAW OR  OTHERWISE  EXCEPT AS  SPECIFICALLY  PROVIDED  HEREIN OR IN ANY  DOCUMENT
MODIFICATION,  LESSEE WILL  NONETHELESS  PAY TO LESSOR (OR TO WHOSOEVER SHALL BE
ENTITLED  THERETO AS  EXPRESSLY  PROVIDED  HEREIN) AN AMOUNT EQUAL TO EACH BASIC
RENT AND  SUPPLEMENTAL  RENT PAYMENT AT THE TIME SUCH PAYMENT  WOULD HAVE BECOME
DUE AND PAYABLE IN  ACCORDANCE  WITH THE TERMS  HEREOF AND OF THE  PARTICIPATION
AGREEMENT HAD SUCH TERMINATION NOT OCCURRED. EACH PAYMENT OF RENT MADE BY LESSEE
SHALL BE FINAL AND LESSEE  WILL NOT SEEK OR HAVE ANY RIGHT TO RECOVER ALL OR ANY
PART OF SUCH PAYMENT FROM LESSOR.  NOTHING  CONTAINED IN THIS SECTION 3.05 SHALL
PREVENT LESSEE FROM BRINGING A SEPARATE ACTION FOR DAMAGES SUFFERED BY LESSEE AS
A RESULT OF THE BREACH BY ANY PERSON OF ANY  OBLIGATION  OWED BY IT TO LESSEE OR
FOR EQUITABLE RELIEF TO OBTAIN COMPLIANCE WITH SUCH OBLIGATION.  NOTHING IN THIS
LEASE SHALL BE CONSTRUED  AS A GUARANTEE BY LESSEE OF ANY RESIDUAL  VALUE IN THE
EQUIPMENT.

                                   ARTICLE IV

                            Disclaimer of Warranties
                            ------------------------

                  SECTION 4.01.  Disclaimer of  Warranties.  LESSEE HAS SELECTED
THE  EQUIPMENT,  AND AS BETWEEN  LESSOR AND LESSEE,  DELIVERY  OF THE  EQUIPMENT
PURSUANT TO ARTICLE II SHALL BE CONCLUSIVE  PROOF OF ACCEPTANCE BY LESSEE OF THE
EQUIPMENT AS BEING IN COMPLIANCE WITH ALL REQUIREMENTS OF THIS LEASE, AND LESSOR
LEASES AND LESSEE TAKES THE  EQUIPMENT AND EACH  COMPONENT  PART THEREOF "AS IS"
AND LESSEE  ACKNOWLEDGES  THAT NEITHER THE TRUST  COMPANY,  LESSOR NOR ANY OWNER
PARTICIPANT  HAS MADE, NOR SHALL BE DEEMED TO HAVE MADE, ANY  REPRESENTATION  OR
WARRANTY,   EXPRESS  OR  IMPLIED,  AS  TO  THE  TITLE,  VALUE,  COMPLIANCE  WITH
SPECIFICATIONS,   CONDITION,   MERCHANTABILITY,   DESIGN,  QUALITY,  DURABILITY,
OPERATION OR FITNESS FOR USE OR PURPOSE OF THE EQUIPMENT OR ANY  COMPONENT  PART
THEREOF,  AS TO  THE  ABSENCE  OF  LATENT  OR  OTHER  DEFECTS,  WHETHER  OR  NOT
DISCOVERABLE,  AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT,  AS TO THE ABSENCE OF OBLIGATIONS  BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER  REPRESENTATION OR WARRANTY  WHATSOEVER,  EXPRESS OR IMPLIED,  WITH
RESPECT TO THE  EQUIPMENT OR ANY COMPONENT  PART THEREOF OR OTHERWISE.  IT BEING
AGREED THAT ALL RISKS  INCIDENT  THERETO ARE TO BE BORNE,  AS BETWEEN LESSOR AND
LESSEE, BY LESSEE IN

                                       4
<PAGE>

THE EVENT OF ANY DEFECT OR DEFICIENCY  IN THE  EQUIPMENT OR ANY  COMPONENT  PART
THEREOF, OF ANY NATURE WHETHER PATENT OR LATENT, AND THAT NEITHER LESSOR NOR ANY
OWNER  PARTICIPANT  SHALL HAVE ANY  RESPONSIBILITY  OR  LIABILITY  WITH  RESPECT
THERETO, except that Trust Company hereby (i) represents, warrants and covenants
that  on  the  Closing  Date  the  Equipment  shall  be  free  of  Lessor  Liens
attributable  to it, and (ii)  agrees that it will not  directly  or  indirectly
create,  incur,  assume or suffer to exist any Lessor Lien  attributable  to it.
Nothing  contained  in this  Article IV shall in any way  diminish or  otherwise
affect any right Lessee may have with respect to the Equipment against any third
Person.

                                    ARTICLE V

                             Liens; Quiet Enjoyment
                             ----------------------

                  SECTION 5.01.  Liens.  Lessee shall not directly or indirectly
create,  incur,  assume or suffer  to exist any Lien on or with  respect  to the
Equipment or any  Component or part  thereof,  or title  thereto or any interest
therein except Permitted Liens. Lessee will promptly,  at its own expense,  take
such action as may be necessary  duly to discharge any Lien other than Permitted
Liens.

                  SECTION 5.02.  Quiet  Enjoyment.   Notwithstanding  any  other
provision  of this  Lease,  so long as no Lease  Event  of  Default  shall  have
occurred and be continuing,  as between Lessee and Lessor, Lessee shall have the
exclusive  right to  possession,  operation and control of all the Equipment and
neither  Lessor nor any Person acting or claiming  through Lessor will interfere
with the peaceful and quiet  enjoyment,  operation and  possession of the use or
nonuse of the Equipment by Lessee in accordance with the terms hereof.

                  SECTION 5.03.  Personal Property.  Lessee and Lessor agree for
the purposes of the Transactions  that the Equipment and every Component or part
thereof are and shall be  considered  as and shall remain  personal and not real
property or fixtures  to all  Persons  and for all  purposes.  Lessee and Lessor
agree that the Equipment,  every  Component,  and every part thereof are severed
and shall be and shall  remain  severed  from any real  property and are readily
movable and, even if physically  attached to such property,  it is the intention
of Lessee and Lessor that the Equipment, and every Component or part thereof (i)
shall retain the character of personal property, (ii) shall be removable,  (iii)
shall be treated as personal  property with respect to the rights of all Persons
whomsoever, (iv) shall not become part of any real property and (v) by virtue of
its  nature  as  personal  property,  shall  not be  affected  in any way by any
instrument dealing with any real property.

                                       5
<PAGE>

                                   ARTICLE VI

                             Operation; Maintenance
                             ----------------------

                  SECTION 6.01.  Operation.  Lessee  shall not use the Equipment
or permit any third party to use the Equipment:

                  (i)   for any purpose other than its intended purpose;

                  (ii)  in any manner other than in the same manner and with the
         same care as used by Lessee with respect to similar  equipment owned or
         leased by Lessee;

                  (iii) in breach of (x) any material Applicable Laws or (y) any
         license, permit or authorization relating to the Equipment or to Lessee
         issued  by any  Governmental  Authority  having  jurisdiction  over the
         Equipment or Lessee,  unless the validity thereof is being contested in
         good faith and by a Permitted Contest.

                  SECTION 6.02.  Maintenance.(a) Lessee at its own expense shall
at all times during the Term  applicable  to the  Equipment  inspect,  maintain,
service,  repair  and  overhaul  the  Equipment  so as to  keep  it (i) in  good
operating  condition  and  good  physical  condition,  ordinary  wear  and  tear
excepted,  (ii) in compliance with applicable insurance policies and in a manner
and frequency  required by  applicable  manufacturers'  warranties,  if any, and
(iii) maintain the Equipment under a preventive maintenance program by qualified
personnel  (who may be employees  of Lessee) who possess a working  knowledge of
the mechanical operation of the Equipment including electrical systems,  motors,
drives, controls, accessories,  lubricants and all other items necessary to make
the machine  operate at the same rate of  production  as of the date of delivery
under this Lease and in the same manner and with the same care as used by Lessee
with similar equipment owned or leased by Lessee, and as such specifications may
be adjusted by Modifications under this Lease, subject to ordinary wear and tear
(with respect to the Equipment, the "Applicable Specifications").  The Equipment
shall be, moreover,  inspected,  maintained,  serviced, repaired, overhauled and
preserved by Lessee in compliance  with all material  requirements of Applicable
Laws, and Lessee will (at its expense)  provide all  maintenance and service and
make all repairs necessary for such purpose.  Lessor shall not be obliged in any
way to maintain, alter, repair, rebuild, overhaul or replace the Equipment.

                  (b) Lessee  shall  maintain  in proper  order all  appropriate
books,  records,  service  manuals,  operating  manuals,  blueprints,  and title
documents in connection  with the Equipment and provide all such books,  records
and documents to Lessor at the date of return. Lessee shall maintain or cause to
be maintained all records, logs and other materials required to be maintained in
respect of the Equipment by Applicable  Laws and upon written  request  promptly
furnish or cause to be furnished to Lessor such  information  as may be required
to enable Lessor to file any reports required to be filed by Lessor or the Owner
Participant with any  Governmental  Authority  because of Lessor's  ownership or
interest in the Equipment.

                  SECTION 6.03.  Replacement  of Parts.  If any  parts that were
originally incorporated or installed in or attached to or constituting a part of
the Equipment at the time of

                                       6
<PAGE>

delivery thereof hereunder, or any parts thereafter incorporated or installed in
or attached to or  constituting  a part of the  Equipment in  replacement  of or
substitution  for such  original  parts,  shall become worn out,  lost,  stolen,
destroyed,  seized, confiscated,  damaged beyond repair or otherwise permanently
rendered unfit for use, Lessee, at its own expense, shall as soon as practicable
replace such parts, or cause the same to be replaced, by replacement parts which
are free of all Liens  (other  than  Permitted  Liens) and the  removal  and the
replacement shall be performed in such manner and with replacement parts of such
quality,  that the Equipment shall be in as good an operating  condition as, and
have a fair market and expected residual value,  remaining  economic useful life
and  utility at least  equal to the fair  market and  expected  residual  value,
remaining  economic  useful  life and utility  of, the  Equipment  prior to such
replacement  of  parts  (assuming  the  Equipment  was,  at  the  time  of  such
replacement of parts in the condition and state of repair  required by the terms
hereof) and shall constitute  "Leased Equipment" as defined in the Intercreditor
Agreement.  All parts at any time  removed from the  Equipment or any  Component
shall remain the  property of Lessor and subject to this Lease,  no matter where
located,  until such time as such parts  shall be  replaced  by parts which have
been incorporated or installed in or attached to or made a part of the Equipment
and which meet the requirements for replacement parts specified above; provided,
however,  that parts that have been removed from the  Equipment or any Component
and that have no value other than scrap value shall be released  from this Lease
and all other  Operative  Documents  immediately  upon  their  removal  from the
Equipment  or any  Component,  and may be disposed of by Lessee (at its expense)
prior  to  the  installation  of  the  replacement  part.   Immediately  upon  a
replacement  part  becoming  incorporated  or  installed  in or  attached to the
Equipment as above  provided,  without  further act, (i) the replaced part shall
become the  property of Lessee,  and shall no longer be subject to this Lease or
any other Operative  Document,  shall be free and clear of all rights of Lessor,
and  shall  no  longer  be  part  of the  Equipment  hereunder,  and  (ii)  such
replacement  part shall  become the property of Lessor with title held by Lessor
and shall be subject to this Lease and all other  Operative  Documents and shall
be deemed part of the Equipment for all purposes to the same extent as the parts
originally incorporated or installed in or attached to the Equipment. Lessee may
transfer parts of any Component to another Component in a manner consistent with
its normal  operating  practices  so long as such  transfer  does not change the
identity of the  Equipment  involved or reduce by more than a de minimis  amount
the fair market or expected residual value, utility or remaining economic useful
life of the Equipment.  The foregoing  notwithstanding,  if any replacement part
shall have been PPE Collateral, the replaced part, upon release from this Lease,
shall be subject to the Security Agreement and constitute PPE Collateral.

                  SECTION 6.04.  Relocation.
                                 ----------

                  (a)  Within  the  United  States.  At the  Closing  Date,  the
Equipment  and each  Component or part thereof  shall be located at the Sites as
specified on Schedule I to the Lease Supplement. After the Closing Date, as long
as the  Equipment  is  being  operated  in  compliance  with  Section  6.01  and
maintained in compliance with Section 6.02 and no Material  Default has occurred
and is  continuing,  Lessee may,  without the  consent of Lessor,  relocate  the
Equipment or any  Component  or part thereof  during the Term to any location in
the continental United States of America; provided, that

                                       7
<PAGE>

                  (i) Lessee shall, not less than 10 Business Days prior to such
         relocation,  inform Lessor in writing of any  relocation,  the specific
         Components  to be  moved,  the state  and  county of the new  location,
         whether the new location is owned or leased by Lessee or subject to the
         rights of any mortgagee, all in reasonable detail;

                  (ii) if any  Component  is to be  relocated  outside the state
         (or, if appropriate,  the county) in which such Component was delivered
         on the Closing  Date,  Lessee  shall,  on or prior to such  relocation,
         ensure that any filings necessary to protect the interests of Lessor in
         the Equipment at such new location are timely made or corrected;

                  (iii)  if  (x) an  aggregate  of  $25,000,000  or  greater  of
         Components  (measured by its Designated Value) is moved to any location
         (other than a Site, prior to such  relocation)  Lessor and Lessee shall
         enter into a ground lease and ground  sublease with respect to such new
         location  on terms  comparable  to the  existing  Site  Leases and Site
         Subleases,  or  (y)  if  less  than  an  aggregate  of  $25,000,000  of
         Components  (measured by its  Designated  Value) is moved to a location
         other than a Site or a property  subject to a Site Lease,  Lessee shall
         return such  Equipment  to a location  subject to a Site Lease prior to
         the end of the Term or,  promptly upon the  occurrence of a Lease Event
         of Default;

                  (iv) if an aggregate of  $25,000,000  or greater of Components
         (measured by its Designated Value) is moved to any location (other than
         a Site prior to such relocation), at Lessee's expense, there shall have
         been  conducted at such location an  environmental  review  pursuant to
         Environmental  Laws,  which review shall be reasonably  satisfactory to
         each Owner  Participant,  (taking into account to the extent  relevant,
         the  environmental  review  conducted  on behalf of Lessor prior to the
         Closing;

                  (v) Lessee  shall not  relocate  Components  with an aggregate
         value in excess of $25,000,000 to Lessee's facility located in Conyers,
         Georgia; and

                  (vi) at any time that  Lessee  removes all  Components  from a
         Site  which is  subject  to a Site  Lease,  such  Site  Lease  shall be
         terminated.

                  (b)      Outside the United  States.  Lessee may not relocate,
or permit the  relocation of, the Equipment or any Component or  part thereof to
a place outside the continental United States of America.

                  SECTION 6.05.  Modification.  (a) Lessee shall at its expense,
from time to time make any Modification to the Equipment  required by Applicable
Laws  or by any  insurance  requirements.  So long as no  Material  Default  has
occurred and is continuing,  Lessee, at its expense,  from time to time may make
any  Modification to the Equipment that Lessee may deem desirable in the conduct
of its business;  provided, however, that Lessee shall not have the right (i) to
make any such  Modification that diminishes by more than a de minimis amount the
fair market or expected  residual value,  utility and remaining  economic useful
life of the Equipment to an independent  third-party user, below the fair market
or expected residual value,  utility,  or remaining economic useful life thereof
immediately prior to such Modification, assuming the

                                       8
<PAGE>

Equipment  was then in the  condition  required to be maintained by the terms of
this Lease, or (ii) cause the Equipment to become Limited Use Property.

                  (b)  Immediately upon each Modification having been made:

                  (i)  in  the  case  of  any  Nonseverable  Modification,   the
         Modification shall,  effective on the date such Modification shall have
         been  incorporated  into the  Equipment,  become the property of Lessor
         with title  being held by Lessor and shall be subject to this Lease and
         all other Operative Documents; and

                  (ii) in the case of each Severable Modification,  Lessee shall
         hold title to such  Modification and the Modification  shall remain the
         property  of Lessee and shall not  become  subject to this Lease or any
         other Operative Document;  provided,  that Severable Modifications that
         remain at the  Scheduled  Expiration  Date so modified (or remain as of
         any earlier  termination  of this Lease with respect to the  Equipment)
         shall be subject to the provisions of Section 8.02.

Modifications  that,  pursuant to this Section  6.05(b),  become subject to this
Lease,  shall be deemed part of the  applicable  Component and the Equipment for
all purposes. Modifications that do not become subject to this Lease pursuant to
this Section 6.05(b) shall not be deemed a part of the applicable  Component and
the Equipment.

                  (c)  Subject to compliance with Applicable  Laws,  Lessee  may
remove, at its expense, any Severable  Modification which has not become subject
to this Lease  pursuant  to Section  6.05(b) or which  Lessor has not elected to
purchase  pursuant to Section  8.02,  provided,  that,  unless Lessee shall have
given notice of its election to purchase the Equipment  pursuant to Article XVI,
Lessee,  at its  expense  and  prior to the  Scheduled  Expiration  Date (or any
earlier  termination  of this Lease),  shall repair any damage to the  Equipment
caused by such  removal  such that the  Equipment  is returned to the  condition
required hereunder.

                  SECTION 6.06.  Warranty Assignments.(a) Lessee hereby assigns,
transfers  and conveys to Lessor all its right,  title and  interest  in, to and
under all existing and assignable warranties,  if any, relating to the Equipment
(all such warranties, the "Assigned Warranties").

                  (b)  The assignment pursuant to clause (a) of this Section6.06
is a present  assignment  and shall be effective  immediately  upon execution of
this Lease.  Notwithstanding  the foregoing  assignment,  so long as no Material
Default shall have occurred and be  continuing,  Lessor shall not be entitled to
exercise  or receive  any  proceeds  of the  exercise  of,  and Lessee  shall be
entitled to exercise  and  receive  all  proceeds of the  exercise of any of the
claims,  rights, powers,  privileges,  remedies and other benefits in respect of
the  Assigned  Warranties  (including  the right to receive all moneys due or to
become due under or arising out of the Assigned Warranties).

                  SECTION 6.07.  Property Fire Protection. Lessee shall maintain
at  all  facilities  where  Equipment  is  located  fire  security  systems  and
procedures as required under Lessee's insurance policies.

                                       9
<PAGE>

                                   ARTICLE VII

                                Early Termination
                                -----------------

                  SECTION  7.01.   Termination  for   Obsolescence  or  Business
Purposes.  Subject to Section  7.04,  so long as no Material  Default shall have
occurred  and be  continuing,  at any time during the Basic Term on or after the
third anniversary of the Basic Term Commencement Date, Lessee may, not more than
once during any twelve month  period,  upon 90 days' prior  written  irrevocable
notice to Lessor,  terminate the Lease with respect to the Equipment,  if Lessee
certifies by a certificate  of Lessee's Chief  Financial  Officer to Lessor that
the Equipment has become (x)  obsolete,  operationally  uneconomic or surplus to
its needs as  determined by Lessee in its sole  discretion or (y)  operationally
uneconomic due to a change in any Applicable Laws. The termination  shall become
effective  on any  Stipulated  Loss Value Date  selected by Lessee  occurring at
least 90 days after such notice (the "Termination Date").

                  SECTION 7.02. Lessor Election to Retain Equipment. In the case
of a  termination  described in Section  7.01,  at any time within 45 days after
notice from Lessee of its election to  terminate  this Lease with respect to the
Equipment,  Lessor may give Lessee notice of its irrevocable  election to retain
the  Equipment.  If Lessor  shall  have  elected  to  retain  the  Equipment  in
accordance with the preceding sentence, on the Termination Date Lessee shall pay
to  Lessor  any  Overdue  Rent  due with  respect  to the  Equipment  as of such
Termination  Date  and any  unpaid  Supplemental  Rent  due on or  prior to such
Termination  Date,  but will not be required to pay  Stipulated  Loss Value with
respect to the  Equipment.  On such  Termination  Date Lessee shall  deliver the
Equipment  to Lessor  pursuant  to the  requirements  of Article  VIII,  and the
Equipment shall cease to be leased hereunder.

                  SECTION 7.03.  Qualifying Bids.
                                 ---------------

                  (a)  Solicitation  of  Bids.  In  the  case  of a  termination
described in Section  7.01,  during the period from the giving of such notice of
termination  until 10 Business Days prior to the Termination Date and so long as
Lessor shall not have  exercised  its option  pursuant to Section 7.02 to retain
the Equipment,  Lessee, as agent for Lessor and at Lessee's  expense,  shall use
its  commercially  reasonable  efforts to obtain the highest  possible bids from
Persons  other than,  except with the prior  consent of each Owner  Participant,
Lessee,  Guarantor  or  their  Affiliates  to  purchase  the  Equipment  on  the
Termination  Date.  Lessee shall notify Lessor in writing,  at least 10 Business
Days  prior to the  Termination  Date,  of the amount and terms of each such bid
that has  theretofore  been  submitted  and the name and  address  of the  party
submitting  such bid.  Lessee shall certify to Lessor that such bidder is not an
Affiliate of Lessee or Guarantor  (unless  previously  consented to by the Owner
Participants).  Each such bid shall be a bona  fide bid for  payment  in full in
cash (such a bid is  referred to herein as a  "Qualifying  Bid").  Lessee  shall
deliver to Lessor, on reasonable request,  periodic reports of Lessee's progress
in finding a bidder for the Equipment subject to the termination notice.  Lessor
shall have the right,  directly or through  agents or brokers,  to solicit bids,
but shall be under no duty to  solicit  bids or to inquire  into the  efforts of
Lessee to obtain bids.

                                       10
<PAGE>

                  (b)  Procedure If No Sale. If Lessor has not elected to retain
the Equipment pursuant to Section 7.02 and no Qualifying Bids are received as of
the  Termination  Date, this Lease shall continue in full force and effect as to
the Equipment, notwithstanding Lessee's prior written notice pursuant to Section
7.01. Such  continuation  shall not constitute a revocation  pursuant to Section
7.01 or Section 7.04 nor  prejudice in any way Lessee's  right to terminate  the
Lease as of a later date as to the Equipment.

                  SECTION 7.04.  Rescission by Lessee. If Lessor has not elected
to retain the Equipment  pursuant to Section 7.02,  and at least one  Qualifying
Bid  has  been  received  as of  the  scheduled  Termination  Date,  Lessee  may
nevertheless  at any  time  no  later  than  45  days  prior  to  the  scheduled
Termination  Date,  rescind its notice of termination  as to the Equipment.  The
total number of such  rescissions  and elections to continue to lease during the
Basic Term shall not exceed one. Lessee shall reimburse,  on an After-Tax Basis,
Lessor  and the  Owner  Participants,  for all  reasonable  costs  and  expenses
incurred in connection with any such rescission of a notice of termination.

                  SECTION 7.05.  Sale Pursuant to Qualifying  Bid. If (i) Lessee
shall  have  received a  Qualifying  Bid on or prior to the tenth  Business  Day
before the  Termination  Date,  and (ii) Lessor shall have  received from Lessee
notice of the highest  Qualifying  Bid and shall have  received  from the bidder
that  shall  have  submitted  the  highest  Qualifying  Bid  for  the  Equipment
immediately available funds of the amount specified in such bid, Lessor shall on
the Termination Date,  subject to the receipt of the amounts payable pursuant to
Section 7.06 hereof,  transfer to such bidder all of Lessor's  right,  title and
interest to the Equipment "as-is,  where-is" without  representation or warranty
except as to the absence of any Lessor Liens on the  Equipment to which such bid
relates.  On such  Termination  Date,  Lessee shall deliver the Equipment to the
purchasing  bidder  pursuant  to the  requirements  of  Article  VIII,  and  the
Equipment shall cease to be leased  hereunder.  Any funds received by Lessee for
the  Equipment  shall be  immediately  paid  over to Lessor  without  deduction,
set-off or adjustment  of any kind.  Lessee and Lessor shall execute and deliver
such  documents  evidencing  such  transfer and take such further  action as the
purchaser shall reasonably request. Lessee shall pay, on an After-Tax Basis, all
reasonable  costs and expenses  incurred in connection  with any transfer of, or
attempt to find a  Qualifying  Bid for, the  Equipment  pursuant to this Article
VII.

                  SECTION 7.06. Payment Lessee; Notice; Termination of Lease. In
the case of any termination described in Section 7.01, unless Lessor has elected
to retain the  Equipment  being  terminated  pursuant  to Section  7.02,  on the
Termination Date, Lessee shall pay to Lessor the sum of:

                  (a)   any Overdue Rent due with respect to the Equipment as of
         such Termination Date; plus

                  (b)   any  Supplemental   Rent  due  and  unpaid  as  of  such
         Termination  Date  (including  any  amounts  for  reasonable  costs and
         expenses payable by Lessee as required in Section 7.05); plus

                                       11
<PAGE>

                  (c) the excess, if any, of (i) the Stipulated Loss Value as of
         such Termination Date over (ii) the net proceeds  actually  realized on
         any sale thereof and paid over to Lessor,  as the case may be, pursuant
         to Section 7.05.

                  Upon  payment  by Lessee  of all  required  amounts  as to the
Equipment,  the  obligation  of Lessee to pay Rent with respect to the Equipment
shall terminate,  the Equipment shall no longer be subject to this Lease and the
Term with respect to the Equipment shall terminate.

                                  ARTICLE VIII

                               Return of Equipment
                               -------------------

                  SECTION 8.01. Return of Equipment. On the Scheduled Expiration
Date applicable to the Equipment (or upon any earlier  termination of this Lease
with respect to the  Equipment),  if such  Equipment is not  purchased by Lessee
pursuant to Article XVI,  Lessee (at its sole risk and expense) shall  surrender
such Equipment to Lessor and shall comply with each of the following conditions:

                  (a) at the time of such return,  the  Equipment  shall be free
         and clear of all Liens (other than Lessor Liens);

                  (b) not later than 315 days prior to the Scheduled  Expiration
         Date  in  respect  of such  Equipment  (or if  earlier,  the  date  the
         Equipment  is being  returned  due to an  earlier  termination  of this
         Lease), provide a detailed inventory,  in English, of all Components of
         such Equipment.  The inventory shall include,  but not be limited to, a
         description  of  the  Equipment,  the  asset  number  assigned  to  the
         Equipment, and location;

                  (c) not later than 180 days prior to the Scheduled  Expiration
         Date in respect of Equipment (or if earlier,  the date the Equipment is
         being returned due to an earlier termination of this Lease), provide or
         cause the vendor(s) or  manufacturer(s)  to provide,  if available,  to
         Lessor the  following  documents,  in English  or, if  applicable,  the
         language  in which  such  documents  were  provided  to  Lessee  by the
         relevant vendor or manufacturer,  (i) one set of current and up-to-date
         service manuals and operating manuals,  including  replacements  and/or
         additions  thereto  and  (ii)  one  set  of  documents,  detailing  the
         Equipment's configuration, operating requirements, maintenance records,
         and other  technical  data  concerning  the set-up and operation of the
         Equipment,  including  replacements and/or additions thereto, such that
         all documentation is completely up-to-date and current;

                  (d) not later than 180 days prior to the Scheduled  Expiration
         Date in respect of Equipment (or if earlier,  the date the Equipment is
         being  returned  due to an earlier  termination  of this  Lease),  upon
         receiving  reasonable notice from Lessor, make such Equipment available
         for on-site  operational  inspections  by potential  purchasers,  under

                                       12
<PAGE>

         power, and provide technical  personnel,  power and other  requirements
         necessary to  demonstrate  electrical  and  mechanical  systems for the
         Equipment of such Equipment;

                  (e) not later than 180 days prior to the Scheduled  Expiration
         Date  in  respect  of such  Equipment  (or if  earlier,  the  date  the
         Equipment  is being  returned  due to an  earlier  termination  of this
         Lease),   cause  a  Technical   Expert,   acceptable   to  Lessor  (the
         "Inspector"), to perform a comprehensive physical inspection, including
         testing all  material and  workmanship  of such  Equipment,  including,
         where  applicable,  an  inspection  of all  screen  changers,  sensors,
         monitors  and  computer  controllers;  and if during  such  inspection,
         examination  and test, the Inspector  finds the Equipment not operating
         within any Applicable  Specifications or otherwise not in the condition
         and state of repair required by the terms hereof, then Lessee shall, at
         its own expense,  make,  within 60 days of the date of inspection,  all
         necessary  repairs to the Equipment in a professional  and  workmanlike
         manner;

                  (f) have each  Component of such  Equipment  returned  with an
         in-depth field service report, detailing said inspection as outlined in
         clause (e) of this Section  8.01,  with such report to certify that the
         Equipment  has been  properly  inspected,  examined  and  tested and is
         operating within Applicable Specifications;

                  (g) provide that each Component of such Equipment will be: (i)
         returned in the condition required pursuant to Article VI, (ii) cleaned
         and  cosmetically   acceptable,   properly  removing  or  treating  all
         corrosion,  and in  such  condition  so  that  it  may  be  immediately
         installed  and  placed  into  use in a  production  environment,  (iii)
         detoxified or  decontaminated,  if applicable,  to allow for subsequent
         use  in  accordance  with  Applicable  Laws,  (iv)  in  good  operating
         condition  (subject to normal wear and tear), (v) properly  identified,
         and  (vii)  returned  with  such  operating  and  application  specific
         software used by Lessee at such time to control the Equipment;

                  (h) ensure that all Components of the Equipment and operations
         thereof  conform  to  all  laws  and  health  and  safety   regulations
         applicable  in the  jurisdiction  in which such  Equipment  was located
         immediately  prior to the time of return  and which may be in effect at
         the time of return;

                  (i) ensure that all gears, barrels,  screws, and screw flights
         and other mechanical corrections are free from any adhesive,  abrasive,
         or corrosive wear that will prevent any Component from operating within
         Applicable Specifications.  Where excess wear has occurred, Lessee will
         replace such Components or parts thereof before returning the Equipment
         to Lessor;

                  (j)properly remove all Lessee installed markings which are not
         necessary for the operation, maintenance or repair of the Equipment;

                  (k) in the event that  Lessor  does not elect to  operate  the
         Equipment  in the  facility  where  the  respective  Equipment  is then
         located,  which election shall be made not later than 120 days prior to
         the  Scheduled  Expiration  Date  or,  upon  demand  if  the  Lease

                                       13
<PAGE>

         is terminated  by reason of a Lease Event of  Default,  provide for the
         deinstallation  and  packing  of  the  Equipment  to  include,  but not
         limited to, the  following:  (i) all  process  fluids  shall be removed
         from the Equipment and disposed of in  accordance with the then current
         Environmental Laws (at no time are  materials which could be considered
         hazardous waste pursuant to  any  Environmental  Law to be shipped with
         machinery);  (ii) all  internal  fluids such as lube oil and  hydraulic
         fluid are to be  filled  to  operating  levels;  filler  caps are to be
         secured  and  disconnected  hoses  are to be sealed to avoid  spillage;
         (iii) qualified professionals (which  may be employees of Lessee) shall
         deinstall and match mark each  Component;  (iv) each Component shall be
         packed in a safe and secure  manner  suitable  for  shipping by rail or
         truck;  and  (v)  Lessee  shall  provide  for  transportation  of   the
         Equipment to the closest railhead F.O.B.;

                  (l) at Lessor's choice,  either (i) allow Lessor,  at Lessor's
         expense,  and provided Lessor has provided reasonable notice to Lessee,
         to arrange for an on-site  auction of the Equipment in an assembled and
         functional  state.  Any such  auction will be conducted no more than 60
         days prior to Scheduled  Expiration Date (or, if earlier,  the date the
         Equipment  is being  returned  due to an  earlier  termination  of this
         Lease) and will be conducted  in a manner  which will not  unreasonably
         interfere with Lessee's business operations,  or (ii) at the request of
         Lessor,  provide safe,  secure storage,  at Lessor's  expense,  for the
         Equipment for 120 days after  expiration or earlier  termination of the
         Lease at an  accessible  location  satisfactory  to  Lessor;  provided,
         however,  if the Lease is  terminated  as a result of a Lease  Event of
         Default,  Lessee,  at its  expense,  shall  provide  such storage for a
         period of 120 days; and

                  (m) if Lessee fails to return any  Component of the  Equipment
         within 30 days following the Scheduled Expiration Date (or, if earlier,
         the date the Equipment is being returned due to an earlier  termination
         of this Lease),  then Lessor may demand that Lessee pay the Fair Market
         Value of such Component.

If the  Equipment  is not  returned in all  material  respects on the  Scheduled
Expiration Date (or, if earlier, the date the Equipment is being returned due to
an earlier  termination  of this Lease),  as required  herein,  Basic Rent shall
accrue and be due and payable by Lessee each 30 days thereafter, at a daily rate
equal to the daily  equivalent  of the greater of (i) 125% of the average  Basic
Rent during the Term which has expired and (ii) Fair Market Rent Value.

                  SECTION 8.02. Severable Modifications.  If Lessee has made any
Severable  Modification to the Equipment to be surrendered to Lessor pursuant to
Section 8.01, and such Severable Modification has not previously been removed by
Lessee,  Lessee  shall,  not later than 60 days  before such  surrender,  inform
Lessor in writing if Lessee  intends to leave  such  Severable  Modification
in place, whereupon Lessor may elect to purchase such Severable Modification for
its then fair market value. If Lessor has not given Lessee written notice of its
election under the preceding sentence at least 30 days prior to the date for the
surrender of the Equipment,  Lessee may (i) remove such  Severable  Modification
prior to such  surrender  (and shall repair in all material  respects any damage
caused by such removal), or (ii) leave such Severable  Modification

                                       14
<PAGE>
in place,  in which case it will become the property of Lessor  without  further
action on the part of, or further cost to, Lessor.

                                   ARTICLE IX

            Damage; Application of Payments; Restoration of Equipment
            ---------------------------------------------------------

                  SECTION 9.01.  Event of Loss.
                                 -------------

                  (a) Notice of Event of Loss.  Lessee shall,  within 5 Business
Days after the  occurrence  thereof,  notify  Lessor of any Event of Loss to the
Equipment.  Within 30 days of such occurrence,  Lessee shall give Lessor and the
Owner  Participants  written notice  stating  whether there has been an Event of
Loss with respect to the  Equipment.  In such notice,  Lessee shall (i) describe
the nature and scope of the  occurrence  giving rise to such Event of Loss,  and
(ii) if  applicable,  specify  which of the  alternatives  set forth in  Section
9.01(b) it will pursue.  If Lessee fails to provide notice of its election under
this Section  9.01(a) within such 30-day period,  Lessee shall be deemed to have
elected  the  alternative  set forth in Section  9.01(b)(ii).  If Lessee  timely
elects the  alternative  in Section  9.01(b)(i)  and fails to make the  required
substitution  within  the  periods  prescribed  therefor,  Lessee  shall  not be
entitled to make such  substitution  but shall be required to make the  payments
required by Section  9.01(b)(ii) on the last day on which Lessee was entitled to
make the substitution.

                  (b)      Lessee  Alternatives.  Upon an  Event of Loss, Lessee
shall,  subject  to the  restrictions  in  Section  9.01(a),  pursue  one of the
alternatives, (i) or (ii), set forth in this Section 9.01(b).

                  (i) If Lessee elects or is required to effect this alternative
         (i), it shall,  provided  that no Material  Default has occurred and is
         continuing, within 180 days of the occurrence of the Event of Loss (but
         in no event later than the  Scheduled  Expiration  Date with respect to
         the  Equipment),  effect a  restoration  of the  Equipment,  which  may
         include a  substitution  of Components in the manner and subject to the
         conditions  specified in Section 9.05 hereof. Once such restoration has
         been  made and the  conditions  specified  in  Section  9.05  have been
         satisfied,  so  long  as  no  Material  Default  has  occurred  and  is
         continuing,  Lessor  shall  transfer  all of its rights to any replaced
         components  of the  Equipment  to Lessee,  and shall  remove all Lessor
         Liens upon such replaced components,  and Lessee shall be subrogated to
         all claims of Lessor,  if any,  against third parties to the extent the
         same relate to  physical  damage to or loss of the  Equipment.  For all
         purposes  hereof,   the  replacement   equipment   shall,   after  such
         substitution,  be part of the property leased hereunder, be "Equipment"
         deemed to be the  Component  replaced  subject  to the  relevant  Lease
         Supplement. Under this alternative (i), no abatement or reduction shall
         be made in the Basic Rent.

                  (ii) If Lessee elects this alternative  (ii), it shall, on the
         first  Stipulated  Loss  Value  Date  falling  after the  earlier  of 5
         Business Days after receipt of insurance proceeds or 180 days after the
         occurrence of the Event of Loss, pay to Lessor the sum of:

                                       15
<PAGE>

                    (A) the Stipulated  Loss Value for the Equipment  determined
                  for such Stipulated Loss Value Date;

                    (B)any Overdue Rent with respect to the Equipment as of such
                  Rent Payment Date; and

                    (C) any  Supplemental   Rent  with  respect to the Equipment
                  due and payable on or before such  Stipulated Loss Value Date,
                  on such Stipulated Loss Value Date as a result of the Event of
                  Loss.

                  Once the payment described in the preceding  sentence has been
made, Lessor shall transfer to Lessee all of its rights to the Equipment "as-is,
where-is"  without  representation  or  warranty  except  as to the  absence  of
Lessor's Liens, Lessee shall have no further obligation to make payments of Rent
with respect to the Equipment,  and the Term with respect to the Equipment shall
end.

                  SECTION 9.02.  Application  of Payments Upon an Event of Loss.
Except as provided in the next sentence of this Section 9.02 or in Section 9.04,
any  payments  received at any time by Lessor or by Lessee  with  respect to any
Equipment  (including  insurance  proceeds or warranty  payments  but  excluding
proceeds from  insurance  policies  carried by Lessor or any Owner  Participant)
from  any  Governmental  Authority  or  any  other  Person  as a  result  of the
occurrence of an Event of Loss with respect to such  Equipment  shall be applied
as follows:

                  (a) any such  payment  received at any time by Lessee shall be
         promptly,  and in any event within 5 Business Days,  paid to Lessor for
         application  pursuant to the following provisions of this Section 9.02,
         except  that Lessee may retain any amounts  which  Lessor  shall at the
         time be obligated to pay to Lessee pursuant to Article XIX;

                  (b) so much of such  payments  as shall not exceed all amounts
         required to be paid by Lessee pursuant to Section  9.01(b)(ii) shall be
         applied in reduction of Lessee's  obligation to pay such amounts if not
         already paid by Lessee, or, if already paid by Lessee, shall be applied
         to reimburse Lessee for its payment of such amounts; and

                  (c)  the  balance,   if  any,  of  such   payments   remaining
         thereafter, if they are from insurance carried by Lessee, shall be paid
         to Lessee  or, if they are from any other  Person or  source,  shall be
         divided between Lessor and Lessee in accordance  with their  respective
         interests.

                  SECTION 9.03. Loss, Damage, Seizure, Requisition,  Application
of  Payments  Not  Relating  to an  Event  of  Loss.  In the  event  of a  loss,
condemnation,  confiscation,  theft or seizure of, or requisition of title to or
use of, or damage to, the  Equipment  or any part  thereof not  resulting  in an
Event of Loss,  Lessee shall promptly  notify Lessor thereof and all obligations
of Lessee under this Lease with respect to the Equipment  shall  continue to the
same  extent as if such event had not  occurred.  Subject to the  provisions  of
Section 9.04 and Article XIX,  payments received at any time by Lessor or Lessee
from any insurer (under insurance carried by Lessee), any Governmental Authority
or other Person with respect to any loss, condemnation,

                                       16
<PAGE>

confiscation,  theft or  seizure  of, or  requisition  of title to or use of, or
damage to the  Equipment not  constituting  an Event of Loss shall be paid to or
retained by Lessee.

                  SECTION 9.04.  Application of Payments During Payment Default,
Bankruptcy Default or Lease Event of Default. Any amount that shall otherwise be
payable to Lessee pursuant to this Lease arising out of any insurance, warranty,
governmental award or otherwise shall not be paid to Lessee or, if it shall have
been  previously  paid to Lessee,  shall not be  retained by Lessee but shall be
paid to Lessor,  if at the time of such payment any Material  Default shall have
occurred and be continuing. In such event, all such amounts shall be paid to and
held by  Lessor  in trust as  security  for the  obligations  of  Lessee to make
payments  under any other  Operative  Document or to pay Rent  hereunder  or, at
Lessor's option,  applied by Lessor toward payment of any of such obligations of
Lessee at the time due hereunder or under such other Operative Document. At such
time as there shall not be continuing any Material Default,  all such amounts at
the time held by Lessor in excess of the amount,  if any, that Lessor shall have
elected to apply as above provided shall be paid to Lessee.

                  SECTION 9.05. Restoration of the Equipment.  (a) So long as no
Material Default shall have occurred and be continuing, not more frequently than
once in any 12-month period,  unless in connection with an Event of Loss, Lessee
may substitute like-kind components in accordance with the terms of this Section
9.05.  If Lessee shall elect to substitute  pursuant to the preceding  sentence,
Lessee shall,  at its sole cost and expense,  deliver to Lessor  without cost to
Lessor  a full  warranty  bill of sale  for such  substituted  component  of the
Equipment specifically identifying such substituted component, which substituted
component meets (or will meet when the  substitution is completed) the following
conditions:

                  (i)  it is free and clear of all Liens  (other than Permitted
         Liens);

                  (ii) it (A) is of like-kind with the Component to be replaced,
         (B)  has a fair  market  and  estimated  residual  value,  utility  and
         remaining  economic  useful  life at least equal to the fair market and
         estimated residual value, utility and remaining economic useful life of
         the Component to be replaced, assuming such replaced Component has been
         maintained in the condition  required by this Lease,  (C) is of same or
         newer  date  of  manufacture  as  the  replaced  Component,  (D)  shall
         constitute   "Leased   Equipment"  as  defined  in  the   Intercreditor
         Agreement, and (E) such substitution will not adversely affect the fair
         market or  estimated  residual  value,  utility or  remaining  economic
         useful life of the Equipment (as confirmed by a Technical Expert);

                  (iii) title to  such replacement  component has vested in  the
         Owner Trustee; and

                  (iv) Lessee  shall make all filings  necessary  to protect the
         interests of Lessor in the relevant substituted components concurrently
         with consummating such substitution.

                  (b)   Upon   transfer  of  the  substitute  components  and
compliance with the  requirements  of paragraph (a): (i) the replaced  Component
shall  become the  property of Lessee;  (ii) Lessee  will be  subrogated  to all
claims of Lessor, if any, against third parties to the extent the same relate to
physical  damage  to or loss of the  Equipment.  For all  purposes  hereof,  the

                                       17
<PAGE>

component  so  substituted  shall,  after  such  transfer,  (i) be  part  of the
Equipment  hereunder,  be subject to the relevant Lease Supplement and all other
Operative Documents,  and (ii) be deemed to be the "Component" that was replaced
and to have  the  same  Designated  Value  as the  Component  replaced.  No such
substitution shall result in any change in Basic Rent.

                  (c)   For  Components  substituted other than as the result
of an Event of Loss, at the time of transfer of the substitute component, Lessee
shall provide a certificate of its Chief Financial  Officer to Lessor certifying
that the Components to be substituted  are obsolete,  surplus or uneconomic with
respect to their use where the Equipment is located.

                  (d)   During the Term, Lessee may not substitute Components
with a Designated Value in excess of 30% of Lessor's Cost.

                  Lessee  shall  pay,  on an  After-Tax  Basis,  all  costs  and
expenses (including  reasonable  attorneys' fees and disbursements)  incurred by
Lessor  and  the  Owner  Participants,   and  for  all  taxes,  fees  and  other
governmental charges payable in connection with the substitution. whether or not
such substitution is consummated and with respect to any documentation  required
to evidence such substitution in accordance with the terms hereof.

                  SECTION 9.06.  Event of Loss with respect to All Components at
a Site.  Notwithstanding  Section 9.01, in the event all or substantially all of
the  Components  located  at a Site  subject  to a  Site  Lease  (the  "Affected
Components")  suffer  an  Event  of  Loss  (assuming  such  Affected  Components
constituted all of the Equipment), then Lessee, in lieu of declaring an Event of
Loss with respect to all Equipment, may request that Lessor consider terminating
the Lease  solely with  respect to such  Affected  Components  in exchange for a
partial  payment of Stipulated  Loss Value.  Lessor shall consider and negotiate
any such request,  and the terms and conditions  thereof, in good faith in light
of the circumstances at the time,  including the then location of the Equipment,
its  configuration,  value and expected  useful life, and the integrity,  value,
utility and  remaining  useful life of the  remaining  Components  after  giving
effect to a  partial  termination  of the Lease  with  respect  to the  Affected
Components.

                                    ARTICLE X

                              Environmental Matters
                              ---------------------

                  SECTION 10.01.  Environmental  Covenants. (a) Until the end of
the Lease Term,  Lessee shall take all reasonable  efforts  pursuant to Lessee's
EH&S  Program  as set forth in Section  17.02 to ensure (i) that each Site,  the
Equipment  and PPE  Collateral  and all aspects  thereof  comply in all material
respects with all applicable  Environmental Laws and Environmental Permits; (ii)
that  no  Hazardous  Substance  is  released,   spilled,  emitted  or  otherwise
discharged  ("Spill") at, on or from any Site,  the Equipment or PPE  Collateral
other than in compliance in all material respects with applicable  Environmental
Laws; and (iii) that each Site,  the Equipment or PPE  Collateral  possesses all
required Environmental Permits.

                                       18
<PAGE>

                  (b)   In  the case of a Spill,  Lessee shall  undertake and
diligently complete all actions necessary to investigate and, if required by law
or good management practice, remediate the Spill.

                  (c)   Lessee  shall  notify  Owner  Participant  within  10
Business  Days  of  learning  of any  of  the  following:  (i) a  violation  (or
combinations  thereof)  of  Environmental  Laws that could  result in the Lessee
incurring  liabilities  in excess of  $50,000;  (ii) a Spill  that  results in a
violation of Environmental  Laws; (iii) any Environmental Claim asserted against
the Lessee,  each Site, the Equipment and PPE  Collateral,  including any notice
alleging  the  violation  of  or  liability  under   Environmental   Laws  which
individually or in the aggregate could result in liability in excess of $50,000;
or (iv) any  fact,  circumstance  or  condition,  on or  under  each  Site,  the
Equipment  and  PPE  Collateral  that  could  reasonably  result  in the  Lessee
incurring liabilities under Environmental Laws in excess of $50,000.

                  SECTION 10.02. EH&S Reporting. Lessee shall provide each Owner
Participant  and  Lessor,  within 90 days after the end of each Fiscal  Year,  a
report certified by Lessee's  Environmental  Health and Safety ("EH&S") director
and Lessee's Chief Financial Officer summarizing material developments involving
EH&S  matters   concerning   Lessee  (the  "Annual  EH&S  Report")  and,   where
appropriate,  a copy of the  relevant  documents  will be provided to each Owner
Participant. The Annual EH&S Report shall include the following:

                  (a) total operation expenses and capital expenses incurred for
         Lessee's ongoing  operations to comply with  Environmental  Laws during
         the Fiscal Year just ended at each Site,  budgets for such  expenses at
         each  Site  for the  current  fiscal  year,  and  projections  for such
         expenses for the succeeding  fiscal year,  which expenses shall also be
         included in the annual  operating  budget provided  pursuant to Section
         17.02 of this Lease;

                  (b) any  investigation  or remediation  undertaken  during the
         prior Fiscal Year to address a Spill or any historic  contamination  at
         any Site  (including a description of the  contamination,  the proposed
         action, the expected time line for completion, and a cost estimate);

                  (c) any  inspections  of the Sites,  the  Equipment or the PPE
         Collateral by Governmental  Authorities  regulating EH&S matters during
         the Fiscal Year just ended,  any notices of violation  issued to Lessee
         by such  regulatory  authorities  during such Fiscal Year,  and a brief
         description of each such notice  (including  the authority  issuing the
         notice,  the subject matter  thereof,  the relief  sought,  and whether
         Lessee believes that such notice could  reasonably  result in a fine or
         penalty in excess of $50,000);

                  (d)  any  administrative  and  judicial   proceedings  brought
         against Lessee  regarding  EH&S matters  pending at any time during the
         Fiscal Year just ended  (including the entity  bringing the proceeding,
         the  subject  matter  thereof,  the  Sites,  the  Equipment  or the PPE
         Collateral  involved,  the relief sought,  and whether Lessee  believes
         that such proceeding  could  reasonably  result in a fine or penalty in
         excess of $50,000);

                                       19
<PAGE>

                  (e) a  summary  of any  violations  of  Environmental  Laws or
         Environmental  Permits (e.g.,  excedences of a wastewater  discharge or
         air-emission  parameters),  identified  by  Lessee  and  reported  to a
         Governmental Authority during the past Fiscal Year, a brief description
         of the  violations  and  whether  Lessee  believes  that such notice or
         combination  thereof,  could reasonably be expected to result in a fine
         or penalty in excess of $50,000;

                  (f) employees' health and safety data, including lost time and
         injuries and  illnesses  reported on the Lessee's  OSHA 200 log for the
         Fiscal Year just ended, and a comparison with industry-wide data;

                  (g) a copy of any  modifications or  enhancements  made to the
         EH&S  Program  pursuant to Section 17.02 of the Lease during the Fiscal
         Year just ended;

                  (h) a  copy  of  any  EH&S  compliance  audit  and  corrective
         action documentation prepared pursuant to the Lessee's EH&S Program;and

                  (i) any legislative, regulatory, or enforcement initiatives of
         which  Lessee  has  knowledge   concerning   EH&S  matters  that  could
         reasonably be expected to materially  affect Lessee's costs,  revenues,
         or  business  plans in the current  Fiscal Year or the four  succeeding
         Fiscal Years.

                  SECTION 10.03. Waiver. Lessee hereby waives, releases, acquits
and forever discharges Lessor, its agents,  employees,  representatives  and any
other person acting on behalf of Lessor, of and from any  Environmental  Claims,
actions, causes of action, demands, rights, damages, costs or expenses,  whether
direct or indirect, known or unknown,  foreseen or unforeseen,  which Lessee now
has or which may arise in the future on  account of or in any way  related to or
in connection  with any past,  present,  or future  physical  characteristic  or
condition of the Sites,  the Equipment  and PPE  Collateral,  including  without
limitation  any Hazardous  Substances in, at, on, under or related to the Sites,
the Equipment and the PPE Collateral, or any violation or potential violation of
any  Environmental  Law,  unless and to the extent caused in whole or in part by
Lessor,  its agents,  representatives  and any other person  acting on behalf of
Lessor.

                                   ARTICLE XI

                             Sublease and Assignment
                             -----------------------

                  SECTION  11.01.   Sublease.   Lessee  shall  have  and  retain
throughout the Term for the Equipment  control over the operation and use of the
Equipment; provided, however, Lessee may without the consent of Lessor, sublease
designated  Components  thereof during the Term,  subject to the following terms
and conditions, at the time the sublease commences:

                  (a) no Material Default shall have occurred and be continuing;

                                       20
<PAGE>

                  (b) Lessee shall  provide  Lessor  notice of such  sublease no
         later than 10 days following Lessee's entering into such sublease which
         notice shall  identify the sublessee,  the location of such  Components
         and the term of the sublease;

                  (c) Lessee  shall  remain  primarily  liable to Lessor for the
         performance  of all the terms of this  Lease  and the  other  Operative
         Documents to the same extent as if such sublease had not occurred;

                  (d)the Guarantor shall remain liable for its obligations under
         the Guarantee to the same  extent as if such sublease had not occurred;

                  (e) such sublease shall be in compliance  with Applicable Laws
         and shall contain  operational,  maintenance and use covenants at least
         as restrictive as those contained herein and shall prohibit any further
         subleasing;

                  (f) such  sublease or other  arrangement  as to any  Component
         shall not extend beyond the Term;

                  (g) any rights created thereby in any Component shall be fully
         and expressly subject and subordinate in all respects to this Lease;

                  (h) Lessee  shall make all  filings  necessary  to protect the
         interests  of  Lessor  in the  relevant  Components  concurrently  with
         entering into such sublease or other arrangement;

                  (i) such sublessee  is  not  the  subject of  any  bankruptcy,
         insolvency, receivership or other similar proceeding;

                  (j) at no time  may  Lessee  have  under  sublease  Components
         having an aggregate Designated Value of more than 30% of total Lessor's
         Cost with sublessees which are not Affiliates of Lessee;

                  (k) no  sublease  shall  contain  purchase  options  for  such
         subleased Components;

                  (l) the sublessee shall not be a tax-exempt entity;

                  (m) any sublease with a term greater than one year,  including
         all renewals,  of Components  with a Designated  Value of $1,000,000 or
         more and all  subleases if  Components  with a Designated  Value in the
         aggregate  of  $5,000,000  or more are  subject  to  sublease  shall be
         collaterally  assigned to Owner Trustee, and the original chattel paper
         copy of each such  sublease  shall be promptly  delivered  to the Owner
         Trustee; and

                  (n) no such sublease  shall  adversely  affect the fair market
         and estimated  residual  value,  utility and remaining  economic useful
         life of the Equipment.

                                       21
<PAGE>

                  SECTION 11.02. Assignment   and  Merger.   Lessee   shall  not
assign  its   interest  or obligations in the Lease except in connection  with a
merger  or  consolidation  permitted  under  Section 5.11  of the  Participation
Agreement.

                                   ARTICLE XII

                                   Inspection
                                   ----------

                  If no Material  Default  exists,  each Owner  Participant  and
Lessor shall have the right at their cost and expense on no less than 5 Business
Days prior written notice (if a Material  Default  exists,  at Lessee's cost and
expense on 24 hours prior written notice ) to Lessee or the relevant  sublessee,
if any,  during normal business hours to (x) inspect the Equipment and (y) visit
the premises  where the  Equipment is located;  provided  that such Person shall
agree to comply with any safety and other  customary  procedures with respect to
visitors  necessary to protect the  integrity of the  manufacturing  process and
such  inspection  or visit shall not  interfere  with the normal  operations  of
Lessee or sublessee, if any.  Notwithstanding anything to the contrary contained
herein or in any Operative Document,  unless a Material Default has occurred and
is continuing or except during the last 12 months of the Term, if Lessee has not
elected to return the Equipment, such inspections,  collectively, may be made no
more  frequently  than once per calendar  year.  Neither  Lessor,  nor any Owner
Participant  shall have any duty to make such inspection nor incur any liability
or obligation by reason of not making any such inspection.

                                  ARTICLE XIII

                             Lease Events of Default
                             -----------------------

                  SECTION 13.01. Lease  Events of Default. The following  events
shall  constitute  Lease Events of Default:

                  (a)  Lessee  shall  fail to make any  payment of Basic Rent or
         Renewal Term Basic Rent when due, and any such failure  shall  continue
         unremedied for a period of 5 Business Days; or

                  (b) Lessee shall fail to make any payment of  Stipulated  Loss
         Value when due, and any such failure shall  continue  unremedied  for a
         period of 5  Business  Days after  receipt by Lessee of written  notice
         that such payment is due; or

                  (c) Lessee shall fail to make any payment of Supplemental Rent
         (other than items  described  in clause (a) or (b)),  when due, and any
         such failure shall continue  unremedied for a period of 5 Business Days
         after receipt by Lessee of written notice that such payment is due; or

                  (d) (i) Lessee  shall  fail to  have  in  effect  the  minimum
         insurance  required  by Section 19.01(a)(i), (ii), (iii) or (v) of this
         Lease; or

                                       22
<PAGE>

                     (ii)  Lessee or Guarantor shall fail to perform or  observe
         any other  material  covenant or  obligation  under Article XIX hereof,
         or Sections 5.09, 5.10, 5.11 of the  Participation  Agreement,  and any
         such failure continues unremedied for a period of 30 days after receipt
         by Lessee of written notice thereof; or

                  (e) either of Lessee or Guarantor shall have failed to perform
         or observe any of its covenants or  agreements  (other than any thereof
         dealt with in any other clause of this Article XIII)  contained in this
         Lease or any other  Operative  Document and such failure shall continue
         unremedied  for  a  period  of 30  days  after  receipt  by  Lessee  or
         Guarantor,  as the case may be,  of  written  notice  of such  failure;
         provided,  that the  foregoing  shall not  constitute  a Lease Event of
         Default,  until  expiration  of a longer  period (not to exceed 90 days
         from  the  expiration  of  such  30-day   period),   if  prior  to  the
         commencement  of such period Lessee or  Guarantor,  as the case may be,
         shall  advise  Lessor that such  default is curable  (other than by the
         payment of money)  which notice  shall set forth a proposed  cure,  and
         during such longer period  Lessee or Guarantor,  as the case may be, is
         making diligent efforts to effect such cure; or

                  (f) any representation or warranty made by Lessee or Guarantor
         herein or in any other Operative  Document (except the  representations
         and warranties set forth in any Tax Indemnity Agreement) shall prove to
         have been  incorrect in any material  respect at the time made or given
         and  remains  a  misrepresentation  or breach  of  warranty  materially
         adverse  to  Lessor  or  any  Owner   Participant   at  the  time  such
         incorrectness  is  discovered;  provided that the  foregoing  shall not
         constitute  a Lease  Event of  Default,  if such  misrepresentation  or
         breach of warranty  is capable of being  cured,  remains  uncured for a
         period of 30 days after  Lessee's or  Guarantor's,  as the case may be,
         receipt of written notice advising Lessee or Guarantor, as the case may
         be, of such incorrectness and during which time Lessee or Guarantor, as
         the  case  may  be,   is   making   diligent   efforts   to  cure  such
         misrepresentation or breach; or

                  (g) the Guarantee fails for any reason to be in full force and
         effect,  is  repudiated  or  rendered  inoperative or unenforceable; or

                  (h) Lessee or Guarantor,  as the case may be, shall commence a
         voluntary case or other proceeding seeking liquidation,  reorganization
         or  other  relief  with  respect  to  itself  or its  debts  under  any
         bankruptcy, insolvency or other similar law now or hereafter in effect,
         or  seeking  the  appointment  of  a  trustee,  receiver,   liquidator,
         custodian or other similar  official of it or any  substantial  part of
         its property, or shall consent to any such relief or to the appointment
         of or taking  possession by any such official in an involuntary case or
         other  proceeding  commenced  against  it,  or  shall  make  a  general
         assignment for the benefit of creditors, or shall fail generally to pay
         its debts as they become due; or

                  (i) an involuntary case or other proceeding shall be commenced
         against Lessee or Guarantor,  as the case may be, seeking  liquidation,
         reorganization  or other  relief with  respect to it or its debts under
         any  bankruptcy,  insolvency  or other  similar law now or hereafter in
         effect or seeking the appointment of a trustee,  receiver,  liquidator,

                                       23
<PAGE>

         custodian or other similar  official of it or any  substantial  part of
         its property,  and an order for relief shall be made in such proceeding
         or such involuntary  case or other proceeding shall remain  undismissed
         and unstayed for a period of 90 consecutive days; or

                  (j) the  acceleration  of  senior  indebtedness  of  Lessee or
         Guarantor in an aggregate  principal  amount in excess of  $10,000,000,
         now existing or hereafter incurred, including the BA Loan Agreement; or

                  (k) Lessor  shall cease to have a first  priority  lien on PPE
         Collateral  subject to the first priority lien on Credit Agreement Term
         Loan Equipment  Collateral or a second priority lien on Working Capital
         Collateral  subject to the first  priority lien pursuant to the BA Loan
         Agreement,  or any  refinancing or refunding  thereof,  subject in each
         case to Permitted Encumbrances.

                                   ARTICLE XIV

                                    Remedies
                                    --------

                  SECTION  14.01.  Effect of Lease  Event of  Default.  Upon the
occurrence  of any Lease Event of Default and at any time  thereafter so long as
the same shall be  continuing,  Lessor may, at its option,  by notice to Lessee,
declare this Lease to be in default (except that, upon the occurrence of a Lease
Event of Default  described  in clause (h) or (i) of  Article  XIII,  this Lease
shall be deemed  declared  in default  immediately  without  any  further act or
notice by  Lessor).  At any time  thereafter,  Lessor  may do one or more of the
following with respect to the Equipment as Lessor in its sole  discretion  shall
elect, to the full extent permitted by Applicable Laws:

                  (a) Lessor may, by notice to Lessee, terminate or  cancel this
         Lease.

                  (b) Lessor  may  demand  that  Lessee,  and Lessee  shall upon
         written  demand of Lessor,  at Lessee's  risk and  expense,  return the
         Equipment  to Lessor in the manner and  condition  required  by Article
         VIII  as  if  the  Equipment  were  being  returned  at  the  Scheduled
         Expiration  Date  applicable to the Equipment,  and Lessor shall not be
         liable  for the  reimbursement  of Lessee  for any  costs and  expenses
         incurred by Lessee in connection therewith.

                  (c) Lessor may, at Lessee's  expense,  enter upon any location
         where the Equipment is located and take immediate  possession of any or
         all of the  Equipment or any part thereof (to the  exclusion of Lessee)
         and remove the Equipment from the location without  liability  accruing
         to Lessor  or its  agent  for or by  reason of such  entry or taking of
         possession  or  removal  (whether  for any damage to  property,  or the
         restoration  in  respect  of such  damage,  caused  by such  taking  or
         otherwise).

                  (d) Lessor, with respect to any or all Equipment, by notice to
         Lessee specifying a payment date not earlier than ten days or more than
         30 days  from the date of such  notice,  may  require  Lessee to pay to
         Lessor  and Lessee  hereby  agrees  that it will pay

                                       24
<PAGE>

         to Lessor, on the payment date specified in such notice,  as liquidated
         damages for loss of a bargain, and not as a penalty, and in lieu of any
         further payments of Basic  Rent  hereunder,  an  amount  (reduced  with
         respect to the Equipment  by  any  amounts previously  paid  by  Lessee
         pursuant to subparagraph (e) below with respect to the Equipment) equal
         to the sum of:

                           (i) all Overdue Rent as of the Stipulated  Loss Value
                  Date next  preceding  such date for payment  specified in such
                  notice; plus

                           (ii) an amount equal to the Stipulated Loss Value for
                  all the Equipment  calculated as of the Stipulated  Loss Value
                  Date next  preceding  the date for  payment  specified  in the
                  notice; plus

                           (iii)  interest,  if any, at the  applicable  Overdue
                  Rate on the  amount of such  Basic  Rent and  Stipulated  Loss
                  Value  from  the  Stipulated  Loss  Value  Date  as  of  which
                  Stipulated  Loss  Value is  computed  until the date of actual
                  payment; plus

                           (iv)  all   Supplemental   Rent   payable  by  Lessee
                  hereunder before, after or during the exercise of this remedy,
                  including  all  reasonable  legal fees and  expenses and other
                  costs and expenses incurred by Lessor or any Owner Participant
                  by reason of the  occurrence  of any Lease Event of Default or
                  the exercise of the  remedies of Lessor with  respect  thereto
                  and  interest  at the  applicable  Overdue  Rate  on all  such
                  Supplemental  Rent  from the date due until the date of actual
                  payment.

         Upon such payment of liquidated damages Lessor shall transfer to Lessee
         "as-is,  where-is"  (without any  representation,  recourse or warranty
         whatsoever  other than the  absence of Lessor  Liens)  Lessor's  entire
         interest  in the  Equipment.  Lessor  and  Lessee  shall  (at  Lessee's
         expense)  execute and deliver such documents  evidencing such transfer,
         termination  and release and take such  further  action as either party
         shall reasonably request to implement such transfer.

                  (e) Lessor or its agent may sell its interest in the Equipment
         pursuant to this  subparagraph  (e) and, if prior thereto  Lessor shall
         not have  exercised  its rights under  subparagraph  (g) below  (unless
         Lessor has not been paid  thereunder and has rescinded such  exercise),
         Lessor may  demand by notice to Lessee  specifying  a payment  date not
         earlier  than 15 days  from the date of such  notice  that  Lessee  pay
         Lessor,  and Lessee shall pay to Lessor, as liquidated  damages for the
         loss of a bargain and not as a penalty,  in lieu of all Basic Rent with
         respect  to the  Equipment  due after the date on which such sale shall
         occur, an amount equal to the sum of:

                           (i) all  unpaid  Overdue  Rent  payable or that would
                  have been  payable  with  respect to the  Equipment  as of the
                  Stipulated  Loss Value Date next  preceding  the date on which
                  such sale shall  occur (or,  if the sale shall occur on a Rent
                  Payment Date, as of such Rent Payment Date); plus

                                       25
<PAGE>

                           (ii) all Supplemental  Rent for the Equipment payable
                  by Lessee  hereunder  before,  after or during the exercise of
                  this remedy,  including all reasonable legal fees and expenses
                  and other costs and  expenses  incurred by Lessor or any Owner
                  Participant  by reason of the occurrence of any Lease Event of
                  Default or the exercise of the remedies of Lessor with respect
                  thereto; plus

                           (iii)  interest on the amounts  described  in clauses
                  (i),  (ii) and (iv) at the  Overdue  Rate from the  Stipulated
                  Loss Value Date as of which  Stipulated  Loss Value shall have
                  been computed until the date of actual payment; plus

                           (iv)  the excess, if any, of

                                    (A)  the   Stipulated   Loss  Value  of  the
                           Equipment as of the  Stipulated  Loss Value Date next
                           preceding  the date on which  such sale  shall  occur
                           (or,  if the sale shall  occur on a  Stipulated  Loss
                           Value Date, as of such  Stipulated  Loss Value Date),
                           over

                                    (B) the net proceeds of such sale.

         If Lessor  sells its  interest in any of the  Equipment  pursuant  this
         paragraph  (e),  this Lease with respect to the Equipment so sold shall
         terminate upon such sale. Lessee's obligation to pay liquidated damages
         pursuant to this  subparagraph  (e) shall  survive any total or partial
         termination of this Lease.

                  (f) Lessor may hold, use, operate, lease (whether for a period
         greater  or less than the  balance  of what  would  have been the Basic
         Term) to others the Equipment,  all on such terms and conditions and at
         such  place or places as Lessor  may  determine,  free and clear of any
         rights of Lessee and without any duty to account to Lessee with respect
         to such  action or  inaction  or any  proceeds  with  respect  thereto.
         Lessee's obligation to pay Basic Rent with respect to the Equipment for
         any period  after  Lessee  shall have been  deprived  of control of the
         Equipment pursuant to this subparagraph (f) shall be reduced by the net
         proceeds,  if any, received by Lessor from leasing the Equipment to, or
         otherwise  permitting  its use by, any Person other than Lessee for all
         or any portion of such period.

                  (g) Lessor may,  with respect to any or all of the  Equipment,
         at any time prior to the time that  Lessor's  interest in the Equipment
         shall have been  transferred  to Lessee  pursuant to  subparagraph  (d)
         above or that  Lessor's  interest  in the  Equipment  is sold by Lessor
         pursuant to subparagraph (e) above, demand that Lessee pay to Lessor in
         respect of the  Equipment,  and Lessee shall pay to Lessor on the first
         Business Day occurring at least 10 days after, in the case of subclause
         (x) or (y) of clause (iv) below,  the  determination of the Fair Market
         Sales Value or Fair Market Rental Value, as the case may be, or, in the
         case of  subclause  (z) of clause (iv) below,  the later of the date of
         such demand and the date of determination of the amount due thereunder,
         as  liquidated  damages  for loss of a bargain and not as a penalty (in
         lieu of all  payments  of Basic  Rent  becoming  due after the  payment
         date), an amount equal to the sum of:

                                       26
<PAGE>

                           (i) all unpaid  Overdue Rent due as of the Stipulated
                  Loss Value Date for the Equipment  next  preceding the date of
                  payment under this subparagraph (g) is due; plus

                           (ii)  all  Supplemental  Rent  with  respect  to  the
                  Equipment payable by Lessee hereunder before,  after or during
                  the exercise of this remedy,  including all  reasonable  legal
                  fees and  expenses  and other costs and  expenses  incurred by
                  Lessor,  or any Owner  Participant by reason of the occurrence
                  of any Lease Event of Default or the  exercise of the remedies
                  of Lessor with respect thereto; plus

                           (iii)  interest  on the amounts  described  in clause
                  (i),  (ii) and (iv) at the  applicable  Overdue  Rate from the
                  scheduled payment date to the date of actual payment; plus

                           (iv) whichever of the following amounts as Lessor, in
                  its sole  discretion,  shall  specify  in such  notice for the
                  Equipment:  (x) an amount equal to the excess,  if any, of the
                  Stipulated  Loss Value for the  Equipment,  computed as of the
                  Stipulated  Loss Value Date next  preceding  the date on which
                  such payment is due,  over the Fair Market Rental Value of the
                  Equipment   for  the   remainder   of  the  Basic  Term  after
                  discounting  such  Fair  Market  Rental  Value   semi-annually
                  (effective  on the Rent Payment  Dates) to present worth as of
                  the  scheduled  payment date at the  Applicable  Rate;  (y) an
                  amount equal to the excess,  if any, of the sum of  Stipulated
                  Loss Value for the Equipment as of such  Stipulated Loss Value
                  Date over the Fair Market Sales Value of the Equipment; or (z)
                  an amount  equal to the excess of (A) the present  value as of
                  the  Rent  Payment  Date  specified  in  such  notice  of  all
                  installments  of Basic Rent  until the end of the Basic  Term,
                  discounting semi-annually at the Applicable Rate, over (B) the
                  present  value as of such Rent Payment Date of the Fair Market
                  Rental Value of the Equipment until the end of the Basic Term,
                  discounted semi-annually at the Applicable Rate.

         Upon such payment of liquidated damages, the Lease shall terminate with
         respect  to the  Equipment  and Lessor and  Lessee  shall  execute  and
         deliver such  documents  evidencing  such  termination  as either shall
         reasonably request.

                  (h)  Lessor  may  exercise  any  remedy  available  under  the
         Security  Documents and shall apply any net proceeds realized therefrom
         toward payment of the amounts due hereunder.

                  (i) Lessor may (i)  exercise  any other right or remedy  which
         may be  available  to it  under  Applicable  Laws  or (ii)  proceed  by
         appropriate  court  action to  enforce  the terms  hereof or to recover
         damages  for the  breach  hereof  or to  rescind  this  Lease as to the
         Equipment or the Equipment.

                  SECTION 14.02.  Determinations  of Fair Market Sales Value and
Fair Market Rental Value. All determinations of Fair Market Sales Value and Fair
Market Rental Value (each, a "Value") pursuant to this Article XIV shall be made
using the Appraisal Procedure;

                                       27
<PAGE>

provided,  however,  anything  in this Lease or any  Operative  Document  to the
contrary  notwithstanding,  (i) if the Equipment has not been returned by Lessee
to  Lessor  pursuant  to  the  terms  hereof,  or if  the  Equipment  cannot  be
repossessed  by Lessor,  the Fair Market Sales Value and the Fair Market  Rental
Value of the  Equipment  for  purposes of this Article XIV shall be deemed to be
zero,  and (ii) if the Equipment has been sold pursuant to this Article XIV, the
Fair Market Sales Value of the Equipment  shall be deemed to be the net proceeds
received from the Equipment in such sale.

                  SECTION 14.03. No Relief from  Termination.  No termination of
this Lease,  in whole or in part,  or exercise of any remedy  under this Article
XIV shall, except as specifically provided herein.  relieve Lessee of any of its
liabilities and  obligations  under this Article XIV, all of which shall survive
such  termination,  repossession or exercise of remedy.  At any sale of Lessor's
interest in the  Equipment  or any part  thereof  pursuant to this  Article XIV,
Lessor and any Owner Participant may bid for and purchase such property.

                  SECTION  14.04.  Remedies  Cumulative.   To  the  full  extent
permitted by Applicable Laws and except as expressly  provided herein,  each and
every right, power and remedy herein  specifically given to Lessor in this Lease
shall be  cumulative  and shall be in addition to every other  right,  power and
remedy herein  specifically given or now or hereafter existing at law, in equity
or by statute,  and each and every right, power and remedy whether  specifically
given  herein or otherwise  existing  may be exercised  from time to time and as
often and in such order as may be deemed  expedient by Lessor,  and the exercise
or the  beginning  of the exercise of any power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by Lessor or in the exercise of any
right,  power or remedy or in the  pursuit of any remedy  shall  impair any such
right, power or remedy or be construed to be a waiver of any default on the part
of Lessee or to be an  acquiescence  therein.  No express  or implied  waiver by
Lessor of any Lease Event of Default shall in any way be, or be construed to be,
a waiver of any future or  subsequent  Lease  Event of  Default.  Lessee  hereby
waives any mandatory requirement of law, now or hereafter in effect, which might
limit or modify the remedies herein provided,  to the extent that such waiver is
effective under Applicable Laws.

                                   ARTICLE XV

                                  Right To Cure
                                  -------------

                  If Lessee shall fail to make any payment of Rent to be made by
it hereunder or shall fail to perform or comply with any of its other agreements
contained  herein or in any other  Operative  Document or in any other agreement
entered into in connection therewith, Lessor may (but shall not have any duty to
do so) itself make such  payment or perform or comply with such  agreement,  and
the amount of such payment and the amount of the  reasonable  expenses of Lessor
(including  attorney's  fees and  expenses)  incurred  in  connection  with such
payment or the performance of or compliance with such agreement, as the case may
be,  together  with  interest

                                       28
<PAGE>

thereon at the  Overdue  Rate,  shall be deemed  Supplemental  Rent,  payable by
Lessee upon written demand.

                                   ARTICLE XVI

                                Purchase Options
                                ----------------

                  SECTION 16.01. Early Buyout Option.
                                 -------------------

                  (a) Option to Purchase.  Lessee shall have the right, upon not
less than 180 days nor more than 365 days prior  written  irrevocable  notice to
Lessor,  to purchase all but not less than all of the  Equipment on the EBO Date
and at the EBO Price set forth in the Lease Supplements.  As a condition to such
purchase,  Lessee shall be obligated to pay, in addition to the  installment  of
the EBO Payment  Amount for such  Equipment  due on each EBO Payment  Date,  (i)
Overdue  Rent  with  respect  to such  Equipment  as of the EBO  Date  for  such
Equipment,  and (ii) any other  Supplemental Rent due and payable on or prior to
the EBO Date for such Equipment.

                  (b) Conveyance. Upon payment by Lessee of the amounts required
to be paid on the EBO Date  for any  Equipment  pursuant  to  Section  16.01(a),
Lessor shall execute and deliver such  documentation as is reasonably  requested
by Lessee to transfer all of Lessor's  right,  title and interest in and to such
Equipment to Lessee "as-is, where-is",  without any representation,  recourse or
warranty except as to the absence of Lessor Liens.

                  (c) Deferred EBO Payment  Amount.  In the case of any purchase
of the Equipment pursuant to Section 16.01(a), Lessee may, at its option, either
(i) pay the aggregate of all EBO Payment  Amounts for such  Equipment on the EBO
Date, or (ii) so long as no Lease Default or Lease Event of Default has occurred
and is then  continuing,  pay each EBO Payment Amount in the installments on the
applicable EBO Payment Date specified in the Lease Supplement.

                  Lessee shall elect its payment option in the applicable notice
given  pursuant to Section  16.01(a).  If Lessee elects the option  specified in
clause (ii) above, then with respect to the Equipment, on the EBO Date (provided
all payments due thereon have been made):

                  (i) this Lease shall be deemed  terminated as a true lease and
         this agreement shall continue as a lease intended for security, mutatis
         mutandis,  notwithstanding  any  provision  hereof,  creating  a  first
         priority  security  interest in the  Equipment  securing for Lessor the
         obligation of Lessee to make the remaining installments,

                  (ii)    Articles  VII, VIII, IX and XVI shall be of no further
         force and effect, and

                  (iii)    the Basic Rent shall cease to accrue.

                                       29
<PAGE>

Upon payment by Lessee of the last such installment, Owner Trustee shall execute
and  deliver to Lessee a release  of the  security  interest  so  retained.  All
reasonable costs and expenses of Owner Trustee or any Owner Participant incurred
in connection with Lessee's  election under this Section  16.01(c) shall be paid
by Lessee.  Lessee  shall,  at its own  expense,  take such action and make such
filings as necessary or appropriate to perfect and protect Lessor's  interest in
the Equipment.

                  SECTION 16.02. End of Term Purchase Option.
                                 ---------------------------

                  (a) Return  Notice.  Lessee shall notify Lessor in writing not
later than 12 months prior to the Scheduled Expiration Date whether Lessee shall
return the  Equipment  pursuant to Article  VIII hereof or elect to purchase the
Equipment  pursuant to this Section  16.02 or renew the term pursuant to Section
16.03. If Lessee fails to deliver such notice as herein  required,  Lessee shall
be deemed to have elected to not return the Equipment.  If Lessee has elected or
is deemed to have elected not to return the Equipment, and Lessee fails to elect
to purchase the Equipment  pursuant to Section  16.02(b)  hereof or to renew the
term of the Lease  pursuant to Section 16.03  hereof,  Lessee shall be deemed to
elect to renew the Lease  pursuant to Section 16.03 unless no renewal  option is
available  under the terms of Section  16.03,  in which  event,  Lessee shall be
deemed to have elected to purchase the Equipment  pursuant to Section  16.02(b).
All such elections or deemed elections are  irrevocable.  If Lessee elects or is
deemed to have  elected to purchase  the  Equipment or to renew the term of this
Lease, then Lessee may commence  discussions with Lessor as to Fair Market Sales
Value or Fair Market  Rental  Value of the  Equipment,  and  failing  agreement,
either Lessee or Lessor may request a  determination  of Fair Market Sales Value
or Fair Market Rental Value pursuant to the Appraisal Procedure.

                  (b) Election to Purchase.  Provided  Lessee has not elected to
return the  Equipment  pursuant to Section  16.02(a)  or given a Renewal  Notice
pursuant to Section 16.03, Lessee shall have the option, upon irrevocable notice
given not less than 90 days prior to the Scheduled Expiration Date applicable to
any Equipment,  to purchase (the "Purchase Option") all but not less than all of
Lessor's  rights in such  Equipment  at a price equal to the Fair  Market  Sales
Value thereof at such Scheduled  Expiration Date.  Lessee's notice shall specify
Lessee's  proposed  Fair Market Sales Value for such  Equipment.  Lessor  shall,
within 30 days of receipt of  Lessee's  notice,  inform  Lessee as to whether it
agrees with the proposed  Fair Market  Sales  Value.  If such price has not been
previously  determined,  either  by  agreement  or  pursuant  to  the  Appraisal
Procedure, then the Fair Market Sales Value shall be determined by the Appraisal
Procedure.

                  (c)  Payment;  Conditions.  Provided  Lessee  has  elected  to
purchase the Equipment pursuant to Section 16.02(b), Lessee shall pay to Lessor,
on the last day of the Term for the Equipment, the agreed-upon Fair Market Sales
Value  for the  Equipment  plus any  Overdue  Rent as of such date and any other
Supplemental Rent then due and unpaid with respect to such Equipment.

                  (d)  Reconveyance  . Upon  payment  by Lessee  of the  amounts
called for in paragraph  (c) in respect of any  Equipment,  Lessor shall execute
and deliver such documentation

                                       30
<PAGE>

as is reasonably  requested by Lessee to transfer all of Lessor's  right,  title
and interest in and to such Equipment to Lessee "as-is,  where-is",  without any
representation, recourse or warranty except as to the absence of Lessor Liens.

                  SECTION 16.03. Renewal Option.
                                 --------------

                  (a)  Renewal  Option.  So  long  as no  Material  Default  has
occurred and is  continuing  and  provided  Lessee has not elected to return the
Equipment  pursuant  to Section  16.02(a) or elected to  exercise  the  Purchase
Option pursuant to Section 16.02(b),  Lessee shall have the option,  upon notice
(a "Renewal  Notice")  given not less than 90 days prior to the end of the Basic
Term or any Renewal Term applicable to any Equipment,  to extend this lease (the
"Renewal Option") in respect of all but not less than all of the Equipment for a
term of 2 years  (the  "Renewal  Term");  provided,  however,  there  shall be a
maximum of 4 successive Renewal Terms;  provided,  further, that no Renewal Term
may extend  beyond  the term of any Site  Lease nor exceed 80% of the  remaining
economic  useful life of the  Equipment as  determined  at the beginning of such
Renewal Term by the Appraisal Procedure.  If Lessee is deemed to have elected to
renew this Lease, the Renewal Term shall be 2 years.

                  (b) Computation of Renewal Term Basic Rent.  Lessee shall, not
less than 90 days prior to the  commencement  of each Renewal Term applicable to
such Equipment,  inform Lessor of Lessee's calculation of the Fair Market Rental
Value for such Equipment for such Renewal Term. Renewal Term Basic Rent shall be
equal  to 105% of the Fair  Market  Rental  Value.  If such  price  has not been
previously  determined,  either  by  agreement  or  pursuant  to  the  Appraisal
Procedure,  then Lessor  shall,  within 30 days of receipt of  Lessee's  notice,
inform  Lessee as to whether it agrees  with the  proposed  Fair  Market  Rental
Value.  If Lessor does not agree,  and if Lessee and Lessor are unable to agree,
the Fair Market Rental Value shall be determined by the Appraisal Procedure.

                  (c) Adjustment of Stipulated  Loss Value.  During each Renewal
Term, the  Stipulated  Loss Value for the Equipment as of each Rent Payment Date
during such Renewal Term shall be an amount equal to the Fair Market Sales Value
of such  Equipment as determined at the beginning of such Renewal Term,  reduced
on a  straight-line  basis from such Fair Market Sales Value as so determined to
the  estimated  Fair  Market  Sales Value of such  Equipment  at the end of such
Renewal Term (allowing for inflation and deflation). If within 30 days after the
giving by Lessee of the  Renewal  Notice for a Renewal  Term,  Lessee and Lessor
shall not have agreed on the Fair Market Sales Value of the  Equipment as of the
beginning  and end of such  Renewal  Term,  the Fair Market Sales Value shall be
determined by the Appraisal Procedure.

                  (d)  Amendments to this Lease.  Lessor and Lessee hereby agree
to enter into an amendment to the Lease on or prior to the end of the Basic Term
or any Renewal Term, as the case may be,  applicable to such  Equipment in order
to make such  changes  thereto as may be required to give effect to such Renewal
Term on the terms contemplated hereby.

                                       31
<PAGE>

                                  ARTICLE XVII

                               Further Assurances
                               ------------------

                  SECTION 17.01. Further Action by Lessee. Lessee and Lessor, at
Lessee's expense, shall promptly and duly execute and deliver to Lessee, each of
the Owner  Participants  and  Lessor,  as the case may be,  such  documents  and
assurances and take such further action as Lessor or Lessee, as the case may be,
may from time to time  reasonably  request  in order to carry out the  intent of
this Lease and the other  Operative  Documents  and to establish and protect the
rights  and  remedies  created  or  intended  to be  created  in favor of Lessor
hereunder  and  thereunder,  to  establish,  perfect and  maintain the rights of
Lessor in and to the Equipment.  Without limiting the preceding sentence, Lessee
shall record or file counterparts or appropriate memoranda of this Lease or such
financing  statements or other  documents  with respect to this Lease and Lessor
agrees  to  execute  and  deliver  promptly  such  of  the  foregoing  financing
statements or other documents as may require execution by Lessor. Lessee, at its
expense,  agrees  to  cause  the  timely  execution,   delivery  and  filing  of
continuation  statements as to the financing statements  theretofore filed so as
to preserve the security interest of the Owner Trustee.

                  SECTION 17.02. Environmental, Health and Safety Program.
                                 ----------------------------------------

                  (a) EH&S  Program.  Lessee,  at Lessee's sole cost and expense
shall  establish,   implement  and  maintain  a  formal,  comprehensive  written
environmental, health and safety program ("EH&S Program") aimed at ensuring that
Lessee's operations at the Sites are conducted in compliance with all applicable
Environmental  Laws. The EH&S Program shall include:  (i) identification of EH&S
concerns  associated with Environmental Laws applicable to Lessee's  operations;
(ii)  adoption and  implementation  of an EH&S  management  system to assess and
control the environmental  impacts and compliance status of Lessee's operations;
(iii)  implementation  of periodic  EH&S audits by or involving  an  independent
third-party  consultant with documented  corrective  action responding to audits
(which  audits  shall be  conducted  on a frequency  of not less than once per 2
years);   (iv)  employee  EH&S   committees,   for  ensuring   compliance   with
Environmental  Laws;  and (v) such other  requirements  as Lessor may reasonably
require from Lessee from time to time.  The EH&S  Program  must  involve  senior
management, include a formal written corporate EH&S policy, and identify by name
or position the person with overall responsibility for EH&S compliance,  as well
as those person(s) who are responsible for specific EH&S areas.

                  (b) Provision of Copy.  Lessee shall,  within 120 days of this
Agreement,  provide each Owner  Participant  with a copy of the EH&S Program for
Owner  Participant's  review and comment.  Each Owner  Participant  will provide
written  comments  within 90 days of receipt of a copy of the EH&S  Program from
Lessee. All reasonable  comments made by Owner Participant shall be incorporated
into the final EH&S Program.

                  (c)  Review.  During  the Term of the Lease,  Lessee  shall at
least  annually  review and evaluate the  effectiveness  of the EH&S Program and
make necessary modifications

                                       32
<PAGE>

or  enhancements to reduce EH&S impacts and maintain  continued  compliance with
Environmental Laws.

                                  ARTICLE XVIII

                                  Chattel Paper
                                  -------------

                  SECTION 18.01. Chattel Paper. To the extent, if any, that this
Lease or any Lease  Supplement  constitutes  chattel  paper or other  collateral
within  the  meaning of the  Uniform  Commercial  Code (or other law  respecting
security  interests) as in effect in any  applicable  jurisdiction,  no security
interest in Lessor's  interest under this Lease or any such Lease Supplement may
be created  through the transfer or possession of any  counterpart of this Lease
or such Lease  Supplement  other than the original  executed  counterpart  No. 1
hereof or thereof.

                                   ARTICLE XIX

                                    Insurance
                                    ---------

                  SECTION 19.01. Insurance.
                                 ---------

                  (a) Coverage. Without limiting any of the other obligations or
liabilities  of Lessee under this  Agreement,  Lessee shall,  during the term of
this  Agreement,  carry and maintain,  at its own expense,  at least the minimum
insurance  coverage  set forth in this  Section  19.01.  All  insurance  carried
pursuant  to this  Section  19.01 shall be placed  with such  insurers  having a
minimum  A.M.  Best  rating of A:X to A-:X,  and be in such  form,  with  terms,
conditions, limits and deductibles as shall be reasonably acceptable to Lessor.

                  (i) All Risk  Property  Insurance.  Lessee shall  maintain all
         risk  property  insurance  covering  each and  every  component  of the
         Equipment  and the tangible PPE  Collateral  against  physical  loss or
         damage,  including  but not  limited  to fire  and  extended  coverage,
         collapse,  flood, earth movement and comprehensive boiler and machinery
         coverage (including electrical  malfunction and mechanical  breakdown).
         Coverage  shall be written for the then current  Stipulated  Loss Value
         for  the  Equipment  and  for  replacement  cost  value  in  an  amount
         acceptable  to Lessor for the PPE  Collateral.  Such  insurance  policy
         shall  contain an agreed  amount  endorsement  waiving any  coinsurance
         penalty and shall include  expediting expense coverage in an amount not
         less than $1,000,000.

                  (ii) Business  Interruption.  As an extension of the insurance
         required  under  subsection  (a)(i),  Lessee  shall  maintain  business
         interruption  insurance  in an agreed  amount  equal to  projected  net
         profits,  and continuing  expenses (including the lease payments due on
         the  Equipment).  Such  coverage  shall  also  provide  for  contingent
         business  interruption  covering the major  suppliers  and customers of
         Lessee.  Such

                                       33
<PAGE>

         insurance shall also cover service interruption and extra expenses each
         in an amount not less than $1,000,000.

                  (iii) Comprehensive General Liability Insurance.  Lessee shall
         maintain  comprehensive  general  liability  insurance  written  on  an
         occurrence  basis (i.e. not claims made basis) with a limit of not less
         than  $1,000,000.  Such coverage shall include,  but not be limited to,
         premises/operations,  explosion,  collapse, underground hazards, sudden
         and   accidental   pollution,    contractual   liability,   independent
         contractors,   products/completed   operations,   property  damage  and
         personal  injury  liability.   Such  insurance  shall  not  contain  an
         exclusion for punitive or exemplary damages where insurable by law.

                  (iv) Workers' Compensation/Employer's  Liability. Lessee shall
         maintain Workers'  Compensation  insurance in accordance with statutory
         provisions covering accidental injury,  illness or death of an employee
         of Lessee while at work or in the scope of his  employment  with Lessee
         and Employer's  Liability in an amount not less than  $1,000,000.  Such
         coverage shall not contain any occupational disease exclusions; and

                  (v) Excess/Umbrella Liability. Lessee shall maintain liability
         insurance in an amount not less than  $25,000,000  when aggregated with
         general  liability  insurance  coverage  written on an occurrence basis
         (i.e. not claims made basis),  providing  coverage limits excess of the
         insurance  limits  required  under  subsections  (a)(iii)  and  (a)(iv)
         employer's liability only. Such insurance shall follow form the primary
         insurances  and drop down in case of exhaustion  of  underlying  limits
         and/or  aggregates.  Such insurance  shall not contain an exclusion for
         punitive or exemplary damages where insurable under law.

                  Notwithstanding  anything  to the  contrary  in  this  Section
19.01, (x) Lessee may self-insure (through deductibles,  retention or otherwise)
against  damage to the  Equipment  and the PPE  Collateral  in an amount for any
12-month  policy  period  not  greater  than  $1,000,000,  and  (y)  Lessee  may
self-insure (through deductibles,  retention or otherwise) against comprehensive
general  liability  insurance  in an amount for any 12-month  policy  period not
greater than $1,000,000;

                  (b)  Endorsements.  Lessee shall cause all insurance  policies
carried and  maintained in accordance  with this Section 19.01 to be endorsed as
follows:

                  (i)  Lessee  shall be the named  insured  and Lessor and Owner
         Participants  shall be named as additional  named insureds with respect
         to policies described in subsections  (a)(i) and (a)(ii).  Lessor shall
         be named as loss  payee  with  respect to the  insurance  described  in
         subsection  (a)(i).  Collateral Agent (as defined in the  Intercreditor
         Agreement) shall be loss payee with respect to the insurance  described
         in subsection  (a)(ii).  Such  additional  named insured and loss payee
         status afforded to Lessor,  Owner  Participants and Collateral Agent in
         such insurance  policies  described in  subsections  (a)(i) and (a)(ii)
         shall apply only with respect to the Equipment and the PPE  Collateral.
         Lessee  shall be the named  insured  and Lessor and Owner  Participants
         shall be  additional  insureds  with  respect to policies  described in
         subsections (a)(iii), (a)(iv) to the extent

                                       34
<PAGE>

         allowed by law, and (a)(v).  It shall be understood that any obligation
         to pay premiums, shall be the sole obligation  of Lessee  and  not that
         of Lessor and Owner Participants; and

                  (ii) with respect to policies  described in subsections (a)(i)
         and (a)(ii),  the interests of Lessor and Owner  Participants shall not
         be  invalidated  by any  action or  inaction  of  Lessee,  or any other
         person,  nor by any foreclosure or other  proceedings or notice of such
         relating to the property and shall insure Lessor and Owner Participants
         regardless of any breach or violation by Lessee or any other person, of
         any warranties, declarations or conditions of such policies; and

                  (iii) inasmuch as the liability  policies are written to cover
         more than one insured,  all terms conditions,  insuring  agreements and
         endorsements,  with the  exception  of the limits of  liability,  shall
         operate in the same manner as if there were a separate  policy covering
         each insured; and

                  (iv)  the  insurers  thereunder  shall  waive  all  rights  of
         subrogation against Lessor and Owner Participants,  any right of setoff
         or counterclaim and any other right to deduction, whether by attachment
         or otherwise; and

                  (v)  such  insurance   shall  be  primary   without  right  of
         contribution of any other  insurance  carried by or on behalf of Lessor
         and Owner  Participants  with respect to their interests as such in the
         Equipment; and,

                  (vi) if such insurance is canceled for any reason  whatsoever,
         including nonpayment of premium, or any changes are initiated by Lessee
         or carrier which affect the interests of Lessor and Owner Participants,
         such  cancellation  or change  shall not be  effective as to Lessor and
         Owner  Participants  until 30 days,  except for  non-payment of premium
         which shall be 10 days,  after receipt by Lessor of written notice sent
         by registered mail from such insurer.

                  (c) Certifications.  On the  Closing Date,  and at each policy
renewal,  but not less than  annually,  Lessee shall provide to Lessor and Owner
Participants  approved  certification  from  each  insurer  or by an  authorized
representative  of  each  insurer.   Such   certification   shall  identify  the
underwriters,  the type of insurance, the limits, deductibles,  and term thereof
and shall specifically list the special provisions delineated for such insurance
required for this Section 19.01.

                  (d) Insurance Report.  Concurrently with the furnishing of all
certificates  referred to in this Section 19.01, Lessee shall furnish Lessor and
Owner  Participants  with an  opinion  from  an  independent  insurance  broker,
acceptable to Lessor (provided that MJM Global Services, Inc. shall be deemed to
be acceptable to Lessor),  stating that all premiums then due have been paid and
that, in the opinion of such broker,  the insurance then maintained by Lessee is
in accordance with this section.  Furthermore,  upon its first  knowledge,  such
broker shall advise Lessor  promptly in writing of any default in the payment of
any  premiums or any other act or  omission,  on the part of any  person,  which
might  invalidate or render  unenforceable,  in whole or in part,  any insurance
provided by Lessee hereunder.

                                       35
<PAGE>

                  (e) General. Lessor shall be entitled, upon reasonable advance
notice,  to review  Lessee's  insurance  policies  carried and  maintained  with
respect to the Equipment and the PPE Collateral and Lessee's  obligations  under
this Section 19.01. Upon request, Lessee shall furnish Lessor with copies of all
insurance  policies,  binders,  and  cover  notes  or  other  evidence  of  such
insurance. Notwithstanding anything to the contrary herein, no provision of this
Section  19.01 or any  provision  of this  Agreement  shall impose on Lessor and
Owner Participants any duty or obligation to verify the existence or adequacy of
the insurance coverage maintained by Lessee, nor shall Lessor be responsible for
any  representations  or  warranties  made  by or on  behalf  of  Lessee  to any
insurance broker, company or underwriter. Lessor, at its sole option, may obtain
such  insurance  if not  provided  by Lessee  and in such  event,  Lessee  shall
reimburse Lessor upon demand for the cost thereof together with interest.

                  SECTION 19.02. Adjustment of Claims; Payment
                                 -----------------------------

                  (a) No Event of Default.  Unless a Material Default shall have
occurred and be continuing,  Lessee shall have the exclusive  right to negotiate
and adjust all claims  against  insurers for damage to or loss of the Equipment,
or for third-party public liability with respect to the Equipment, which in each
case, in the  reasonable  opinion of Lessee,  would be for an amount equal to or
less  than  $5,000,000.  With  respect  to any  such  claim  which  in  Lessee's
reasonable  opinion would be for an amount greater than $5,000,000  Lessee shall
provide  Lessor  prompt  written  notice of such claim and Lessor shall within 5
Business Days of receipt of such notice inform Lessee  whether  Lessor elects to
participate in the  negotiation and adjustment of any such claim. If Lessor does
not provide  Lessee notice of its election  within such  5-Business  Day period,
Lessee  shall have the  exclusive  right to  negotiate  and adjust such  claims.
Subject  to  subsection  (b)  of  this  Section  19.02,  insurance  proceeds  of
$5,000,000  or less per  occurrence  shall be paid to Lessee,  or if received by
Lessee may be retained by Lessee. If the property  insurance proceeds in respect
of the Equipment for any occurrence  are in excess of $5,000,000,  such proceeds
shall be paid to Lessor and,

                  (i) if Lessee has elected to repair or replace the  Equipment,
         upon the submission by Lessee to Lessor of invoices,  contracts,  bills
         of lading  or other  sufficient  proofs of the costs of each  repair or
         replacement,  Lessor shall promptly pay such proceeds to Lessee to fund
         the costs of repairing,  restoring or replacing the damaged  Components
         periodically upon written application from Lessee certifying the amount
         of such funding and  specifying  in  reasonable  detail the costs to be
         incurred,  with  the  remainder  being  remitted  to  Lessee  upon  the
         completion of the repair, restoration or replacement,

                  (ii) if such proceeds  were paid as a consequence  of an Event
         of Loss and  Lessee  has  elected to comply  with  alternative  (ii) of
         Section  9.01(b)  hereof or Lessor,  shall hold such  proceeds  pending
         application as provided in said alternative (ii), or

                  (iii) if such proceeds were paid as a consequence  of an Event
         of  Loss  and  Lessee  has  elected  or  is  required  to  comply  with
         alternative  (i) of Section  9.01(b)  hereof or Lessor  shall hold such
         proceeds,  such proceeds shall be deemed to be cash collateral provided
         by Lessee,  and Lessor shall pay such  proceeds to Lessee  periodically
         upon

                                       36
<PAGE>

         written  application  by  Lessee to  reimburse  Lessee for  the cost of
         Components  replaced to date,  with remainder  being remitted to Lessee
         upon the completion of the substitution.

Any amounts held by Lessor (which  amounts shall be held by Lessor,  as the case
may  be,  as  security  for  the   obligation  of  Lessee  to  make  repairs  or
replacements, as the case may be) and any proceeds or payments (and net earnings
thereon)  remaining after such repairs or  replacements  have been made shall be
paid to Lessee.  Any amounts which are held by Lessor pending  payment to Lessee
shall,  until  paid to  Lessee  as  provided  herein  be  invested  by Lessor in
accordance with the provisions of Section 6.06 of the Trust Agreement.  Any gain
(including interest received) realized as the result of any such investment (net
of any fees, commissions and other expenses, if any, incurred in connection with
such  investment)  shall be  applied  or  reinvested  in the same  manner as the
principal invested.

                  (b) Application of Payments during  Existence of a Lease Event
of Default.  Any amount  referred  to in this  Section 19 which is payable to or
retainable  by Lessee  shall not be paid to or retained by Lessee if at the time
of such  payment or  retention a Material  Default  shall have  occurred  and be
continuing,  but shall be held by or paid over to  Lessor  as  security  for the
obligations  of Lessee  under this Lease and, if a Material  Default  shall have
occurred and be continuing,  applied against Lessee's  obligations  hereunder as
and when due. At such time as there shall not be  continuing  any such  Material
Default,  such  amount  shall be paid to Lessee  to the  extent  not  previously
applied in accordance with the preceding sentence.

                  SECTION 19.03. Additional  Insurance  by  Lessor  and  Lessee.
Lessee may, at its own expense,  carry insurance with respect to its interest in
the  Equipment in amounts in excess of that  required to be  maintained  by this
Article  XIX;  any Owner  Participant  may carry for its own account at its sole
cost and  expense  insurance  with  respect to its  interest  in the  Equipment,
provided that such insurance does not prevent Lessee from carrying the insurance
required or permitted by this Article XIX or adversely  affect such insurance or
the cost thereof.

                                   ARTICLE XX

                        Owner Trustee; Owner Participant
                        --------------------------------

                  SECTION 20.01. Successor Trustee;  Co-trustee.  In the case of
the succession or the appointment of any successor  trustee or trustees pursuant
to the terms of the Trust Agreement,  such successor or successors shall succeed
to all the rights, duties, powers, and obligations of Lessor hereunder and under
the other  Operative  Documents and shall (with the other trustees) be deemed to
be Lessor and the legal owner of the Equipment for all purposes  hereof and each
reference  herein and in the Operative  Documents to the "Lessor" shall mean any
such successor trustee or trustees. Lessor or any successor trustee from time to
time  serving  as Lessor  hereunder  may from time to time  appoint  one or more
co-trustees or separate trustees pursuant to the terms of the Trust Agreement to
exercise or hold any of or all the rights, duties and title of Lessor hereunder.
Except for succession  pursuant to Section 10 of the Trust Agreement,  each such
appointment  of any  successor  trustee,  co-trustee  or separate  trustee shall
require the prior written  consent or approval by Lessee and Guarantor.  No such
appointment of

                                       37
<PAGE>

any successor trustee, co-trustee or separate trustee shall in any way alter the
terms of this  Lease or the  obligations  of  Lessee or  Lessor  hereunder.  The
appointment of one successor  trustee,  co trustee or separate trustee shall not
exhaust  the  right to  appoint  further  successor  trustees,  co-trustees  and
separate  trustees  pursuant  to the  Trust  Agreement,  but such  right  may be
exercised repeatedly so long as this Lease may be in effect.

                  SECTION   20.02.   Owner  Trustee  Not  Acting  in  Individual
Capacity.  Lessee  acknowledges  that Trust  Company is entering into this Lease
solely as the Owner Trustee and not, except as expressly provided herein or with
respect to Lessor Liens attributable to it, in its individual  capacity,  and in
no case  whatsoever  shall it (or any entity or person acting as successor Owner
Trustee under the Trust  Agreement) be personally  liable for any  obligation or
loss  in  respect  of  any  of  the  statements,  representations,   warranties,
agreements or obligations of the Owner Trustee hereunder,  except that the Owner
Trustee shall be liable,  in its  individual  capacity,  (a) for its own willful
misconduct or gross negligence;  (b) in the case of the inaccuracy of any of its
representations  or  warranties  or the failure to perform  any  covenant of the
Owner Trustee in its individual  capacity contained in or referred to in Section
4.04 of the Participation  Agreement or in Section 4.01 hereof;  and (c) for the
failure to use ordinary care in the receipt and  disbursement of monies actually
received by it under the Operative Documents.

                                   ARTICLE XXI

                                   Collateral
                                   ----------

                  SECTION 21.01. Collateral.Lessee's and Guarantor's obligations
under the Operative Documents are secured by the liens on the PPE Collateral and
the Working Capital  Collateral  pursuant to and in accordance with the Security
Documents.


                                  ARTICLE XXII

                                  Miscellaneous
                                  -------------

                  SECTION 22.01. Documentary Conventions. This  Agreement  shall
be governed by the  Documentary  Conventions in Appendix A of the  Participation
Agreement.

                  SECTION  22.02.  Revision  of Lease  Supplements.  Lessor  and
Lessee agree to amend the Lease Supplements to reflect any revisions required by
the terms hereof or any Operative Document as soon as necessary or practical. It
is hereby  understood and agreed by the parties hereto that such amendment shall
not  be  effective   without  the  prior  written   consent  of  the  Guarantor.
Notwithstanding  the  preceding  sentence,   the  revisions  shall  take  effect
immediately, whether or not the Lease Supplement has been amended.

                  SECTION 22.03.  True Lease. It is the intention of the parties
hereto  that this Lease  shall  constitute  an  agreement  of true lease for all
purposes, including income tax purposes, such that Lessor will be treated as the
owner and lessor of the Equipment and Lessee will be

                                       38
<PAGE>

treated as the lessee of the Equipment,  and unless Lessee  exercises any of its
rights to purchase the Equipment, nothing herein shall be construed as conveying
to Lessee any title to or ownership of the Equipment, the rights and interest of
Lessee  hereunder  with respect to and in the Equipment  being those of a lessee
only.

                  SECTION  22.04.  City of Chicago.  Solely for  purposes of the
City  of  Chicago's  Personal  Property  Lease/Rental  Transaction  Tax,  rental
payments in the amount of  $132,739,678.56  shall be apportioned to the lease of
all  Components  located in the City of  Chicago.  Payment of such rent shall be
deemed to commence on October 15, 2006 and termination on July 15, 2010.

                                       39
<PAGE>


                  IN WITNESS  WHEREOF,  the parties hereto have each caused this
Lease Agreement to be duly executed as of the date first above written.


                              STATE STREET BANK AND TRUST  COMPANY OF
                              CONNECTICUT, NATIONAL ASSOCIATION,
                              not in its individual capacity but solely as Owner
                              Trustee, as Lessor,

                              By:     ________________________
                                      Name:
                                      Title:


                              SWEETHEART CUP COMPANY INC.,
                              as Lessee,

                              By:     ________________________
                                      Name:
                                      Title:

                                       40