LEASE AGREEMENT



 





Exhibit 4.5




LEASE AGREEMENT




Dated March 1, 1999




By and between




THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PIEDMONT




and




BOSTROM SEATING, INC.




               The interest of The Industrial Development Board of
the City of Piedmont in any rents, revenues and
receipts derived by it under this Lease Agreement has
been assigned to NBD Bank. as Trustee under the Trust
Indenture dated as of March 1, 1999.


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




 









 





LEASE AGREEMENT




TABLE OF CONTENTS




	 	 	 	 	 	 	 
	RECITALS

	 	 	 	 	1	 
	

	 	
ARTICLE 1	 	 	 	 
	

	 	
DEFINITIONS	 	 	 	 
	

	 	
ARTICLE 2	 	 	 	 
	

	 	
REPRESENTATIONS	 	 	 	 
	SECTION 2.01

	 	Representations by the Issuer
	 	 	5	 
	SECTION 2.02

	 	Representations by the User
	 	 	6	 
	

	 	
ARTICLE 3	 	 	 	 
	

	 	
DEMISING CLAUSES; 1973 LEASE TO REMAIN	 	 	 	 
	

	 	
IN EFFECT; CONSTRUCTION OF LEASE AGREEMENT	 	 	 	 
	

	 	
ARTICLE 4	 	 	 	 
	

	 	
ACQUISITION OF THE PROJECT	 	 	 	 
	SECTION 4.01

	 	Agreement to Acquire
	 	 	8	 
	SECTION 4.02

	 	No Warranty of Suitability of Issuer
	 	 	9	 
	SECTION 4.03

	 	Pursuit of Remedies Against Vendors,
Contractors and Subcontractors and Their
Sureties
	 	 	9	 
	SECTION 4.04

	 	Completion of the Project
	 	 	9	 
	

	 	
ARTICLE 5	 	 	 	 
	

	 	DURATION OF LEASE TERM AND RENTAL PROVISIONS	 	 	 	 
	SECTION 5.01

	 	Duration of Term
	 	 	10	 
	SECTION 5.02

	 	Basic Rental Payments; Draws Under Letter of Credit
	 	 	10	 
	SECTION 5.03

	 	Additional Rental Payments
	 	 	11	 
	SECTION 5.04

	 	Advances by Issuer or Trustee
	 	 	12	 
	SECTION 5.05

	 	Indemnity of Issuer, Trustee and Paving Agent
	 	 	12	 
	SECTION 5.06

	 	Obligations of User Unconditional
	 	 	13	 
	SECTION 5.07

	 	This Lease a Net Lease
	 	 	13	 

















 






	 	 	 	 	 	 	 
	

	 	
ARTICLE 6	 	 	 	 
	

	 	MAINTENANCE, ALTERATIONS, REPLACEMENTS, INSURANCE	 	 	 	 
	SECTION 6.01

	 	Maintenance and Repairs, Alterations and Improvements, Party
Walls and Liens; Utility Charges	 	 	14	 
	SECTION 6.02

	 	Removal of Substitution and Replacement for Equipment
	 	 	15	 
	SECTION 6.03

	 	Installation of Machinery and Equipment Owned or Leased by the
User or Subject to a Security Interest in Third Parties
	 	 	15	 
	SECTION 6.04

	 	Insurance
	 	 	16	 
	

	 	
ARTICLE 7	 	 	 	 
	

	 	PROVISIONS RESPECTING DAMAGE, DESTRUCTION AND CONDEMNATION	 	 	 	 
	SECTION 7.01

	 	Damage and Destruction
	 	 	17	 
	SECTION 7.02

	 	Condemnation
	 	 	18	 
	

	 	
ARTICLE 8	 	 	 	 
	

	 	
CERTAIN PROVISIONS RELATING TO ASSIGNMENT,	 	 	 	 
	

	 	
SUBLEASING, MORTGAGING AND THE BONDS	 	 	 	 
	SECTION 8.01

	 	Provisions Relating to Assignment and Subleasing
	 	 	20	 
	SECTION 8.02

	 	Assignment of Lease Agreement and Rents by the Issuer
	 	 	21	 
	SECTION 8.03

	 	Transfer or Encumbrance Created by Issuer: Corporate Existence
of Issuer
	 	 	21	 
	SECTION 8.04

	 	Redemption of Bonds
	 	 	21	 
	

	 	
ARTICLE 9	 	 	 	 
	

	 	
COVENANTS OF THE USER	 	 	 	 
	

	 	
ARTICLE 10	 	 	 	 
	

	 	
EVENTS OF DEFAULT AND REMEDIES	 	 	 	 
	SECTION 10.01

	 	Events of Default
	 	 	23	 
	SECTION 10.02

	 	Remedies on Default
	 	 	23	 
	SECTION 10.03

	 	Availability of Remedies
	 	 	24	 
	SECTION 10.04

	 	Agreement to Pay Attorneys’ Fees and Expenses
	 	 	25	 
	

	 	
ARTICLE 11	 	 	 	 
	

	 	
OPTIONS	 	 	 	 
	SECTION 11.01

	 	Options to Terminate
	 	 	25	 







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	SECTION 11.02

	 	Option to Renew
	 	 	25	 
	SECTION 11.03

	 	Option to Purchase Prior to Payment of the Bonds
	 	 	25	 
	SECTION 11.04

	 	Option to Purchase Project After Payment of the Indenture Indebtedness
	 	 	26	 
	SECTION 11.05

	 	Option to Purchase Portions of Project Site
	 	 	27	 
	SECTION 11.06

	 	Conveyance of Exercise of Option to Purchase
	 	 	28	 
	

	 	
ARTICLE 12	 	 	 	 
	

	 	
INTERNAL REVENUE CODE	 	 	 	 
	SECTION 12.01

	 	Covenants Regarding Section 103 and Sections 141-150 of the
Internal Revenue Code
	 	 	28	 
	SECTION 12.02

	 	User’s Obligation Upon Determination of Taxability
	 	 	29	 
	SECTION 12.03

	 	Federal Rebate Payments
	 	 	30	 
	

	 	
ARTICLE 13	 	 	 	 
	

	 	
PROVISIONS OF GENERAL APPLICATION	 	 	 	 
	SECTION 13.01

	 	Covenant of Quiet Environment
	 	 	30	 
	SECTION 13.02

	 	Investment of Funds
	 	 	30	 
	SECTION 13.03

	 	Issuer’s Liabilities Limited
	 	 	30	 
	SECTION 13.04

	 	Prior Agreements
	 	 	30	 
	SECTION 13.05

	 	Execution Counterparts
	 	 	31	 
	SECTION 13.06

	 	Binding Effect. Governing Law
	 	 	31	 
	SECTION 13.07

	 	Enforceability
	 	 	31	 
	SECTION 13.08

	 	Article and Section Captions
	 	 	31	 
	SECTION 13.09

	 	Notices
	 	 	31	 
	SECTION 13.10

	 	Amendment of Indenture and this Lease Agreement
	 	 	32	 
	TESTIMONIAL

	 	 	 	 	35	 
	SIGNATURES

	 	 	 	 	35	 
	ACKNOWLEDGMENTS

	 	 	 	 	36-37	 
	EXHIBIT A
	 	 	 	 	 	 
	EXHIBIT B
	 	 	 	 	 	 








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STATE OF ALABAMA




CALHOUN COUNTY




LEASE AGREEMENT




          LEASE AGREEMENT dated as of March 1, 1999, between THE INDUSTRIAL
DEVELOPMENT BOARD OF THE CITY OF PIEDMONT, a public corporation under the laws
of the State of Alabama (the “Issuer”), and BOSTROM SEATING, INC., a Delaware
corporation (the “User”).



Recitals




          Pursuant to and for the purposes expressed in Division 1 of Article 4 of
Chapter 54 of Title 11 of the Code of Alabama 1975 (the “Enabling Law”), the
Issuer and the User are parties to that certain Lease Agreement dated as of
September 1, 1973, as defined herein (the “1973 Lease”), and the Issuer and the
User have executed and delivered this Lease Agreement simultaneously with the
issuance and sale by the Issuer of its $3,100,000 Variable\Fixed Rate
Industrial Development Revenue Bonds (Bostrom Seating, Inc. Project), dated the
date of delivery and payment therefor, under and pursuant to that certain Trust
Indenture dated as of March 1, 1999 from the Issuer to NBD Bank, as trustee, to
finance the acquisition, construction and installation of a “project” within
the meaning of the Enabling Law, as more particularly described in said Trust
Indenture.



Agreement




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



          The 1973 Lease is hereby amended by deleting the provisions of Articles I
through XII, inclusive, save and excepting Section 5.1 of the 1973 Lease, in
the entirety thereof and substituting therefor the following:



ARTICLE 1




Definitions




          For all purposes of this Lease Agreement:



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



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




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



 









 






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




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




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



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



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



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



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



          Bond Guaranty shall mean that certain Bond Guaranty Agreement dated March
1, 1999, executed by User in favor of the Trustee.



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



          City shall mean the City of Piedmont, Alabama and any successor to its
functions.



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



          Credit Documents shall mean collectively all agreements, documents,
guaranties, instruments, notes, notices, and other writings executed and
delivered by the User or any other persons or persons which evidence, guarantee
or provide security for the obligations of the User with respect to the Letter
of Credit, including any amendments or supplements to any thereof from time to
time entered into pursuant to the applicable provisions thereof, until a
Substitute Letter of Credit shall have been accepted by the Trustee, and
thereafter “Credit Documents” shall mean collectively all agreements,
documents, guaranties, instruments, notes, notices, and other writings which
evidence, guarantee or provide security for the obligations of the User with
respect to such Substitute Letter of Credit.



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          Debt Service shall mean the principal of, premium (if any) and interest on
the Bonds.



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



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



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



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



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



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



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



          Indenture shall mean that certain Trust Indenture dated as of March 1,
1999 between the Issuer and the Trustee as originally executed or as it may
from time to time be supplemented, modified or amended by one or more
indentures or other instruments supplemental hereto entered into pursuant to
the applicable provisions thereof.



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



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



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



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



          Lease Default shall have the meaning stated in Article 10 of this Lease
Agreement.



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



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



          1973 Lease shall mean that certain Lease Agreement dated as of September
1, 1973 between the Issuer and Universal Oil Products Company, recorded in Book
1362 at page 123 et seq. in the Office of the Judge of Probate of Calhoun
County, Alabama, as assigned to and assumed by the User pursuant to Lease
Assignment and Assumption Agreement dated May 14, 1993 between the User and
Universal Oil Products Company, recorded in Book            at Page            et seq. in
said office.



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



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



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




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



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




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




          (4) fees for architectural, engineering and supervisory services to
such architects, engineers, developers and construction supervisors as
the User shall approve,




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




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




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




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



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



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



          State shall mean the State of Alabama.



          Trustee shall mean NBD Bank, until a successor Trustee shall have become
such pursuant to the applicable provisions of the Indenture, and thereafter
“Trustee” shall mean such successor.



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



          User shall mean Bostrom Seating, Inc., and its successors and assigns.



ARTICLE 2




Representations




          SECTION 2.01 Representations by the Issuer



          The Issuer makes the following representations




          (a) The Issuer is duly incorporated under the provisions of the Enabling
Law and has the power to enter into the transactions contemplated by this Lease
Agreement and to carry out its obligations hereunder. The Issuer is not in
default under any of the provisions con-



-5-









 







tained in its certificate of incorporation, its by-laws, or in the laws of
the State. By proper corporate action the Issuer has duly authorized the
execution and delivery of this Lease Agreement, the Indenture, and the Bonds.



          (b) The Issuer has determined that the issuance of the Bonds, the
acquisition, construction and equipping of the Project and the leasing of the
Project to the User will be in furtherance of the purposes of the Enabling Law.



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



          SECTION 2.02 Representations by the User



          The User makes the following representations:




          (1) The User is duly organized and in good standing as a corporation
under the laws of the State of Delaware and is not in default under any
of the provisions contained in its articles of incorporation, as amended,
or bylaws or in the laws of the State of Delaware. The User is duly
qualified to do business in the State.




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




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




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




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




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




          (7) There is no action, suit, proceeding, inquiry or investigation
pending before any Governmental Authority, or threatened against or
affecting the User or its prop-


-6-









 





erties, that (a) involves (i) the consummation of the transactions
contemplated by, or the validity or enforceability of, the Financing
Documents, (ii) its organization, (iii) the election or qualification of
its directors or officers, (iv) its powers, or (b) could have a
materially adverse effect upon the financial condition or operations of
the User.



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




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




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




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



ARTICLE 3




Demising Clauses; 1973 Lease to Remain

in Effect; Construction of Lease Agreement




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



I.





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



II.





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



-7-









 





III





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



SUBJECT, HOWEVER, to Permitted Encumbrances;



PROVIDED: this Lease Agreement is executed and delivered in continuation of
the leasehold estate created by the Issuer in the Project pursuant to the 1973
Lease, in accordance with Section 5.1 thereof and as amendatory to the
provisions of the 1973 Lease, and the 1973 Lease shall remain in effect, as
amended by this Lease Agreement, solely with respect to the leasehold estate
created in the property covered hereby.




ARTICLE 4




Acquisition of the Project




          SECTION 4.01 Agreement to Acquire



          (a) Simultaneously with the delivery of this Lease Agreement the Issuer
shall cause the Bond proceeds to be deposited in the Construction Fund. The
Issuer shall cause the proceeds of the Bonds to be advanced to the User by
withdrawal from the Construction Fund, in accordance with the requirements of
the Indenture, for the payment of Project Costs at such times and in such
amounts as shall be directed by the User. The proceeds of the Bonds shall be
used solely for the payment of Project Costs as provided in the Indenture.



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



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



          (d) The User may, with the prior written consent of the Credit Obligor,
cause changes or amendments to be made in the plans and specifications for such
acquisition and construction of the Project, provided (1) such changes or
amendments will not change the nature of the Project to the extent that it
would not constitute a “project” as authorized by the Enabling Law, and (2)
such changes or amendments will not materially affect the utility of the
Project for its intended use. The Issuer will make only such changes or
amendments in the plans and specifications for the acquisition and construction
of the Project as may be requested in writing by the User.



-8-









 





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



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



          SECTION 4.02 No Warranty of Suitability of Issuer



          THE USER RECOGNIZES AND AGREES THAT THE ISSUER MAKES NO WARRANTY, EITHER
EXPRESS OR IMPLIED, NOR OFFERS ANY ASSURANCES THAT THE PROJECT WILL BE SUITABLE
FOR THE USER’S PURPOSES OR NEEDS OR THAT THE PROCEEDS DERIVED FROM THE SALE OF
THE BONDS WILL BE SUFFICIENT TO PAY IN FULL ALL PROJECT COSTS.



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



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



          SECTION 4.04 Completion of the Project



          (a) The completion of the Project shall be evidenced to the Trustee by a
certificate signed by the Project Supervisor on behalf of the User stating that
(1) construction of the



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



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



ARTICLE 5




Duration of Lease Term and Rental Provisions




          SECTION 5.01 Duration of Term



          The term of this Lease Agreement and of the lease herein made shall begin
on the date of the delivery of this Lease Agreement and, subject to the
provisions of this Lease Agreement, shall continue until midnight of March 1,
2014. The Issuer will deliver to the User possession of the Project on the
commencement date of the Lease Term, subject to the inspection and other rights
reserved in this Lease Agreement, and the User will accept possession thereof
at such time; provided, however, the Issuer will be permitted such possession
of the Project as shall be necessary and convenient for it to construct or
install any additions or improvements and to make any repairs or restorations
required or permitted to be constructed, installed or made by the Issuer
pursuant to the provisions hereof.



          SECTION 5.02 Basic Rental Payments; Draws Under Letter of Credit



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



          (b) On each Bond Payment Date prior to 10:30 a.m. (Birmingham, Alabama
time) the Trustee shall, without making any prior claim or demand on the User
for the payment of Basic Rental Payments with respect to Bonds other than
Pledged Bonds, make a draw on the Letter of Credit in an amount equal to the
amount of Debt Service on the Bonds due and payable on such Bond Payment Date
on Bonds other than Pledged Bonds (except as may otherwise be provided in
Section 8.02(f) of the Indenture). The User shall receive a credit against
Basic



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Rental Payments for the amount so drawn. No draw shall be made under the
Letter of Credit with respect to Pledged Bonds, and the User shall receive no
credit against Basic Rental Payments with respect to Pledged Bonds for any
amounts drawn under the Letter of Credit.



          (c) The User hereby authorizes and directs the Trustee to draw moneys
under the Letter of Credit in accordance with the provisions of the Indenture
and this Lease Agreement to the extent necessary to pay the Debt Service on the
Bonds (other than Pledged Bonds) when due and payable pursuant to the Indenture
and the Bonds.



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



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



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



          (g) Any overdue Basic Rental Payment shall bear interest from the related
Bond Payment Date until paid at the Post-Default Rate for overdue Debt Service
payments specified in the Indenture.



          SECTION 5.03 Additional Rental Payments



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




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




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




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



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



          (c) Any overdue Additional Rental Payment shall bear interest from the
date due until paid at the Post-Default Rate for such Additional Rental
Payments specified in the Indenture.



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          SECTION 5.04 Advances by Issuer or Trustee



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



          SECTION 5.05 Indemnity of Issuer, Trustee and Paving Agent



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



          (b) The User hereby agrees that the Issuer, the Trustee and the Paying
Agent shall not incur any liability to the User, and shall be indemnified
against all liabilities, in exercising or refraining from asserting,
maintaining or exercising any right, privilege or power of the Issuer, or the
Trustee, or the Paying Agent under any of the Financing Documents if the
Issuer,



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or the Trustee, or the Paying Agent as the case may be is acting in good
faith and without willful misconduct or in reliance upon a written request by
the User.



          (c) If any indemnifiable party (whether the Issuer or the Trustee) shall
be obligated to pay any claim, liability or loss, and if in accordance with all
applicable provisions of this Section the User shall be obligated to indemnify
and hold such indemnifiable party harmless against such claim, liability or
loss, then, in such case, the User shall have a primary obligation to pay such
claim, liability or loss on behalf of such indemnifiable party and may not
defer discharge of its indemnity obligation hereunder until such indemnifiable
party shall have first paid such claim, liability or loss and thereby incurred
actual loss.



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



          SECTION 5.06 Obligations of User Unconditional



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



          SECTION 5.07 This Lease a Net Lease



          The User recognizes, understands and acknowledges that it is the intention
hereof that this Lease Agreement be a net lease and that as long as any of the
Bonds are Outstanding all



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Basic Rent be available for payment of the Debt Service on the Bonds and
that all Additional Rent shall be available for the purposes specified
therefor. This Lease Agreement shall be construed to effectuate such intent.



ARTICLE 6




Maintenance, Alterations, Replacements, Insurance




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



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



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



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



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



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          (e) The User shall not permit any mechanics’ or other liens to stand
against the Project for labor or material furnished with respect to the
Project. The User may, however, in good faith contest any such mechanics’ or
other liens and in such event may permit any such liens to remain unsatisfied
and undischarged during the period of such contest and any appeal therefrom
unless by such action the lien of the Indenture on the Project or any part
thereof, or the Project or any part thereof shall be subject to loss or
forfeiture, in either of which events such mechanics’ or other liens shall be
promptly satisfied.



          SECTION 6.02 Removal of Substitution and Replacement for Equipment



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



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



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



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



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



          (b) If (i) any machinery, equipment or other personal property is leased
by the User or the User shall have granted a security interest in any such
property in connection with the acquisition thereof by the User, (ii) such
property is installed or is located on the Project Site, and (iii) such
property does not constitute a part of the Project under the terms of this
Lease Agreement, then the lessor of such property or the party holding a
security interest therein, as the case may be, may remove such property from
the Project Site even though a Lease Default may then exist hereunder or this
Lease Agreement may have been terminated following a Lease Default hereunder,
provided, that the foregoing permission to remove shall be subject to
the agree-



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ment by such lessor or secured party to repair at its own expense any
damage to the Project occasioned by such removal.



          SECTION 6.04 Insurance



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




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




          (2) Insurance against liability for bodily injury to or death of
persons and for damage to or loss of property occurring on or about the
Project or in any way related to the condition or operation of the
Project, in the minimum amounts of $1,000,000 combined single limit for
death of or bodily injury to any one person, and for property damage, all
on a per occurrence basis.




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




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




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




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



-16-









 





          (b) All policies evidencing the insurance required by the terms of the
preceding paragraph shall be taken out and maintained in generally recognized
responsible insurance companies, qualified under the laws of the State to
assume the respective risks undertaken. All such insurance policies shall name
as either loss payee or additional insureds the Credit Obligor, the Issuer and
the Trustee (as their respective interests shall appear) and shall contain,
where appropriate, standard mortgage clauses providing for all losses
thereunder in excess of $250,000 to be paid to the Credit Obligor or, if there
be no Credit Obligor, to the Trustee; provided that all losses (including those
in excess of $250,000) may be adjusted by the User, subject, in the case of any
single loss in excess of $250,000, to the approval of the Credit Obligor, or if
there be no Credit Obligor, the Trustee. The User may insure under a blanket
policy or policies.



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



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



ARTICLE 7




Provisions Respecting Damage, Destruction and Condemnation




          SECTION 7.01 Damage and Destruction



          (a) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is in effect and the Credit Obligor has not dishonored any
draws thereunder and a Credit Obligor Insolvency Date shall not have occurred,
then all Net Proceeds of insurance resulting from claims for losses in respect
of damage to or destruction of the Project (in whole or in part) shall be
applied as provided in the Credit Documents.



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




          (1) If the Project is destroyed (in whole or in part) or is damaged
the User shall continue to make Rental Payments and will promptly give
written notice of such damage and destruction to the Trustee and the
Issuer. All Net Proceeds of insurance re-


-17-









 





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




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




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



          (c) If a Lease Default shall have occurred and be continuing, and the
Letter of Credit is not in effect or the Credit Obligor has dishonored any draw
thereunder or a Credit Obligor Insolvency Date shall have occurred, then all
Net Proceeds of insurance resulting from claims for losses in respect to damage
to or destruction of the Project (in whole or in part) shall be deposited in
the Bond Fund and applied to the extraordinary redemption of the Bonds in
accordance with the terms of the Indenture and the Bonds.



          SECTION 7.02 Condemnation



          (a) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is in effect and the Credit Obligor has not dishonored any
draws thereunder and a Credit Obligor Insolvency Date shall have occurred, then
all Net Proceeds resulting from any



-18-









 







taking by eminent domain of the Project (in whole or in part) shall be
applied as provided in the Credit Documents.



          (b) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is not in effect, or if the Credit Obligor has dishonored any
draw thereunder or if a Credit Obligor Insolvency Date shall have occurred,
then the following provisions shall apply in event of any taking by eminent
domain of the Project (in whole or in part):




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




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




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




               (ii) To the acquisition, by construction or otherwise, by the
Issuer of other lands or improvements suitable for the User’s
operations at the Project, which land or improvements shall be
deemed a part of the Project and available for use and occupancy by
the User without the payment of any Rental Payments other than that
herein provided to the same extent as if such land or other
improvements were specifically described herein and demised hereby,
and which land or improvements shall be acquired by the Issuer
subject to no liens or encumbrances.




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



-19-









 






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




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



          (c) If a Lease Default shall have occurred and be continuing, and the
Letter of Credit is not in effect or the Credit Obligor has dishonored any draw
thereunder or a Credit Obligor Insolvency Date shall have occurred, then all
Net Proceeds of condemnation awards resulting from condemnation of the Project
(in whole or in part) shall be deposited in the Bond Fund and applied to the
extraordinary redemption of the Bonds in accordance with the terms of the Bonds
and the Indenture.



ARTICLE 8




Certain Provisions Relating to Assignment,




Subleasing, Mortgaging and the Bonds




          SECTION 8.01 Provisions Relating to Assignment and Subleasing



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




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




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



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



          SECTION 8.02 Assignment of Lease Agreement and Rents by the Issuer



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



          SECTION 8.03 Transfer or Encumbrance Created by Issuer: Corporate
Existence of Issuer



          (a) Without the prior written consent of the Trustee, the Credit Obligor,
and the User, the Issuer (1) will not sell, transfer or convey the Project or
any part thereof, except as provided in this Lease Agreement, and (2) will not
create or incur or suffer or permit to be created or incurred or to exist any
mortgage, lien, charge or encumbrance on the Project or any part thereof.



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



          SECTION 8.04 Redemption of Bonds



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



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



ARTICLE 9




Covenants of the User




          Until the Indenture Indebtedness is paid in full:



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



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



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



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



          (e) The User will maintain and preserve its existence (as a corporation or
as another form of entity as may be determined by the User) and will not
voluntarily dissolve without first discharging its obligations under this Lease
Agreement (except as permitted herein) and will comply with all valid laws,
ordinances, regulations and requirements applicable to it or to its property
and the Project.



          (f) The User will not in any manner transfer or convey any substantial
portion of its property, assets and licenses without receipt of adequate
consideration therefor.



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



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ARTICLE 10




Events of Default and Remedies




          SECTION 10.01 Events of Default



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




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




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




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




          (4) The occurrence of an event of default under any of the other
Financing Documents and the expiration of any applicable grace period; or




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



          SECTION 10.02 Remedies on Default



          Whenever any such Lease Default shall have occurred and be continuing, the
Issuer or the Trustee may, with the consent of the Credit Obligor (if the
Letter of Credit is in effect



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and the Credit Obligor shall not have dishonored a draw thereunder and a
Credit Obligor Insolvency Date shall not have occurred), take any of the
following remedial steps:




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




          (2) Reenter the Project, without terminating this Lease Agreement,
and, upon ten days’ prior written notice to the User and Credit Obligor,
relet the Project or any part thereof for the account of the User, for
such term (including a term extending beyond the Lease Term) and at such
rentals and upon such other terms and conditions, including the right to
make alterations to the Project or any part thereof, as the Issuer may,
with the approval of the Trustee and Credit Obligor, deem advisable, and
such reentry and reletting of the Project shall not be construed as an
election to terminate this Lease Agreement nor relieve the User of its
obligations to pay Basic Rent and Additional Rent or to perform any of
its other obligations under this Lease Agreement, all of which shall
survive such reentry and reletting, and the User shall continue to pay
Basic Rent and all Additional Rent provided for in this Lease Agreement
until the end of the Lease Term, less the net proceeds, if any, of any
reletting of the Project after deducting all of the Issuer’s and
Trustee’s expenses in connection with such reletting, including, without
limitation, all repossession costs, brokers’ commissions, attorneys’
fees, alteration costs and expenses of preparation for reletting;




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




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



          SECTION 10.03 Availability of Remedies



          (a) No remedy herein conferred upon or reserved to the Issuer or the
Trustee is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Lease Agreement or now or hereafter
existing at law or in equity or by statute.



          (b) No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a
waiver thereof but any such right or power may be exercised from time to time
and as often as may be deemed expedient.



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



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



          SECTION 10.04 Agreement to Pay Attorneys’ Fees and Expenses



          In the event the User should default under any of the provisions of this
Lease Agreement and the Issuer or the Trustee (in its own name or in the name
and on behalf of the Issuer) should employ attorneys or incur other expenses
for the collection of Rental Payments or the enforcement of performance or
observance of any obligation or agreement on the part of the User herein
contained, the User will on demand therefor pay to the Issuer or the Trustee
(as the case may be) the reasonable fee of such attorneys and such other
reasonable expenses so incurred.



ARTICLE 11




OPTIONS




          SECTION 11.01 Options to Terminate



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



          SECTION 11.02 Option to Renew



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



          SECTION 11.03 Option to Purchase Prior to Payment of the Bonds



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




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



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




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



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



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



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



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



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          (b) In the event the option granted in this Section 11.04 shall not have
been exercised prior to the end of the Lease Term, then said option shall be
automatically exercised upon the end of the Lease Term.



          SECTION 11.05 Option to Purchase Portions of Project Site



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




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




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




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



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



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



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



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



          SECTION 11.06 Conveyance of Exercise of Option to Purchase



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



ARTICLE 12




Internal Revenue Code




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



          (a) The Issuer and the User do each hereby covenant and agree for the
benefit of the Bondholders that neither the Issuer nor the User will take any
action, omit to take any action, permit any action to be taken or fail to
require any action to be taken, which would cause the interest on the Bonds to
be or become Taxable. Without limiting the generality of the foregoing, the
User covenants and agrees that (a) the proceeds of the Bonds shall not be used
or applied in such manner as to cause any Bond to be or become an “arbitrage
bond” as that term is defined in Section 148 of the Internal Revenue Code, (b)
ninety-five percent (95 %) or more of the net proceeds will be used for the
acquisition, construction, reconstruction, or improvement of land or property
of a character subject to the allowance for depreciation, within the meaning of
Section 144(a) of the Internal Revenue Code, (c) the proceeds will be used
solely for the acquisition and construction of the Project, which shall
constitute facilities solely for the manufacturing, including processing, of
tangible personal property, or for issuance expenses, or shall be rebated to
the United States of America as provided in this Lease Agreement and the
Indenture, and no part of the proceeds will be used by the User, directly or
indirectly, for working capital or to finance inventory, or to acquire any
facility or asset which may not be financed, in whole or in part, with the
proceeds of obligations the interest on which is excludable from gross income
for federal income taxation, (d) the net proceeds shall not be used for the
acquisition, construction, reconstruction or improvement of any property which
would cause the average maturity of the Bonds to exceed one hundred twenty
percent (120%) of the average reasonably expected economic life of the
facilities financed with the net proceeds of the Bonds, within the meaning of
Section 147(b) of the Internal Revenue Code, (e) none of the net proceeds shall
be used to acquire (directly or indirectly) any land (or any interest therein)
to be used for farming purposes; (f) less than twenty-five percent (25 %) of
the net proceeds shall be used to acquire (directly or indirectly) the Project
Site or any other land (or any interest therein), (g) none of the net proceeds
shall be used to ac-



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quire any property or any interest therein (including, without limitation,
buildings, structures, facilities, improvements, equipment, machinery or other
personal property) the first use of which property was not pursuant to such
acquisition with the proceeds, (h) neither the Bonds nor any proceeds therefrom
shall ever be federally guaranteed, as such term is defined in Section 149(b)
of the Internal Revenue Code, except as expressly permitted by said Section
149(b), (i) neither the User nor any related person shall ever have allocated
to it and outstanding tax-exempt facility related bonds (as such term is used
in Section 144(a) (10) of the Internal Revenue Code) in an aggregate principal
amount exceeding $40,000,000, (j) no party shall ever be allowed to use or
otherwise occupy or derive any benefit whatsoever from the Project, or any part
thereof, if the effect of the foregoing shall result in a test period
beneficiary (as defined in Section 144(a) (10) of the Internal Revenue Code)
having allocated to it and outstanding in excess of $40,000,000 in aggregate
principal amount of tax-exempt facility related bonds, (k) no more than two
percent of the face amount of the Bonds shall be used to pay issuance costs.



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



          (c) The User covenants and agrees that (i) the limitation set forth in
Section 144(a)(4)(A) of the Code will not be exceeded during the applicable
six-year period with respect to “facilities” described in Section 144(a)(4)(B)
of the Code, and (ii) during such six-year period it will not make, or permit
to be made, “capital expenditures” (as described in Section 144(a)(4) of the
Code and applicable regulations thereunder) in an aggregate amount that would
exceed the limitation set forth in said Section.



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



          SECTION 12.02 User’s Obligation Upon Determination of Taxability



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



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



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



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          SECTION 12.03 Federal Rebate Payments



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



ARTICLE 13




Provisions of General Application




          SECTION 13.01 Covenant of Quiet Environment



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



          SECTION 13.02 Investment of Funds



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



          SECTION 13.03 Issuer’s Liabilities Limited



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



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



          SECTION 13.04 Prior Agreements



          Except for any deed, bill of sale, or other instrument by which the
Project, any part thereof, or any interest therein has been transferred and
conveyed by the User to the Issuer, this Lease Agreement shall completely and
fully supersede all prior agreements, both written and



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oral, between the Issuer and the User relating to the acquisition of the
Project Site, the construction of the Improvements, the acquisition and
installation of the Equipment, the leasing of the Project and any options to
purchase. Neither the Issuer nor the User shall hereafter have any rights
under such prior agreements, except as otherwise herein provided, but shall
look solely to this Lease Agreement for definition and determination of all of
their respective rights, liabilities and responsibilities relating to the
Project.



          SECTION 13.05 Execution Counterparts



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



          SECTION 13.06 Binding Effect. Governing Law



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



          SECTION 13.07 Enforceability



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



          SECTION 13.08 Article and Section Captions



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



          SECTION 13.09 Notices



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



          (b) Any such notice or other document shall be deemed delivered when
actually received by the party to whom directed (or, if such parry is not an
individual, to an officer, or other legal representative of the parry) at the
address specified pursuant to this Section, or, if



-31-









 







sent by mail, three days after such notice or document is deposited in the
United States mail, proper postage prepaid. addressed as provided above.



          SECTION 13.10 Amendment of Indenture and this Lease Agreement



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



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



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     IN WITNESS WHEREOF, the Issuer and the User have each caused this Lease
Agreement to be executed, sealed and attested in its name by officers thereof
duly authorized thereunto, and the parties hereto have caused this Lease
Agreement to be dated as of March 1, 1999.


	 	 	 	 	 
	 	THE INDUSTRIAL DEVELOPMENT BOARD

OF THE CITY OF PIEDMONT

 	 
	 	By:  	/s/ Illegible
 	 
	 	 	Chairman 	 
	 	 	 	 
	 




	 	 	 
	S E A L
	 	 
	 
	 	 
	Attest:

	 	/s/ Illegible
	

	 	

	

	 	          Secretary







	 	 	 	 	 
	 	BOSTROM SEATING, INC.

 	 
	 	By:  	/s/ Donald C. Mueller
 	 
	 	 	Its:                  Treasurer 	 
	 	 	 	 
	 



	 	 	 
	S E A L
	 	 
	 
	 	 
	Attest:

	 	/s/ Illegible
	

	 	

	Its:

	 	Secretary

















 






 




STATE OF ALABAMA      )

CALHOUN COUNTY           )



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



          Given under my hand and seal this the 24th day of February, 1999.



	 
	/s/ Illegible

	
 

	     Notary Public








NOTARIAL SEAL




My commission expires: June 19, 2000














 








 




STATE OF ILLINOIS      )

COOK COUNTY           )




          I, the undersigned, a Notary Public in and for said County in said State,
hereby certify that Donald C. Mueller whose name as Treasurer of Bostrom
Seating, Inc., a Delaware corporation, is signed to the foregoing Lease
Agreement, and who is known to me, acknowledged before me on this day that,
being informed of the contents of said Lease Agreement, he, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation.



          Given under my hand and seal this the 26th day of March, 1999.



	 	 	 
	/s/ Lynn M. Pass

	
 

	Notary Public







    [SEAL]

NOTARIAL SEAL




My commission expires: August 19, 2000














 








 




EXHIBIT A

TO

LEASE AGREEMENT

DATED AS OF MARCH 1, 1999

BETWEEN

THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PIEDMONT

AND

BOSTROM SEATING, INC.




Description of Real Proper




          A parcel of land situated partially in the NE 1/4-SE 1/4 and the SE 1/4-NE
1/4, both in Section 4, Twp 13 S, Rn 10 E, as recorded in the Office of the
Judge of Probate, Calhoun County, Alabama, and more particularly described as
follows:



          From the SE corner of the SE 1/4-SE 1/4, Section 4, Twp 13 S, Rn 10 E
thence N 00°-52’E and along the East line of the said Section 4 a distance of
1471.0 feet for the point of beginning of described parcel of land;



          Thence N 79°-02’W and along the North side of a County Road, no dedicated
right-of way width, a distance of 1340.20 feet, thence N 00°-52 ‘E a distance
of 1892.40 feet, thence N 89°-14’E a distance of 1320.0 feet to the East line
of the said SE 1/4-NE 1/4, thence S 00°-52’W and along the East line of said
Section 4, a distance of 2165.00 feet to the point of beginning, all being
situated in the NE 1/4-SE 1/4 and the SE 1/4-NE 1/4, Section 4, Twp 13 S, Range
10 E, Calhoun County, Alabama, and containing 61.45 acres.













 









EXHIBIT B

TO

LEASE AGREEMENT

DATED AS OF MARCH 1, 1999

BETWEEN

THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PIEDMONT

AND

BOSTROM SEATING, INC.




EQUIPMENT LIST




Description of Personal Property and Fixtures




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



          (b) The personal property and fixtures described on the following pages.