Document:

EX-10.11

 

Exhibit 10.11

CITY OF PARAGOULD, ARKANSAS

Lessor

TO

AMERICAN RAILCAR INDUSTRIES, INC.

Lessee

 

LEASE AGREEMENT

Dated as of April 1, 1995

 

This instrument also constitutes a Security Agreement under the Arkansas Uniform
Commercial Code.

The interest of the Lessor in this Lease Agreement has been assigned to Fleet National
Bank, as Trustee, under the Trust Indenture, dated as of
April 1, 1995, securing $9,500,000
City of Paragould, Arkansas, Industrial Development Revenue Bonds (American Railcar
Industries, Inc./ACF Industries, Incorporated Railcar Manufacturing Project), Series 1995, as
security for payment of the principal of and premium, if any, and interest on such Bonds.

Prepared by: .

Kephart & Fisher

41 South High Street

Suite 1685

Columbus, Ohio 43215

 

 

LEASE AGREEMENT

TABLE OF CONTENTS

ARTICLE I

	 	 	 	 	 
	Definitions
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	REPRESENTATIONS
	 	 	 	 
	 
	 	 	 	 
	Section 2.1. Representations by Issuer
	 	 	5	 
	Section 2.2. Representations by Company
	 	 	6	 
	Section 2.3. Intention
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	DEMISING CLAUSES AND WARRANTY OF TITLE
	 	 	 	 
	 
	 	 	 	 
	Section 3.1. Demise of the Leased Land, Buildings, and the
Leased Equipment
	 	 	8	 
	Section 3.2. Warranty of Title
	 	 	8	 
	Section 3.3. Quiet Enjoyment
	 	 	9	 
	Section 3.4. Zoning
	 	 	9	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	ACQUISITION, CONSTRUCTION, AND EQUIPPING OF THE PROJECT;
	 	 	 	 
	ISSUANCE OF THE BONDS
	 	 	 	 
	 
	 	 	 	 
	Section 4.1. Agreement to Acquire, Construct, and Equip the
Project
	 	 	9	 
	Section 4.2. Disbursements from the Construction Fund
	 	 	10	 
	Section 4.3. Furnishing Documents to Trustee
	 	 	11	 
	Section 4.4. Establishment of Completion Date
	 	 	11	 
	Section 4.5. Company Required to Pay in Event Construction
Fund Insufficient
	 	 	13	 
	Section 4.6. Enforcement of Contracts
	 	 	13	 
	Section 4.7. Ownership of Tax Benefits
	 	 	14	 
	Section 4.8. Investment of Moneys
	 	 	14	 
	Section 4.9. Plans and Specifications; Modifications to
Mortgaged Property
	 	 	15	 
	Section 4.10. Agreement to Issue Bonds; Application of
Bond Proceeds

	 	 	15	 

 

 

	 	 	 	 	 
	ARTICLE V 
	 	 	 	 
	EFFECTIVE DATE OF THIS LEASE AGREEMENT; DEFINITION OF
	 	 	 	 
	LEASE TERM; RENTAL PROVISIONS
	 	 	 	 
	 
	 	 	 	 
	Section 5.1. Effective Date of this Lease Agreement; Duration
of Lease Term
	 	 	16	 
	Section 5.2. Delivery and Acceptance of Possession
	 	 	16	 
	Section 5.3. Basic Rent and Additional Rent Payable
	 	 	16	 
	Section 5.4. Place of Rental Payments
	 	 	17	 
	Section 5.5. Obligations of Company Hereunder Unconditional
	 	 	17	 
	Section 5.6. Credit for Bonds Surrendered
	 	 	18	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	MAINTENANCE, MODIFICATIONS, IMPOSITIONS, AND INSURANCE
	 	 	 	 
	 
	 	 	 	 
	Section 6.1. Maintenance and Modifications of Mortgaged
Property by Company
	 	 	19	 
	Section 6.2. Removal of Leased Equipment
	 	 	20	 
	Section 6.3. Impositions
	 	 	21	 
	Section 6.4. Insurance Required
	 	 	22	 
	Section 6.5. Application of Net Proceeds of Insurance
	 	 	24	 
	Section 6.6. Additional Provisions Regarding Insurance
	 	 	24	 
	Section 6.7. Advances by Issuer or Trustee
	 	 	24	 
	Section 6.8. Release, and Indemnification Covenants
	 	 	25	 
	Section 6.9. Environmental considerations
	 	 	26	 
	Section 6.10. Payment in Lieu of Taxes
	 	 	26	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	DAMAGE, DESTRUCTION AND CONDEMNATION;
	 	 	 	 
	USE OF NET PROCEEDS
	 	 	 	 
	 
	 	 	 	 
	Section 7.1. Damage and Destruction
	 	 	28	 
	Section 7.2. Application of Net Proceeds
	 	 	29	 
	Section 7.3. Insufficiency of Net Proceeds
	 	 	30	 
	Section 7.4. Cooperation of Issuer
	 	 	30	 
	Section 7.5. Rights of Parties in Event of Condemnation; Bonds
Protected in Any Event
	 	 	30	 
	Section 7.6. Company Obligated to Continue Basic and Additional
Rental Payments Until Condemnation Award
Available
	 	 	32	 
	Section 7.7. Right of Company to Participate in Condemnation
Proceeding
	 	 	33	 
	Section 7.8. Issuer’s Covenant Not to Condemn
	 	 	33	 

 

 

	 	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	SPECIAL COVENANTS
	 	 	 	 
	 
	 	 	 	 
	Section 8.1. No Warranty of Condition or Suitability by
Issuer
	 	 	33	 
	Section 8.2. Inspection of the Mortgaged Property
	 	 	33	 
	Section 8.3. Company to Maintain its Corporate Existence
	 	 	34	 
	Section 8.4. Release of Certain Land
	 	 	34	 
	Section 8.5. Granting of Easements
	 	 	36	 
	Section 8.6. Compliance with Code
	 	 	36	 
	Section 8.7. Federal Guarantee Prohibition
	 	 	37	 
	Section 8.8. Limitation on Issuance Costs
	 	 	38	 
	Section 8.9. Limitation on Expenditure of Proceeds
	 	 	38	 
	Section 8.10 Limitation on Land and Certain Facilities
	 	 	38	 
	Section 8.11 Location of Project; Outstanding Obligations
	 	 	38	 
	Section 8.12 Prohibited Facilities
	 	 	38	 
	Section 8.13 No Arbitrage
	 	 	39	 
	Section 8.14 Capital Expenditure Limitation
	 	 	39	 
	Section 8.15 $40, 000, 000 Limitation
	 	 	39	 
	Section 8.16 Existing Facilities Limitation
	 	 	39	 
	Section 8.17 Compliance with Rebate Provisions
	 	 	40	 
	Section 8.18 Composite Issues
	 	 	40	 
	Section 8.19 Manufacturing Facility
	 	 	41	 
	 
	 	 	 	 
	ARTICLE IX
	 	 	 	 
	ASSIGNMENT, SUBLEASING, PLEDGING, AND SELLING; REDEMPTION;
	 	 	 	 
	OPTIONAL AND MANDATORY PREPAYMENT
	 	 	 	 
	OF RENT; ABATEMENT OF RENT
	 	 	 	 
	 
	 	 	 	 
	Section 9.1. Assignment and Subleasing
	 	 	41	 
	Section 9.2. Restrictions on Sale, Mortgage, or other
Conveyance of Mortgaged Property by Issuer
	 	 	42	 
	Section 9.3. Redemption of Bonds
	 	 	42	 
	Section 9.4. Prepayment of Rents
	 	 	42	 
	Section 9.5. Mandatory Prepayment of Rent Upon
Determination of Taxability
	 	 	42	 
	Section 9.6. Company Entitled to Certain Rent Abatement
if Bonds Paid Prior to Maturity
	 	 	43	 
	Section 9.7. Reference to Bonds Ineffective After
Bonds Paid
	 	 	43	 
	 
	 	 	 	 
	ARTICLE X
	 	 	 	 
	EVENTS OF DEFAULT AND REMEDIES
	 	 	 	 
	 
	 	 	 	 
	Section 10.1. Events of Default Defined
	 	 	43	 
	Section 10.2. Remedies on Default
	 	 	45	 
	Section 10.3. Remedies Not Exclusive
	 	 	46	 
	Section 10.4.
Rental, Damages, and Reletting Go Into Bond Fund

	 	 	46	 
	Section 10.5. Equitable Relief
	 	 	46	 
	Section 10.6. Trustee May File Proofs of Claim
	 	 	46	 

 

 

	 	 	 	 	 
	ARTICLE XI
	 	 	 	 
	OPTIONS IN FAVOR OF COMPANY
	 	 	 	 
	 
	 	 	 	 
	Section 11.1. Option to Terminate
	 	 	47	 
	Section 11.2. Option to Acquire Issuer’s Interest in
the Mortgaged Property Prior to Payment of
the Bonds
	 	 	47	 
	Section 11.3. Option to Acquire Legal Title Upon Full
Payment of Bonds
	 	 	48	 
	Section 11.4. Conveyance on Exercise of Option to
Acquire Legal Title
	 	 	48	 
	Section 11.5. Reserved ,
	 	 	49	 
	Section 11.6. Reserved
	 	 	49	 
	 
	 	 	 	 
	ARTICLE XII
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Section 12.1. Notices
	 	 	49	 
	Section 12.2. Binding Effect
	 	 	49	 
	Section 12.3. Severability
	 	 	49	 
	Section 12.4. Amendments , Changes , and
Modifications
	 	 	49	 
	Section 12.5. Priority of Agreement
	 	 	49	 
	Section 12.6. Execution Counterparts
	 	 	50	 
	Section 12.7. Captions
	 	 	50	 
	Section 12.8. Security Agreement; Recording and Filing
	 	 	50	 
	Section 12.9. Law Governing Construction of Agreement
	 	 	50	 
	Section 12.10. Estoppel Certificate
	 	 	50	 
	 
	Execution
	 	 	51	 
	 
	 	 	 	 
	Exhibit A
	 	 	 	 
	 
	Exhibit B
	 	 	 	 

 

 

LEASE AGREEMENT

     This
Lease Agreement dated as of April 1, 1995, is between the CITY OP PARAGOULD,
ARKANSAS (hereinafter called “Issuer”), a municipal corporation organized and existing under
the laws of the State of Arkansas (“State”), as lessor, and
AMERICAN
RAILCAR INDUSTRIES, INC. (hereinafter called “Company”) , a corporation organized and
existing under the laws of the State of Missouri as lessee.

W I T N E S S E T H:

     WHEREAS, Issuer is authorized by the Municipalities and Counties
Industrial Development Revenue Bond Law, Ark. Code Ann. §§ 14-164-201 to -224
(1987) (the “Act”) , to acquire lands, construct and equip industrial buildings,
improvements, and facilities, and incur other costs and expenses and make
other expenditures incidental to and for the securing and developing of
industry; and

     WHEREAS, Issuer is authorized by the Act to issue industrial development
revenue bonds payable from revenues derived from the industrial project so
acquired and constructed and secured by a lien thereon and security interest
therein; and

     WHEREAS, the necessary arrangements have been made with Company for the
acquisition, construction, and equipping of a substantial industrial project
consisting of a manufacturing facility for railroad cars or related industrial
products with attached office or any other manufacturing or industrial
use provided for in Section 2.2(c) hereof (the “Project”), and to
lease the Project to Company for use in Company’s business; and

     WHEREAS, Company desires that Issuer issue its Industrial Development
Revenue Bonds (American Railcar Industries, Inc./ACF Industries, Incorporated
Railcar Manufacturing Project), Series 1995 (the “Bonds”) , to provide funds
to acquire, construct, and equip the Project, and Issuer has agreed to do the
same;

     WHEREAS, pursuant to an Ordinance adopted March 27, 1995, the Issuer has
authorized the execution and delivery of this Lease Agreement; and

     WHEREAS, pursuant to a Trust Indenture, dated as of the date hereof,
between Issuer and Fleet National Bank, a national banking association duly
organized, validly existing, and in good standing under the laws of the United
States, having all requisite power and authority to act as trustee, and having
its principal corporate trust office in Providence, Rhode Island, as Trustee,
Issuer intends to assign to Trustee as security for the Bonds its
interest in this Agreement (except for the reimbursement of certain

 

 

expenses, payment of the renewal option price, payment of the optional
purchase price for the Leased Land, and payments for indemnification of
Issuer);

     NOW, THEREFORE, in consideration of the respective representations and agreements
hereinafter contained Issuer and Company agree as follows (provided, that in the
performance of the agreements of Issuer herein contained, any obligation it
may thereby incur for the payment of money shall not be a general debt on its part,
but shall be payable solely out of the proceeds derived from this Lease Agreement, the
sale of the bonds referred to in Section 2.1 hereof, and the insurance proceeds
and condemnation awards as herein provided and the Issuer’s estate and interest in
the Mortgaged Property):

ARTICLE I

DEFINITIONS

     All words and phrases defined in the indenture shall have
the same meanings for purposes of this Lease Agreement. In
addition, the following words and terms shall have the following meanings:

     “Agreed Rate” means 8 percent per annum.

     “AuthoriZed Issuer Representative” means the person or persons,
satisfactory to Company, at the time designated to act on behalf of- Issuer
by written certificate furnished to Company and Trustee containing the
specimen, signature (s) of such person(s) and signed on behalf of Issuer by
its Mayor. Such certificate may designate an alternate or alternates.

     “Collateral” means all machinery, equipment, furniture, and fixtures and
other personal property of every kind and nature whatever acquired by Company
and paid for or reimbursed to Company for the cost thereof out of the
Construction Fund or other funds provided by the Company pursuant to Section
4.5 of this Agreement and placed on and in the Leased Land and Buildings
including, Without limitation, all replacements and substitutions of all
of , the foregoing and the proceeds of all of the foregoing. All
such machinery, equipment, furniture, fixtures, and other
personal property shall be identified in a ledger, one copy of which
shall be filed with Trustee and one copy maintained by Company on
the Mortgaged Property. The term Collateral does not include
any equipment leased by Company from any lessor other than Issuer
(the “Equipment”) .

     “Construction Period” means the period between the beginning of
construction or April 27, 1995 (whichever is earlier) and the Completion
Date.

     “Lease Term” means the duration of Company’s right to use
and occupy the Mortgaged Property as specified in Section 5.1 of
this Lease Agreement.

2

 

     “Official Action Date” means November 28, 1994.

     “Permitted Encumbrances” means, as of any particular time, (i) the
Indenture and the Lease Agreement, (ii) any easements, licenses, rights of way
(including the dedication of public, highways), and other rights or privileges
in the nature of easements with respect to any property included in the
Mortgaged Property, granted or conveyed in accordance with and pursuant
to Section 8.5 of this Lease Agreement, (iii) utility, access,
and other easements and rights-of-way, restrictions,
reservations, reversions, and exceptions that an Independent Engineer,
acceptable to Trustee and Company certify will not interfere with or
impair the operations being conducted in the Mortgaged Property (or, if
no operations are being conducted therein, the operations for
which the Mortgaged Property was designed or last modified) , (iv)
such minor defects, irregularities, encumbrances,
easements, rights-of-way, and clouds on title as normally exist with
respect to properties similar in character to the Mortgaged Property,
and as do not, in the opinion of any Counsel acceptable to
Trustee, materially impair the property affected thereby for the purpose
for which it was acquired or is held by Issuer, (v) any judgment
lien against the Company so long as such judgment is being contested
and execution thereon is stayed, (vi) any liens on the
Mortgaged Property for taxes, payments-in-lieu of taxes, assessments,
levies, fees, water and sewer rents, other governmental and
similar charges, and any liens of mechanics, materialmen,
laborers, suppliers or vendors for work or services performed or
materials furnished in connection with the Mortgaged Property, which are
not due and payable or which are not delinquent, or the amount
or validity of which, are being contested in accordance with the
terms of this Lease Agreement, (vii) any lien on accounts
receivable securing or deemed to secure any indebtedness incurred or
deemed incurred by virtue of any recourse obligation associated with
any sale or assignment of accounts receivable; and (viii) any lien
or encumbrance or reservation of title affecting
personalty constituting part of the Mortgaged Property.

     “Permitted Investments” means:

     (a) Governmental Obligations;

     (b) obligations of any of the following federal agencies which
represent full faith and credit of the United States
of America: Farmers Home
Administration, General Services Administration, United
States Maritime Administration,
Small Business Administration, Government National
Mortgage Association, United States Department of Housing and
Urban Development, and Federal Housing Administration;

     (c) U.S. dollar denominated deposit accounts fully insured to the
holder by the Federal Deposit Insurance Corporation in commercial banks;

3

 

     (d) U.S. dollar denominated deposit accounts, federal funds,
and banker’s acceptances with commercial banks (foreign or domestic)
which have a rating on their short term certificates of deposit on the
date of purchase of “A-1” or “A-1+” by S&P or “P-l” by Moody’s and
maturing no more than 360 days after the date of purchase;

     (e) money market funds rated in the highest rating category of S&P
or Moody’s which are monitored quarterly or money market funds which
are invested exclusively in Government Obligations;

     (f) pre-refunded municipal obligations,
which obligations shall be limited to bonds or other obligations
of any state of the
United States or of any agency, instrumentality, or local governmental unit of any such state (i) which are not
callable at the option of the obligor prior to maturity or as to which
irrevocable notice has been given by the obligor to call on the date
specified in the notice; (ii) which are fully secured as to principal
and interest and redemption premium, if any, by a fund consisting only
of cash or obligations described in paragraph (a) above, which
fund may be applied only to the payment of such principal of
and interest and redemption premium, if any, on such bonds
or other obligations on the maturity date or dates thereof or
the specified redemption date
or dates pursuant to such irrevocable
instructions, as appropriate; (iii) which fund is sufficient, as
verified-by an independent accountant, to pay principal of and interest
and redemption premium, if any, on the bonds or other obligations
describied in this paragraph on the maturity date or dates thereof or
the redemption date or dates specified in the irrevocable instructions
referred to in subclause (i) of this paragraph, as appropriated; and
(iv) which are rated, based on the escrow, in the highest
rating category of S&P or Moody’s, or any successors thereto; and

     (g) U.S. dollar denominated certificates of deposit in commercial
banks properly secured at all times by collateral security described in
(a) and (b) above.

     “Qualified Project Costs” means costs and expenses of the Project which
constitute land costs or costs for property of a character subject to the
allowance for depreciation, excluding specifically working capital and
inventory costs, provided, however, that (a) costs or expenses paid or
incurred more than sixty days prior to the Official Action Date shall not be
deemed to be Qualified Project Costs; (b) Issuance Costs shall not be
deemed to be Qualified Project Costs; (c) interest during the
Construction Period shall be allocated between Qualified Project Costs and
other costs and expenses to be paid from the proceeds of the Bonds;
(d) interest following the Construction Period shall not constitute
a Qualified Project Cost; (e) letter of credit fees and municipal

4

 

bond insurance premiums which represent a transfer of credit risk shall
be allocated between Qualified Project Costs and other costs and expenses to be
paid from the proceeds of the Bonds; and (f) letter of credit fees and
municipal bond insurance premiums which do not represent a transfer of the
credit risk shall not constitute Qualified Project Costs.

     “Yield” means yield computed under Regulation §1.148-4 for the Bonds and
yield computed under Regulation for an investment.

ARTICLE II

REPRESENTATIONS

     Section 2.1.
Representations by Issuer. Issuer makes the following
representations as the basis for the undertakings on its part herein
contained:

     (a) Under the provisions of the Act and the Constitution of
the State, Issuer is authorized to enter into the transactions to
be performed by it under this Lease Agreement and the Indenture and to
carry out its obligations hereunder and thereunder. Issuer has
been duly authorized to execute and deliver this Lease Agreement and the
Indenture.

     (b) Issuer will perform all of its obligations with reference to
the acquiring, constructing, and equipping of the Project as specified
in Article IV of-this Lease Agreement.

     (c) Notwithstanding anything herein contained to the contrary, it is the
intention of Issuer that any obligation it

     may hereby incur for the payment of money shall not be a general debt
on its part but shall be payable solely from the proceeds derived from
this Lease Agreement, the sale of the Bonds, and the insurance and
condemnation awards as herein provided and the Issuer’s estate and
interest in the Mortgaged Property.

     (d) issuer has been induced to enter into this undertaking by
the promise of Company to locate industrial facilities within or near
the corporate limits of Issuer.

     (e) In order to furnish necessary moneys for. the payment of
Project Costs and a portion of the expenses of authorizing and issuing
the Bonds, Issuer has authorized the issuance of the Bonds.

     (f) The Bonds are to be issued under and secured by the Indenture,
pursuant to which Issuer’ s interest in this Lease Agreement and the
revenues and income derived by Issuer from the leasing of the Mortgaged
Property will be. assigned to Trustee as security for payment of the
principal of and

5

 

premium, if any, and interest on the Bonds, and the Bonds will be secured by a
mortgage on and security interest in Issuer’s interest in the Mortgaged Property (provided
that in the performance of the agreements of the Issuer herein contained, any obligation
that Issuer may thereby incur for the payment of money shall be limited to the Issuer’s
estate or interest in the Mortgaged Property and shall not be a general debt on its part,
but shall be payable solely out of the proceeds derived from this Agreement, the sale of the
Bonds referred to in Section 2.1 herein, and the insurance proceeds and condemnation awards
as herein provided) and provided further that the obligations of Company under the Bonds,
this Agreement and Indenture are guaranteed by ACF Industries, Incorporated and the Company
pursuant to the Guaranty.

     (g) Not later than the 15th day of the second calendar month after the close of the
calendar quarter in which the Bonds are delivered by Issuer pursuant to Article II of the
Indenture, Issuer covenants to satisfy the information reporting requirement of Section
149(e) of the Code.

       Section 2.2. Representations by Company. Company makes the following representations as the
basis for the undertakings on its part herein contained:

     (a) Company is a corporation duly incorporated under the laws of the State of
Missouri, is in good standing under the laws of the State of Missouri and the State, and
has power to enter into this Lease Agreement, the Hazardous Substance Certification and
Indemnification, and the Guaranty, and to perform all obligations contained herein and
therein, and by proper corporate action, has been duly authorized to execute and deliver
this Lease Agreement, the Hazardous Substance Certification and Indemnification, and the
Guaranty.

     (b) The leasing by Issuer of the Mortgaged Property to Company will induce Company to
acquire, construct, and equip an industrial enterprise within or near the corporate limits
of Issuer.

     (c) Company will operate the Mortgaged Property upon its completion as (i) a
manufacturing facility for railroad cars or related industrial products with attached
office or (ii) any other manufacturing or industrial use provided that such use (a) is
consistent with the Act and with a Manufacturing Facility (as such term is defined in
Section 144 (a) (12) of the Code and (b) does not violate any other requirements of the
Code and applicable Regulations so that interest on the Bonds shall at any time cease to be
excluded from gross income for federal income tax purposes, until the expiration or earlier

6

 

termination of the Lease Term as provided herein, all to the extent that such operation is,
in Company’s judgment, commercially desirable.

     (d) Neither the execution and delivery of this Lease Agreement, the Hazardous
Substance Certification and Indemnification, and the Guaranty, the consummation of the
transactions contemplated hereby and thereby, nor the fulfillment of or compliance with the
terms and conditions hereof and thereof conflicts with or results in a material breach of the
terms, conditions, or provisions of the Articles of Incorporation or bylaws of Company or any
agreement or instrument to which Company is now a party or by which Company is bound, or
constitutes a material default under any of the foregoing, or results in the creation or
imposition of any lien, charge, or encumbrance whatsoever upon any of the property or assets of
Company under the terms of any instrument or agreement except as provided herein.

     (e) There is no action, suit, proceeding, inquiry, or investigation, at law or in equity,
before or by any court or public board or body, known to be pending or threatened against or
affecting Company, nor to the best of the knowledge of Company is there any basis therefor,
wherein an unfavorable decision, ruling, or finding would materially adversely affect the
transactions contemplated by this Lease Agreement or which, in any way, would materially adversely
affect the validity or enforceability of the Bonds, this Lease Agreement, the Hazardous Substance
Certification and Indemnification the Guaranty, or any other agreement or instrument, to which
Company is a party, used or contemplated for use in the consummation of the transactions
contemplated hereby.

     (f) The Project consists of land, buildings, Leased Equipment, or facilities that can be used
to secure and develop industry within or near the City of Paragould, Arkansas.

     (g) The proceeds from the sale of the Bonds will be used only for the payment of Cost of the
Project and paying a portion of the costs of issuing the Bonds.

     (h) The Mortgaged Property complies, or will comply upon completion of construction, with all
presently applicable building and zoning ordinances where failure to comply would have a materially
adverse effect on Company’s ability to utilize the Mortgaged Property for the purposes intended.

     (i) Company agrees to cooperate with Issuer in the performance of Issuer’s obligations
under the Indenture.

7

 

     (j) No changes shall be made in the Project and no actions will be taken by
Company which shall in any way impair the exemption of interest on any of the Bonds from
federal income taxation.

     (k) Company will comply with and fulfill all other requirements and conditions of the
Code and regulations and rulings issued pursuant thereto in the acquisition, construction,
equipping, and operation of the Project to the end that the interest on the Bonds shall at
all times be free from federal income taxation.

     (l) The Project is substantially the same in all material respects to that described
in the notice of public hearing published in the Paragould Daily Press on March 10, 1995
and the amended notice of public hearing published in the Paragould Daily Press on March
21, 1995.

     (m) Subject to the provisions of Section 6.9, Company acknowledges that it has leased
the Leased Land “as is”.

       Section 2.3. Intention. It is intended by the parties hereto that this Lease Agreement and
all actions taken hereunder be consistent with and pursuant to the ordinances of Issuer relating
to the Bonds, and that the interest on the Bonds be excluded from the gross income of the
recipients thereof for federal income tax purposes by reasons of the provisions of Section 144 (a)
of the Code or any substantially similar successor provision hereinafter enacted.

ARTICLE III

DEMISING CLAUSES AND WARRANTY OF TITLE

       Section 3.1. Demise of the Leased Land, Buildings, and the Leased Equipment. Issuer
demises and leases to Company, and Company leases from Issuer, the Mortgaged Property at the
rental set forth in Section 5.3 hereof and in accordance with the provisions of this Lease
Agreement. Notwithstanding the definition of Mortgaged Property as all property and personalty
demised under the Lease Agreement, the Issuer and the Company hereby acknowledge that this Lease
Agreement is superior in lien to the lien of the Indenture.

       TO HAVE AND TO HOLD the Mortgaged Property unto Company for the term of this Lease Agreement
as hereafter set forth.

       Section 3.2. Warranty of Title. Issuer warrants that it lawfully owns and is lawfully
possessed of the Leased Land and that it has good and merchantable title and estate therein, free
from all encumbrances other than Permitted Encumbrances, but it has no liability in regard
thereto. Issuer will obtain an ALTA lender’s

8

 

extended coverage title insurance policy which runs in favor of Trustee, in form and with such
exceptions as shall be acceptable to Trustee (the cost of which is to be defrayed from the
Construction Fund), issued by a title insurance company designated by Company in the amount of
$9,500,000 with an option to increase such insurance from time to time up to the full insurable
value of the Mortgaged Property if Company shall so direct.

     Section 3.3. Quiet Enjoyment. Issuer covenants and agrees that Company, upon paying the rent
herein and upon performing and observing the covenants, conditions, and agreements hereof, shall
and may peaceably hold and enjoy the Mortgaged Property during the Lease Term without any
interruption or disturbance, subject however, to the terms of this Lease Agreement.

     Section 3.4. Zoning. Anything herein and elsewhere contained to the contrary, this Lease
Agreement and all the terms, covenants, and conditions hereof are in all respects subject and
subordinate to all zoning restrictions affecting the Leased Land and Company shall be bound by
such restrictions. Issuer represents and warrants that the intended use of the Mortgaged Property
by Company is permitted under applicable zoning laws.

ARTICLE IV

ACQUISITION, CONSTRUCTION, AND EQUIPPING OP THE PROJECT;

ISSUANCE OF THE BONDS

     Section 4.1. Agreement to Acquire, Construct, and Equip the Project. After the Bond proceeds
are available, Issuer (or Company, as agent for Issuer) will enter into or accept the assignment
of contracts or purchase orders having terms, conditions, drawings, specifications, and other
provisions designated and prescribed by Company for acquiring, constructing, and equipping the
Project. All payments necessary to acquire, construct, and equip the Project shall be made out of
the Construction, Fund or other funds provided by the Company pursuant to Section 4.5 hereof, and
Company shall be reimbursed out of the Construction Fund, for all expenditures made by it in
connection with the Project. Title to all machinery, equipment and personal property of every
nature paid for out of the Construction Fund or other funds provided by the Company pursuant to
Section 4.5 of this Agreement (either by direct payment or by virtue of reimbursement to Company)
shall be vested in, or be transferred to, Issuer. The Collateral does not include any Equipment
leased by the Company from any Lessor (as defined in the Indenture) other than the Issuer. The
obligations of Issuer hereunder are subject to the provisions of this Lease Agreement limiting the
obligations of Issuer to the extent of moneys in the Construction Fund.

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     Company, with the cooperation of Issuer when necessary, shall obtain all necessary
approvals from any and all governmental agencies requisite to the constructing and equipping of
the Project, and the Project shall be constructed and equipped in compliance with all federal,
State, and local laws, ordinances, and regulations applicable thereto.

     All requests, approvals, and agreements required on the part of Issuer and Company shall be
in writing, signed by the Authorized Issuer Representative and/or the Authorized Company
Representative, as appropriate, granting such approval or entering into such agreement. Issuer
and Company shall, concurrently with the delivery of this Lease Agreement, notify each other and
Trustee of the Authorized Representative of each. It is agreed that each party may have more than
one Authorized Representative and may change the Authorized Representative or Representatives
from time to time, with each such change to be in writing forwarded to the other party and
Trustee. The Authorized Representative of each party so designated shall be authorized to enter
into and execute any contracts or agreements or to grant any approvals or to take any action for
and on behalf of the party hereto represented by him, and the other party to this Lease Agreement
shall be entitled to rely upon the duly designated Authorized Representative as having full
authority to bind the party hereto represented by him.

       Section 4.2. Disbursements from the construction Fund.
Issuer has, in the Indenture, authorized and directed Trustee to make disbursements from the
Construction Fund to pay the Cost of the Project or to reimburse Company for any Cost of the
Project paid by Company. 

     Trustee shall make disbursements upon receipt of a requisition signed by an Authorized
Company Representative:

     (a) stating with respect to each disbursement to be made: (i) the requisition number, (ii)
the name and address of the person, firm, or corporation to whom payment is due, (iii) the amount
to be disbursed, (iv) that each obligation mentioned therein has been properly incurred, is a
proper charge against the Construction Fund, and has not been the basis of any previous
disbursement, (v) with respect to any requisition for payment for work, material, or supplies,
that such obligation was incurred for work, materials or supplies in connection with the
acquisition, construction, and equipping of the Project, (vi) that at least 95 percent of the
amount requested for disbursement will be used for the payment of Qualified Project Costs, (vii)
that all property to be acquired with the proceeds of the disbursement will be owned by Issuer,
(viii) that no portion of the amount requested for disbursement will be used in the manner
prohibited in Sections 8.11 or 8.13 of this Lease Agreement, and (ix) that no portion of the
amount requested for disbursement will be used for the

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acquisition of existing property except upon compliance with Section 8.16 of this
Lease Agreement;

     (b) specifying in reasonable detail the nature and purpose of the obligation,
including (i) that such obligation has been properly incurred, is a proper charge against
the Construction Fund, is a proper cost of the Project as defined in the Act and has not
been the basis of any previous withdrawal, (ii) that the Authorized Company Representative
has no written notice of any mechanics’, materialmen’s, or other liens or rights to liens
or other obligations (other than those being contested in good faith) which should be
satisfied or discharged before payment of such obligation is made, (iii) that such payment
does not include any amount which is then entitled to be retained under any holdbacks or
retainages provided for in any agreement, (iv) that there exists no event of default or any
event which, with notice or the passage of time or both, would result in any event of
default;

     (c) with respect to the first disbursement to be made for Costs of the Project,
Company shall provide Trustee with a certificate of an officer of Company that the Project,
as designed, complies with all presently applicable building and zoning ordinances
applicable to the Project; and

     (d) accompanied by a lien search certified by the circuit clerk or by Chicago Title
Insurance Company or any successor or replacement to Chicago Title Insurance Company
approved by the Trustee, that there are no mechanics’ liens or other liens or encumbrances
other than the Permitted Encumbrances recorded in the lien register against the Mortgaged
Property as of the date of such disbursement request.

     In making any payment from the Construction Fund, Trustee may rely conclusively on
requisitions and certificates delivered to it pursuant to this Section, and Trustee and Issuer
shall be relieved of all liability with respect to the accuracy of such requisitions and
certificates and the making of such payments in accordance with such requisitions and
certificates and all liability to see to the proper application thereof by Company.

     Section 4.3. Furnishing Documents to Trustee. Company agrees to cause such requisitions
to be directed to Trustee as may be necessary to effect payments out of the Construction Fund in
accordance with Section 4.2 hereof. Trustee shall retain a record of all such requisitions.

     Section 4.4. Establishment of Completion Date. The Completion Date shall be evidenced to Issuer and Trustee by (a) a certificate signed by an
Authorized Company Representative stating

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that, except for amounts retained by Trustee at Company’s direction for any Cost of the Project not
then due and payable, (i) acquisition and construction of the Project has been substantially
completed and all costs of labor, services, materials, and supplies used in such acquisition and
construction have been paid, except for punch list items, for which adequate reserves shall have
been established (ii) all equipment for the Project has been installed to Company’s satisfaction,
such equipment so installed is suitable and sufficient for the operation of the Project, and
substantially all costs and expenses incurred in the acquisition and installation of such equipment
have been paid, and (iii) all other facilities necessary in connection with the Project have been
acquired, constructed, and equipped and all costs and expenses incurred in connection therewith
have been paid and (b) certificate signed by an Authorized Company Representative stating that the
Project has been substantially completed in accordance with all plans and specifications for the
Project and complies with all applicable federal, State, and local laws, regulations, and other
governmental requirements (including, without limitation, the federal Americans with Disabilities
Act) . Notwithstanding the foregoing, the certificate required by clause (a) above shall state that
it is given without prejudice to any rights against third parties which exist at the date of such
certificate or which may subsequently come into being. Forthwith upon substantial completion of the
acquisition, construction, and equipping of the Project, Company agrees to cause such certificates
to be furnished to Issuer and Trustee.

       Any moneys in the Construction Fund remaining after the Completion Date and payment, or
provision for payment, of the costs of financing the Project described above, at the direction of
the Authorized Company Representative, promptly, and in all events on or before April 27, 1998,
shall be:

     (i) used to acquire, construct, equip and install such additional real or personal
property in connection with the Project, in accordance with the applicable provisions of
the Code (including the public notice requirements therein) , as is designated by the
Authorized Company Representative and the acquisition, construction, equipping and
installation of which will be permitted under the Act, provided that any such use shall be
accompanied by evidence satisfactory to the Trustee that the average reasonably expected
economic life of such additional property, together with the other property theretofore
acquired with the proceeds of the Bonds, will not be less than 5/6ths of the average
maturity of the Bonds or, if such evidence is not presented with the direction, an opinion
of Bond Counsel to the effect that the acquisition of such additional property will not
result in the interest on the Bonds becoming subject to federal income taxation, and
provided further that any such additional real or personal property shall be Mortgaged
Property or Collateral, as applicable, pursuant to the terms of this Lease Agreement and
Indenture;

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     (ii) used to redeem Bonds in accordance with the terms of the Indenture; or

     (iii) used to accomplish a combination of the foregoing as is provided in that
direction.

     Any amounts transferred from the Construction Fund to the Bond Fund shall be treated as a
separate, restricted fund within the Bond Fund and may be invested and reinvested at the written
direction of the Authorized Company Representative by Trustee only in investments designated by the
Authorized Company Representative and permitted by the Indenture. The Authorized Company
Representative shall in no event direct such investment such that the Yield on such investments
would be in excess of the Yield on the Bonds. Trustee shall, to the extent of the funds available,
apply such transferred funds to the redemption of Bonds (not including interest) on the earliest
date that such Bonds are subject to redemption in accordance with and in the manner provided in the
Indenture.

     Section 4.5. Company Required to pay in Event Construction Fund Insufficient. In the event
the moneys in the Construction Fund available for payment of the Cost of the Project should not be
sufficient to pay the Cost of the Project in full, Company agrees to complete the Project and to
pay that portion of the Cost of the Project in excess of the moneys available therefor in the
Construction Fund or to lease Equipment to complete the Project. Issuer does not make any
warranty, either express or implied, that the moneys paid into the Construction Fund and available
for payment of the Cost of the Project will be sufficient to pay all of the Cost of the Project.
Company agrees that if, after exhaustion of the moneys in the Construction Fund, Company should
pay any portion of the Cost of the Project pursuant to the provisions of this Section, Company
shall not be entitled to any reimbursement therefor from Issuer, Trustee, or the owners of any of
the Bonds, nor shall company be entitled to any limitation of the amounts payable under Section
5.3 hereof.

     Section 4.6. Enforcement of Contracts.

     (a) Issuer covenants that it will, upon request of the Company, execute and deliver to the
Company or as the Company may otherwise direct, any agreement or contract required to be signed by
the Issuer in connection with the Company’s acquisition, construction, equipping and operation of
the Project, provided, however, that the execution and delivery of any such agreement(s) by the
Issuer shall not affect the status of the Bonds as limited obligations of the Issuer payable solely
out of the proceeds derived from this Lease Agreement, the sale of the Bonds referred to in Section
2.1 hereof, and the insurance proceeds and condemnation awards as herein provided.

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     (b) Issuer covenants that it will take any action and institute any proceedings
requested by Company to cause and require all contractors and material suppliers to complete
their contracts diligently in accordance with the terms of said contracts, including, without
limitation, the correcting of any defective work. All expenses incurred by Issuer in connection
with the performance of its obligations under this Subsection (a) may be considered part of the
Cost of the Project, and Issuer agrees that Company may, from time to time, in its own name, or
in the name of Issuer, take such action as may be necessary or advisable, as determined by
Company, to insure the construction of the Project in accordance with the terms of the
construction contract and the installation of machinery and equipment in accordance with any
applicable contract pertaining thereto, to insure the peaceable and quiet enjoyment of the
Mortgaged Property for the term of this Lease Agreement.

     (c) The Issuer shall notify the Company of the existence of any warranties and/or guaranties
received by the Issuer in connection with the Project and if requested by Company, Issuer will
assign and extend to Company any vendor’s warranties received . by Issuer in connection with
machinery and equipment purchased by Issuer for the Project, together with any warranties given by
contractors, manufacturers, or service organizations who perform construction work or install any
machinery and equipment on or in the Project. If requested, Issuer will execute and deliver
instruments of assignment to Company to accomplish the foregoing.

     Section 4.7. Ownership of Tax Benefits. It is the intention of the parties that any tax
benefits resulting from ownership of the Mortgaged Property and any tax credit or comparable
credit which may ever be available shall accrue, to the benefit of Company, and Company shall,
and Issuer upon advice of counsel may, make any election and take other action in accordance
with the Code and the regulations promulgated thereunder as may be necessary to entitle Company
to have such benefit and credit.

     Section 4.8. Investment of Moneys. Money held for the credit of any fund or account created
in the Indenture shall, to the extent practicable, be invested and reinvested by Trustee as
directed in writing by the Authorized Company Representative in Permitted Investments which
shall mature not later than the date or dates on which the money held for credit of the
particular fund shall be required for the purposes intended. Trustee shall sell or reduce to
cash a sufficient amount of such investments in the Construction Fund whenever the cash balance
in the Construction Fund is insufficient to pay a requisition when presented, and such
investments in the Bond Fund whenever the cash balance in the Bond Fund is insufficient to pay
the principal of and premium, if any, and interest on the Bonds when due. The Trustee shall have
no liability for any loss on such sale or reduction to cash absent gross negligence or wilful
misconduct.

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     Trustee may make any and all such investments through its own investment department
or the investment department of any bank or trust company under common control with Trustee.
Issuer shall have no responsibility for control of or directing such investments and shall not be
held accountable for any losses resulting from any such investments. All such investments and the
income thereon shall at all times be a part of the fund (the Construction Fund the Bond Fund, or
such other fund, as the case may be) from which the moneys used to acquire such investments shall
have come, and all losses on such investments shall be charged against such fund. All investments
shall be registered in the name of Trustee, as Trustee under the Indenture.

     Section 4.9. Plans and Specifications; Modifications to Mortgaged Property. Company agrees to
maintain plans and specifications for the Mortgaged Property. Company may make any changes in or
modifications of the plans and specifications, and may make any deletions from or substitutions or
additions to the Mortgaged Property without the prior consent of Issuer so long as such changes or
modifications in the plans and specifications, or deletions from or substitutions or additions to
the Mortgaged Property, do not materially alter the size, scope, or character of the Mortgaged
Property or impair the structural integrity and utility of the Mortgaged Property. If any such
changes in or . modifications of the plans and specifications, or if any such deletions from or
substitutions or additions to the Mortgaged Property, materially alter the size, scope, or
character of the Mortgaged Property or impair the structural integrity and utility of the Mortgaged
Property then, and in such event, no such changes, modifications, substitutions, deletions, or
additions shall be made without the express written consent of Issuer, which consent shall not be
unreasonably withheld. No changes in or modifications of the plans and specifications and no
deletions from or substitutions or additions to the Mortgaged Property may be made without prior
approval of the contractor’s sureties if required by the terms of any indemnity bond. Company
covenants and agrees that no changes, modifications, substitutions, deletions, or additions shall
be made with respect to the Mortgaged Property (a) if such change disqualifies the Project under
the Act or results in interest on the Bonds being includable in the gross income of the Owners of
the Bonds for federal income tax purposes, and (b) unless there shall be on deposit with Trustee
adequate moneys available therefor or Company deposits in the Construction Fund adequate moneys to
pay any additional Cost of the Project resulting therefrom.

     Section 4.10. Agreement to Issue Bonds; Application of Bond Proceeds. In order to provide
funds for payment of the Cost of the Project, Issuer, concurrently with the execution of this
Lease Agreement, will issue, sell, and deliver the Bonds and deposit the proceeds thereof in the
Construction Fund.

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ARTICLE V

EFFECTIVE DATE OF THIS LEASE AGREEMENT; DEFINITION OF

LEASE TERM; RENTAL PROVISIONS

     Section 5.1. Effective Date of this Lease Agreement; Duration of Lease Term. This Lease
Agreement shall become effective upon its delivery, and the leasehold estate created herein shall
then -begin, and, subject to the provisions of this Lease Agreement (including particularly
Sections 5.3 and 7.5 hereof and Articles X and XI hereof) , shall continue until the later of (a)
such date as payment has been made in full of the Bonds, including, without limitation, the payment
of principal, interest to the payment date, premium, if any, Trustee’s fees and expenses, and
registrars’ fees and expenses, or provision for such payment has been made as provided in the
Indenture or (b) at midnight,. Local Time April 1, 2010.

     Section 5.2. Delivery and Acceptance of Possession. Issuer agrees that Company shall have
possession of the Mortgaged Property (subject to the right of Trustee to enter thereon for
inspection purposes and to the other provisions of Section 8.2 hereof) whenever such possession is
desired by Company, provided such possession does not unreasonably interfere with the construction
of the Buildings or installation of the Leased Equipment, and Company may install, maintain, and
operate its own equipment during the Construction” Period.

     Section 5.3. Basic Rent and Additional Rent Payable.

     (a) Basic Rent.

     (i) On or before two Business Days prior to each Interest Payment Date, and on or
before two Business Days prior to any date on which any or all of the Bonds shall be
declared to be and shall become due and payable prior to their stated maturity pursuant to
the provisions of the Indenture, by redemption or otherwise, Company shall pay directly to
Trustee in immediately available funds the aggregate amount of principal, premium, if any,
and interest becoming due and payable on the Bonds on such date.

     Anything herein to the contrary notwithstanding, any amount at any time held by
Trustee in the Bond Fund (except for any amounts held in any separate, restricted fund
within the Bond Fund created pursuant to Section 4.4 of this Lease Agreement) shall be
credited against the next succeeding rental payment and shall reduce the payment to be made
by Company to the extent such amount is in excess of the amount required for payment of
Bonds theretofore matured or called for redemption and past due interest in all cases where
such Bonds have not been presented for payment; and further, if the amount held by Trustee
in the Bond Fund should be sufficient to pay at the times required the principal of and
premium, if any, and interest on the Bonds then remaining unpaid, Company

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shall not be obligated to make any further rental payments under the provisions of
this subsection (a)(i).

     (ii) Company will pay the amount, if any, required to be rebated to the United
States of America pursuant to section 148(f) of the Code.

     (b) Additional Rent.

     (i) Company will pay the reasonable fees and expenses of Issuer related to the
issuance of the Bonds or in connection with the Project and incurred upon the written
request of Company.

     (ii) Company will pay the reasonable fees and expenses of Trustee under the
Indenture, including the reasonable fees and expenses of the Trustee’s attorneys and
agents, such reasonable fees and expenses to be paid directly to Trustee for its own
account as and when such reasonable fees and expenses become due and payable, and any
reasonable expenses in connection with any redemption of the Bonds.

     It is understood and agreed that all payments payable by Company under subsections 5.3(a)(i)
of this Section are assigned by Issuer to Trustee as collateral security for the benefit of the
owners of the Bonds. Company assents to such assignment.

     In the event Company should fail to make any of the payments required in this Section, the
item or installment so in default shall continue as an obligation of Company until the amount in
default shall have been fully paid, and Company agrees to pay the same with interest thereon or
with respect to payments to Trustee or Issuer with interest thereon, to the extent permitted by
law, from the date thereof at the Agreed Rate.

     Payments made on account of the indebtedness evidenced by the Bonds and secured by the
Indenture, or as otherwise required to be paid pursuant to the provisions of the Indenture or this
Lease Agreement, whether made to the Trustee or otherwise, by the Company or by the Guarantor,
shall constitute payments of Basic Rent and/or Additional Rent, as the case may be, under this
Lease Agreement.

     Section 5.4. Place of Rental Payments. Issuer hereby directs Company and Company hereby
agrees to pay to Trustee at Trustee’s principal corporate trust office all payments payable by
Company pursuant to subsections 5.3(a) and 5.3(b)(ii).

     Section 5.5. Obligation of Company Hereunder Unconditional.
Subject to the provisions of Section 9.6 hereof, the obligations of Company to make the payments
required in Section 5.3 hereof and to perform and observe the other agreements on its part
contained herein shall be absolute and unconditional, and the payments required in Section 5.3
shall be certainly payable on the dates and at the times specified without notice or demand, and
without abatement or set-off, and regardless of any contingencies

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whatsoever, and notwithstanding any circumstances or occurrences that may now exist or that
may hereafter arise or take place,including, but without limiting the generality of the foregoing:

     (a) The unavailability of the Mortgaged Property or any part thereof for use by
Company at any time by reason of the failure to complete the overall industrial project by
any particular time or at all or by reason of any other contingency, occurrence, or
circumstance whatsoever;

     (b) Damage to or destruction of the Mortgaged Property or any part thereof;

     (c) Legal curtailment of Company’s use of the Mortgaged Property or any part
thereof;

     (d) Change in Issuer’s legal organization or status;

     (e) The taking of title to or the temporary use of the whole or any part of the
Mortgaged Property by condemnation;

     (f) Any termination of this Lease Agreement for any reason whatsoever;

     (g) Failure of consideration or commercial frustration of purposes;

     (h) Any change in the tax or other laws of- the United States of America or of the
State;

     (i) Any default of Issuer under this Lease Agreement or any other default or
failure of Issuer whatsoever.

     Nothing contained in this Section shall be construed to release Issuer from the performance
of any of the provisions of this Lease Agreement on its part to be performed.

     Company covenants that it will not enter into any contract, indenture, or agreement of any
nature whatsoever which shall in any way limit, restrict, or prevent Company from performing any
of its obligations under this Lease Agreement.

     Section 5.6. Credit for Bonds Surrendered. Company shall have the right to surrender Bonds
acquired by it to Trustee. Bonds so surrendered shall be forthwith cancelled and the principal
amounts thereof upon the instructions by the Company to the Trustee shall be applied as (a)
credits against mandatory sinking fund requirements pursuant to Section 303 of the Indenture, (b)
credits or prepayments upon the basic rent payments due and payable with respect to the respective
maturity dates or redemption dates of such Bonds in accordance with the instructions of the
Company and the terms of the Indenture or (c) full payment of the Bonds pursuant to Section 11.3
of this Agreement.

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ARTICLE VI

MAINTENANCE, MODIFICATIONS, IMPOSITIONS, AND INSURANCE

     Section 6.1. Maintenance and Modifications of Mortgaged Property by company.

     (a) Company agrees that during the Lease Term it will at its own expense (i) keep
the Mortgaged Property in reasonably safe condition as its operations shall permit and
(ii) keep the Buildings and the Leased Equipment and all other
improvements forming a part of the Mortgaged Property in good repair and in
good operating condition, making from time to time all necessary repairs thereto
and renewals and replacements thereof.

     (b) Company may from time to time, in its sole discretion and at its own expense,
make any additions, modifications, or improvements at the Mortgaged Property location,
including installation of additional machinery, equipment, furniture, or fixtures
in the Buildings or on the Leased Land, which it may deem desirable for its business
purposes; provided that all such additions, modifications, and improvements do not
adversely affect the structural integrity of the Buildings. The Company shall
be under no obligation to restore the Mortgaged Property to the condition it was
in immediately prior to the commencement of the Lease term.

     (c) Company, in consideration of the premises and of the issuance of the Bonds by
Issuer and the sum of $1.00, lawful money of the United States of America, to it duly
paid by Issuer at or before the execution and delivery of this Lease Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, and in order to secure the obligations of Company under this Lease
Agreement and under the Guaranty and the Hazardous Substance Certification and
Indemnification, does hereby grant a first position security interest (within the
meaning of the Uniform Commercial Code in effect in the State) in, and pledge
unto Issuer, and its assigns forever the Collateral, and the proceeds and products
of the Collateral.

     (d) Company will not permit any mechanics’, materialmen’s, or other liens to be
established or remain against the Mortgaged Property for labor or materials furnished in
connection with any addition, modifications, improvements, repairs, renewals,
or replacements so made by it; provided, that if Company shall first notify
Trustee of its intention so to do, Company may provide the Issuer with a title insurance
policy insuring the Mortgaged Property without exception for the lien in question or
affirmative insurance insuring against collection out of the Mortgaged
Property and may in good faith contest any mechanics’ or other liens filed or
established against the Mortgaged Property, and in such event may permit the items so
contested to remain undischarged and unsatisfied during the period of such contest and
any appeal therefrom unless Issuer or Trustee shall notify Company that, in the
opinion of Counsel, by nonpayment of any such items, the security of the Bondowners, as
to any part of the Mortgaged

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Property, will be materially endangered or the Mortgaged Property or any substantial part
thereof will be subject to loss or forfeiture, in which event Company shall promptly pay and cause
to be satisfied and discharged or bond (if legally permissible) all such unpaid items.
Notwithstanding the foregoing, Company’s right to undertake a good faith contest of mechanic’s and
other liens is subject to the condition that, if such contest continues for 6 months or more,
Company must maintain adequate reserves for the payment of the same in accordance with generally
accepted accounting principles. Issuer will cooperate fully with Company in any such contest.

     Section 6.2. Removal of Leased Equipment. Issuer shall not be under any obligation to renew,
repair, or replace any inadequate, obsolete, worn-out, unsuitable, undesirable, or unnecessary
Leased Equipment. In any instance where Company in its sound discretion determines that any items
of Leased Equipment have become inadequate, obsolete, worn-out, unsuitable, undesirable, or
unnecessary, Company may remove such items of Leased Equipment from the Buildings and the Leased
Land and (on behalf of Issuer) sell, trade-in, exchange, or otherwise dispose of them (as a whole
or in part) without any responsibility or accountability to Issuer or Trustee therefor, provided
that Company shall:

     (a) Substitute (either by direct payment of the costs thereof or by advancing to
Issuer the funds necessary therefor) and install anywhere in the Buildings or on
the Leased Land other machinery or equipment having equal or greater utility
(but not necessarily having the same function) in the operation of the Buildings as a
modern manufacturing facility (provided such removal and substitution shall
not impair the operating unity of the remaining property) , all of which
substituted machinery or equipment shall be free of all liens and encumbrances (other
than Permitted Encumbrances) but shall become a part of the Leased Equipment
provided, however, during the first three (3) years commencing from and
after April 27, 1995, the Company may substitute Equipment (as defined in the
Indenture) , or any other equipment leased by the Company from any lessor other than
the Issuer in place of any Leased Equipment (collectively, the
“Replacement Equipment”) removed from the Mortgaged Property,
which Replacement Equipment shall not be or be deemed to be part of the Leased
Equipment; or

     (b) Not make any such substitution and installation unless, (i) in the case of the
sale of any such machinery or equipment to anyone other than itself or in the case of
the scrapping thereof, Company shall pay into the Bond Fund the proceeds from
such sale or the scrap value thereof, as the case may be, (ii) in the case of the
trade-in of any such machinery or equipment for other machinery or equipment not
to be installed in the Buildings or on the Leased Land, Company shall pay into
the Bond Fund the amount of the credit received by it in such trade-in, and (iii) in
the case of the sale of any such machinery or equipment to Company or in the case of

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any other disposition thereof Company shall pay into the Bond Fund an amount equal to the
original cost thereof less depreciation at rates calculated in accordance with generally
accepted accounting practice; provided, however, that no such payment into the Bond Fund need
be made until the amount to be paid into the Bond Fund on account of all such dispositions not
previously reported aggregates at least $100,000 in any calendar year; provided further, that
Company may not fail to make any such substitution and installation if such failure would
impair the operating unity of the remaining property.

     The removal from the Mortgaged Property of any portion of the Leased Equipment pursuant to
the provisions of this Section shall not entitle Company to any abatement or diminution of the
rents payable under Section 5.3 hereof.

     Company will promptly report to Trustee in writing such removal, substitution, sale, and
other disposition and will pay to Trustee such amounts, if any, as are required by the provision
of the preceding subsection (b) of this Section to be paid into the Bond Fund promptly after the
sale, trade-in, scrapping, or other disposition requiring such payment; provided, however, that no
such report need be made until the amount to be paid into the Bond Fund on account of all such
disposition aggregates at least $100,000 in any calendar year.

     Section 6.3. Impositions. Company shall, during the Lease Term, timely, except as otherwise
provided herein, bear, pay, and discharge, all taxes and assessments, general and special, if any,
which may be taxed, charged, levied, assessed, or imposed upon or against or be payable for or in
respect of the Mortgaged Property, or any part thereof, or any improvements at any time thereon or
Company’s interest in the Mortgaged Property under this Lease Agreement, including any new taxes
and assessments not of the kind enumerated above to the extent that the same are made, levied
against real and personal property, and further including without limitation all water and sewer
charges, assessments, and other governmental charges and impositions whatsoever, foreseen or
unforeseen, which if not paid when due would encumber Issuer’s title to the Mortgaged Property
(all of the foregoing being herein referred to as “Impositions”) . In the event any special
assessment taxes are lawfully levied and assessed which may be paid in installments, Company shall
be required to pay only such installments thereof as become due and payable during the Lease Term
as and when the same become due and payable. Any Impositions which Company is required to bear,
pay, and discharge shall be remitted directly to the authority which is entitled to the payment
thereof. In no event shall Company consent to any new special taxes without the prior written
consent of Trustee.

     Within 30 days after the last day for payment or as soon thereafter as is reasonably
practicable, without penalty or interest, of an Imposition which Company is required to bear, pay,
and discharge pursuant to the terms hereof, Company shall deliver to Issuer upon its written
request a reproduced copy of any

21

 

statement issued therefor which has been duly receipted to show the payment thereof.

     Notwithstanding the foregoing, Company shall have the right, in its or Issuer’s name, to
contest in good faith the validity or amount of any Imposition which Company is required to bear,
pay, and discharge pursuant to the terms of this Section by appropriate legal proceedings provided
Company, before instituting any such contest in Issuer’s name, gives Issuer written notice of its
intention so to do and Company diligently prosecutes any such contest, at all times effectively
stays or prevents any official or judicial sale therefor, under execution or otherwise, sets aside
on its books and maintains adequate reserves for the payment of any liability therefrom in
conformity with generally accepted accounting principles, and promptly pays any final judgment
enforcing the Imposition so contested and thereafter promptly procures record release or
satisfaction thereof. Company shall hold Issuer whole and harmless from any costs and expenses
Issuer may incur related to any such contest.

     Issuer covenants that it will not part with title to the Mortgaged Property or any part
thereof during the Lease Term, except as authorized in this Lease Agreement, or take any other
affirmative action which may reasonably be construed as tending to cause or induce the levy or
assessment of ad valorem taxes on the Mortgaged Property. Issuer and Company acknowledge that
under present law no part of the Mortgaged Property will be subject to ad valorem taxation by the
State or by any political or taxing subdivision thereof.

     Section 6.4. Insurance Required. During the Construction Period and throughout the Lease
Term, Company shall keep the Mortgaged Property continuously insured against such risks as are
customarily insured against by business of like size and type, paying as the same become due all
premiums in respect thereto, including but not necessarily limited to:

     (a) Fire and Extended Coverage Insurance. Subsequent to completion of the Project and
expiration of the builder’s risk policy referred to in subsection (d) below, insurance
against loss or damage by fire with standard extended coverage, vandalism, and malicious
mischief endorsement. Such insurance shall be in an amount equal to or exceeding the lesser
of (i) the full replacement value of the Mortgaged Property, or (ii) the amount required
for the full redemption or retirement of all Bonds then outstanding; provided, however, in
any event, such insurance shall be in an amount necessary to prevent application of any
coinsurance provisions of the applicable policies. The proceeds of all such policies shall
be payable to Issuer, Company, and Trustee as their interests may appear, provided that any
such policies may be so written or endorsed as to make payments on claims for losses not in
excess of

22

 

$100,000 payable directly to Company. All claims on such insurance regardless
of amount may be adjusted by Company with the insurers, subject to approval of
Trustee, which approval shall not be unreasonably withheld, as to settlement of any
claim in excess of $100,000. Issuer shall cooperate with Company in adjusting any
such loss.

     (b) Public Liability Insurance. General public liability insurance
against claims for bodily injury, death,
or property damage occurring in connection with the Mortgaged Property, such
insurance to afford protection to Issuer and Trustee as additional insureds of not
less than $10,000,000 per occurrence.

     (c) Workers’ Compensation Insurance. Workers’ compensation insurance,
including qualified self-insurance pursuant to the workers’ compensation laws of
the State, covering all persons employed by Company at the
Mortgaged Property. Company will cause such insurance to be maintained by
any independent contractors engaged by Company in connection with any work done
on or about the Mortgaged Property with respect to which claims for death or
bodily injury could be asserted against Company, Issuer, or
Trustee, complying with the rules, regulations, and requirements of
the State from time to time in force.

     (d)
Builder’s Risk Insurance. During the course of construction of the
Project until the fire and extended coverage insurance set forth in subsection (a)
above is in force, a standard form builder’s risk policy on a
replacement cost basis, with an “all risk” endorsement, a course
of construction endorsement, and a collapse insurance provision, in an
amount equal to the completed value of the portion of the Project covered by a
construction contract, with loss payable to Issuer, Company, and Trustee, as their
interests may appear.

     (e)
Flood Insurance. If all or part of the Mortgaged Property is located in
an area now or hereafter identified by the Secretary of Housing and Urban
Development as an area having special flood hazards and in which flood insurance
has been made available under the National Flood Insurance Act of 1968, as
amended, policies of flood insurance in an amount at least equal to the lesser of
(1) the amount of the Bonds, (2) the insurable value of the improvements, or (3)
the maximum limit of coverage available under the National Flood
Insurance Act of 1968, as amended.

      Company shall annually provide Trustee with an opinion of an independent insurance broker
of recognized national standing that

23

 

the insurance then in force upon the Mortgaged Property is in compliance with the
provisions of this Section 6.4.

     Nothing in this Section 6.4 or any other portion of this Lease Agreement shall be construed to
prevent Company from including the Mortgaged Property under Company’s blanket forms of insurance
coverage, provided that each and all of the requirements of this Section 6.4 be complied with under
such blanket coverage.

     Section 6.5. Application of Net Proceeds of Insurance. The Net Proceeds of the insurance
required in Section 6.4 hereof shall be applied as follows: (i) the Net Proceeds of the insurance
required in Sections 6.4 (a), (d), and (e) hereof shall be applied as provided in Section 7.2
hereof, and (ii) the Net Proceeds of the insurance required in Sections 6.4(b) and (c) hereof shall
be applied toward extinguishment or satisfaction of the liability with respect to which such
insurance proceeds may be paid.

     Section 6.6. Additional Provisions Regarding Insurance. All insurance required in Section 6.4
hereof shall be taken out and maintained with generally recognized responsible insurance companies
selected by Company. All policies evidencing such insurance shall provide for payment of the
losses to Issuer, Company, and Trustee as their respective interests may appear, and the policies
required by Sections 6.4 (a), (d), and (e) shall bear endorsements requiring that all proceeds of
insurance resulting from any claim in excess of $100,000 for loss or damage covered thereby be
paid to Trustee; provided, however, that all claims regardless of amount may be adjusted by
Company with insurers, subject to approval of Trustee, as to settlement of any claim in excess of
$100,000, which approval shall not be unreasonably withheld.

     All policies, or a certificate or certificates of the insurers that such insurance is in
force and effect, shall be deposited with Trustee, with a copy to Issuer. Each such policy shall
contain a provision that such policy may not be cancelled unless Trustee is notified in writing at
least 30 days prior to the cancellation; and, at least 30 days prior to the expiration of any such
policy, Company shall furnish Trustee with written evidence satisfactory to Trustee that the
policy has been renewed or replaced or is no longer required by this Lease Agreement.

     Section 6.7. Advances by Issuer or Trustee. In the event Company shall fail to maintain the
full insurance coverage required by this Lease Agreement or shall fail to keep the Mortgaged
Property in as reasonably safe condition as its operating conditions will permit, or shall fail to
keep the Buildings and the Leased Equipment in good repair and good operating condition, Issuer or
Trustee may (but unless satisfactorily indemnified shall be under no obligation to) take out the
required policies of insurance and pay the premiums on the same or make the required

24

 

repairs, renewals, and replacements; and all amounts so advanced therefor by Issuer or
Trustee shall become an additional obligation of Company to the one making the advancement
secured by the Mortgaged Property, which amounts Company agrees to pay with interest
thereon, to the extent permitted by law, from. the date thereof at the Agreed Rate.

     Section 6.8. Release and Indemnification Covenants.

     (a) Company shall and hereby agrees to indemnify and save Issuer (including but not
limited to past, present, and future aldermen, officials, and other persons acting on
Issuer’s behalf) and Trustee, and their officers, agents, and employees,
harmless against and from all claims by or on behalf of any person,
firm, corporation, or other legal entity arising from the conduct or management
of, or from any work or thing done on, the Mortgaged Property during the term of this
Lease Agreement, including without limitation, (i) any condition of the Mortgaged
Property, (ii) any breach or default on the part of Company in the performance of
any of its obligations under this Lease Agreement, (iii) any act or negligence of
Company or of any of its agents, contractors, servants, employees, or licensees, or (iv)
any act or negligence of any assignee or lessee of Company, or of any agents,
contractors, servants, employees, or licensees of any assignee or lessee
of Company. Company shall indemnify and save Issuer and Trustee harmless from any
such claim arising as aforesaid, or in connection with any action or proceeding brought
thereon, and upon notice from Issuer or Trustee, Company shall defend them or either of
them in any such action or proceedings.

     (b) It is the intention of the parties hereto that Issuer shall not incur any
pecuniary liability by reason of the terms of this Lease Agreement or the undertakings
required of Issuer hereunder, by reason of the issuance of the Bonds, by reason of
the execution of the Indenture, or by reason of the performance of any act
requested of Issuer by Company, including all claims, liabilities, or losses arising in
connection with the violation of any statutes or regulations pertaining to the
foregoing; nevertheless, if Issuer should incur any such pecuniary liability, then
in such event Company shall indemnify and hold Issuer, its officers, members, agents,
and employees harmless against all claims by or on behalf of any person, firm, or
corporation or other legal entity arising out of the same and all costs and
expenses reasonably incurred in connection with any such claim or in connection
with any action or proceeding brought thereon, and upon notice from Issuer, Company
shall defend Issuer in any such action or proceeding.

     (c) Nothing contained in this Section 6.8 shall be construed to indemnify or
release Issuer from its liability in connection with the Mortgaged Property arising from
the wanton negligence or intentional acts or failure to act on the part of Issuer, its

25

 

employees, agents, or representatives acting in their capacities as such.

     Section 6.9. Environmental Considerations. During the Lease Term, Company agrees that the
Mortgaged Property shall not be used at any time during the Lease Term to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce, process, or in any manner
deal with hazardous materials except as incidental to its business or
the business of any occupant of the whole or any part of the Mortgaged Property whose occupancy of the Mortgaged
Property or such part thereof is not in violation of the terms of this Lease Agreement (which
includes the occupancy with the consent of the Issuer). Company further agrees that it will
defend, indemnify, and hold harmless Issuer from and against any and all liabilities, claims,
damages, penalties, expenditure, losses, or charges, including but not limited to all reasonable
and necessary costs of investigation, monitoring, legal fees, remedial response, removal,
restoration, or permanent acquisition which may now or in the future be undertaken, suffered,
paid, awarded, assessed, or otherwise incurred as a result of any contamination resulting from
the disposal, storage, treatment, processing, or other handling of waste contamination, PCBs, or
other toxic or hazardous substance, which arise from Company’s or any other permitted occupant’s
activity after April 27, 1995 on or under the Mortgaged Property. Company and Issuer each agree
to promptly notify the other and the Trustee in writing by certified mail with return receipt
requested, of the receipt of any written environmental claim, suit, or demand by any individual,
corporation, partnership, governmental agency, or other legal entity concerning the Mortgaged
Property. Issuer reserves the right to defend against such claim, suit, or demand at its sole cost
and expense, and Company will cooperate with Issuer in such defense.

     Notwithstanding anything to the contrary in this Lease Agreement, nothing in this Lease
Agreement, including without limitation this Section 6.9, shall diminish, derogate, or otherwise
limit the rights and interests of Trustee under the Hazardous Substance Certification and
Indemnification.

     Section 6.10. Payments in Lieu of Taxes. Section 6.3 provides that Company is obligated to
pay all taxes and assessments levied and assessed on the Project during the term of this Lease.
Company is informed and understands that, notwithstanding the provisions of Section 6.3, under
Article 16, Section 5 of the Constitution of the State, as interpreted by the Arkansas Supreme
Court in Wayland v. Snapp, 233 Ark. 57, 334 S.W.2d 633 (1960) , and Ark. Code Ann. §§ 14-164-701
to -703 (1987 & Supp. 1993), the Project will be exempt from ad valorem taxes because it is
owned by Issuer and used for a public purpose within the meaning of the applicable
Constitutional and statutory provisions affording the exemption.

26

 

     Thus, Company understands that it, as lessee of the Project owned by Issuer, will, in
fact, pay no ad valorem taxes on the Project under the provisions of Section 6.3. Issuer has
indicated a reluctance to lose all tax revenues which would otherwise be received by it if the
property involved was privately owned.

     Therefore, to induce Issuer to proceed with the issuance of the Bonds for the purpose
indicated, which will inure to the benefit of Company, and for other valuable consideration, the
receipt of which is hereby acknowledged, Company agrees with Issuer as follows:

     (a) In lieu of ad valorem property taxes, Company will pay to Issuer the
percentage set forth below of an annual sum equal to the amount which would be payable
as ad valorem taxes on Company’s interest in the Project were the Project
not exempt from ad valorem taxation, payable not later than October 10 each
year:

	 	 	 	 	 	 	 
	Payment Date	 	Tax	 	Percentage
	(October 10)	 	Year	 	Payable
	1996
	 	1995	 	 	50	 
	1997
	 	1996	 	 	60	 
	1998
	 	1997	 	 	70	 
	1999
	 	1998	 	 	80	 
	2000
	 	1999	 	 	90	 
	2001
	 	2000 and thereafter	 	 	100	 

     (b) Company representatives will meet annually with the Assessor of Greene
County and determine the assessed valuation of the real and personal properties
comprising the Project. The determination shall be made by mutual agreement
if possible, and if not, shall be made by the Assessor as though the Project
properties were privately owned. Company shall have all rights granted to property
owners under Arkansas law to appeal assessments to the county equalization board and
to appeal decisions of the county equalization board to the county court. The
amount to be paid each year shall be determined by applying the millage rates of the
taxing authorities that would be applicable to the Project properties for that
year if the Project properties were privately owned.

     (c) Payments hereunder are not intended to be in lieu of (i) any licenses,
occupation or privilege tax or fee imposed upon Company for or with respect to its
right to carry
on its business in the State, (ii) any special benefit or local improvement
tax or assessment or (iii) fees or charges for utility services rendered, such as for
water or sewer services.

27

 

     (d) The payments to be made hereunder are intended to be in lieu of all ad
valorem taxes that would have to be paid on the Project to the State of Arkansas,
Greene County, Issuer, school districts, and/or other political subdivisions of
the State if the Project were not exempt from ad valorem taxes under the
provisions of Article 16, Section 5 of the Constitution of the State and Ark. Code Ann.
§§ 14-164-701 to -703 (1987 & Supp. 1993) (the “taxing authorities”) .

     (e) Issuer agrees to distribute each payment under this Section 6.10 among the
taxing authorities in the proportion that the millage collected by each bears to the
total millage collected by all during the year of distribution.

     (f) If by reason of a change in the Constitution of the State, a change by the
Supreme Court of the State in its interpretation of the Constitution, a change by the
General Assembly of the State, or otherwise Company is required to pay any tax
for which the payments specified in paragraph (a) are intended to be in lieu, Company
may deduct the aggregate of any such payments made by it from any amount herein agreed
to be paid under paragraph (a) .

     (g) The agreement in this Section 6.10 made by Company shall terminate and be of
no further force and effect from and after the date that this Lease Agreement shall
terminate for any purpose. If such termination shall be at a point constituting
a portion of a year, Company shall pay for the year in which termination occurred that
portion of the specified annual payment that the number of days in such year that
the Project was exempt prior to the terminations bears to 365 days (366 days in a leap
year).

     (h) This Section 6.10 shall be binding upon the successors and assigns of Company, but
no assignment shall be effective to relieve Company of any of its obligations hereunder
unless expressly authorized and approved in writing by Issuer.

ARTICLE VII

DAMAGE, DESTRUCTION, AND CONDEMNATION;

USE OF NET PROCEEDS

     Section 7.1. Damage and Destruction. Unless Company shall have exercised its option to
prepay the amounts payable under this Agreement pursuant to the provisions of Section 11.2 (a)
hereof, if prior to full payment of the Bonds (or provisions for payment thereof having been made
in accordance with the provisions of the Indenture) the Mortgaged Property or any portion thereof
is destroyed (in whole or in part) or is damaged by fire or other casualty, Company shall be
obligated to continue to pay the amounts

28

 

specified in Section 5.3 hereof. Company shall give prompt written notice of
any such destruction or damage in excess of $100,000 to Issuer and Trustee.

     Section 7.2. Application of Net Proceeds. Prior to the Completion Date, Issuer,
Trustee, and Company will cause the Net Proceeds of any insurance proceeds
resulting from any events described in Section 7.1 hereof to be deposited in the
Construction Fund and to be disbursed therefrom as provided in Article IV of this
Lease Agreement and the Indenture. Subsequent to the Completion Date, Issuer,
Trustee, and Company will cause the Net Proceeds of any insurance proceeds resulting
from any event described in Section 7.1 hereof to be deposited in a separate trust
fund, provided that Net Proceeds in an amount less than $100,000 shall be paid
directly to Company. All Net Proceeds shall be applied in one or more of the
following ways as shall be elected by Company in a written notice to Issuer and
Trustee:

     (a) To the prompt repair, restoration, modification, or improvement of the
Mortgaged Property by Company, and Issuer does hereby authorize and direct Trustee to
make disbursements from such separate fund for such purposes or to
reimburse Company for costs paid by it in connection therewith upon receipt of a
requisition acceptable to Trustee signed by an Authorized Company Representative stating
with respect to each disbursement to be made: (1) the requisition number, (2) the
name and address of the person, firm, or corporation to whom payment is due,
(3) the amount to be disbursed, and (4) that
each obligation mentioned therein has been properly incurred, is a proper
charge against the separate trust fund, and has not been the basis of any
previous disbursement. Any balance of the Net Proceeds remaining after such
work has been completed shall be transferred to the Bond Fund to be applied to
the payment of principal of and premium, if any, and interest on the Bonds,
or, if the Bonds have been fully paid (or provision for payment thereof has
been made in accordance with the provisions of the Indenture), any balance
remaining in such separate trust fund shall be paid to Company.

     (b) To redemption of the Bonds on the next succeeding interest payment
date as specified in a written notice by Company to Trustee; provided, that
no part of the Net Proceeds may be applied for such redemption unless (1)
all of the Bonds are to be redeemed in accordance with the Indenture
upon prepayment of the amounts payable hereunder pursuant to Section
11.2(a) hereof or (2) in the event that less than all of the Bonds are to
be redeemed, Company shall furnish to Issuer and Trustee a certificate of
the Authorized Company Representative acceptable to Issuer and Trustee
stating that (i) the property forming the part of the Mortgaged
Property that was damaged or destroyed by such casualty is
not essential to the use or possession of the Mortgaged Property

29

 

     by Company or (ii) the Mortgaged Property has been repaired restored, modified, or
improved to operate as designed.

     Section 7.3. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in
full the cost of any repair, restoration, modification, or improvement referred to in Section
7.2(a) hereof, Company will nonetheless complete the work and will pay any cost in excess of the
amount of the Net Proceeds held by Trustee. Company agrees that if by reason of any such
insufficiency of the Net Proceeds, Company shall make any payments pursuant to the provisions of
this Section, Company shall not be entitled to any reimbursement therefor from Issuer, Trustee, or
the Owners of any of the Bonds, nor shall Company be entitled to any diminution of the amounts
payable under Section 5.3 hereof.

     Section 7.4. Cooperation of Issuer. Issuer shall cooperate fully with Company at the expense
of Company in filing any proof of loss with respect to any insurance policy covering the
casualties described in Section 7.1 hereof and will, to the extent it may lawfully do so, permit
Company to litigate in any proceeding resulting therefrom in the name and behalf of Issuer. In no
event will Issuer voluntarily settle, or consent to the settlement of, any proceeding arising out
of any insurance claim without the written consent of the Authorized Company Representative.

     Section 7.5. Rights of Parties in Event of Condemnation; Bonds Protected in Any Event.

     A. If during the Lease Term title to all or substantially all of the Mortgaged Property shall
be taken or condemned by a competent authority for any public use or purpose, then this Lease
Agreement shall terminate at midnight on the 15th day after the vesting of title in such authority
and rent shall be paid to and adjusted as of that day. In that event, subject to the subsequent
provisions of this Section, the condemnation award shall belong to Issuer and shall be paid to
Trustee and deposited into the Bond Fund (subject to the provisions of the Indenture and this
Lease Agreement) and Company hereby assigns the award to Issuer. In the event the net condemnation
award (being the gross amount awarded less all reasonable attorney’s fees and other reasonable
expenses and costs in the condemnation proceeding) together with the amount then in the Bond Fund
shall be insufficient to pay in full, on the redemption date fixed by Company pursuant to the
provisions of Section 301 of the Indenture, the amount necessary to pay all principal, premium, if
any, interest, Trustee’s fees, and all other costs of redemption (all of which, for purposes of
this Section, shall be called “total bond redemption expense”), Company agrees to pay promptly
upon payment of the condemnation award, as additional rent under this Lease Agreement, the amount
by which the total bond redemption expense shall exceed the net condemnation award plus the amount
then on deposit in the Bond Fund. Company’s agreement to pay additional rent pursuant to this
Section 7.5 shall survive any

30

 

termination of the Lease Agreement under this Section 7.5. For the purposes of this
Article VII, “all or substantially all of the Mortgaged Property” shall be deemed to mean a
taking of all of the Mortgaged Property or a taking of such a substantial portion of the
Mortgaged Property that Company, as determined by Company in its sole discretion, cannot
reasonably operate the remainder in substantially the same manner as before. In the event
the net condemnation award, together with the amount in the Bond Fund, shall be in excess
of the amount necessary to pay the total bond redemption expense and Company is not in
default in any of its other obligations hereunder, or Company is in default in any of its
obligations hereunder and the net condemnation award plus the amount then on deposit in the
Bond Fund plus any amount previously paid to the Bondowners on account of the total bond
redemption expense shall be in excess of the amount necessary to pay the total bond
redemption expense, then the appropriate excess shall belong to and be paid to Company;
provided, however, that if Company is in default with reference to any of its other
obligations hereunder, the amount necessary to satisfy such default shall have been
previously paid to Trustee by Company. To the extent that the sum of the net condemnation
award plus the amount then on deposit in the Bond Fund plus any amount previously paid to
the owners of the Bonds on account of the total bond redemption expense shall be less than
the total bond redemption expense, Company agrees to pay such
deficiency to Issuer as
additional rent hereunder. If less than all of the Mortgaged Property shall be so taken or
condemned and this Lease shall terminate as provided in this Section 7.5 (A), then the part
of the Mortgaged Property not so taken or condemned shall be sold at a public auction (at
which auction the Company, the Guarantor, the Issuer and the Trustee shall have the right
to bid), and the net proceeds of such sale shall be deemed to be included in and be part of
the award or awards, to be disposed of as set forth in this subdivision (A). Issuer agrees
that it will not voluntarily accept, without the prior approval of Company, any
condemnation award, and Issuer agrees that it will cooperate with Company with the end in
view of obtaining the maximum justifiable condemnation award.

     B. If less than substantially all of the Mortgaged Property shall be taken or
condemned by a competent authority for any public use or purpose, neither the term nor any
of the obligations of either party under this Lease Agreement shall be affected or reduced
in any way, and

     (i) If any part of the improvements owned by Issuer on the Mortgaged Property
(improvements as used herein shall include any item of Issuer’s equipment) is taken,
Company shall proceed to repair or rebuild (repair or rebuild shall include
replacement of any item of Issuer’s equipment) the remaining part as nearly as
possible to the condition existing prior to such taking, to the extent that the same
may be feasible, subject to the right on the part of Company to make

31

 

alterations so as to improve the efficiency of the improvements; and

     (ii) The entire condemnation award shall be paid to Company, and Issuer hereby
assigns the same to Company for the use of Company in repairing and rebuilding as
provided in (i) above. The said award shall be transferred to Company in the same manner
as is provided in Section 7.2 with respect to insurance proceeds, provided that the words
“Net Proceeds” there referred to shall for purposes hereof refer to “net condemnation
award.” If the net condemnation award is in excess of the amount
necessary to repair and rebuild as specified in (i) above, such excess shall be paid to Trustee and deposited in
the Bond Fund. If such excess is more than the remaining total basic rent obligations of
Company hereunder, and if at that time Company is not in default with respect to any of
its obligations, the amount of excess over and above the amount necessary to satisfy the
obligations with reference to which Company is in default shall be paid to Company. If
the net condemnation award is less than the amount necessary for Company to repair and
rebuild as set forth in (i) above,. Company shall nevertheless complete the repair and
rebuilding work and pay the cost thereof; and

     (iii) If no part of the improvements is taken, the net condemnation award shall be
paid to Trustee and deposited in the Bond Fund.

     C. In the event of taking under either A or B above, Company shall have the right to
participate at its own expense in, and to offer proof in, the condemnation proceedings and
to receive that portion of any award (by way of negotiation, settlement,
or judgment) which may be made for damages sustained by Company solely as a result
of the interruption of Company’s business or with respect to the Company’s trade fixtures,
equipment, improvements and moving expenses by reason of the condemnation;
provided, however, nothing in this subsection C shall be construed to diminish or
impair in any way Company’s obligation under subsection A of this Section 7.5 to pay as
additional rent the amount of any insufficiency of the net condemnation award and the
funds in the Bond Fund to pay the total bond redemption expense.

     D. If the temporary use of the whole or any part of the Mortgaged Property shall be
taken by right of, or acquired pursuant to the threat of, eminent domain, this Lease
Agreement shall not be thereby terminated and the parties shall continue to be
obligated under all of its terms and provisions, and, provided that an Event of
Default has not occurred and is continuing under this Lease Agreement, Company shall be
entitled to receive the entire amount of the award made for such taking, whether by way of
damages, rent, or otherwise.

     Section 7.6.
Company Obligated to Continue Basic and Additional Rental Payments Until
Condemnation Award Available. In the event of a taking of all or substantially all of the Mortgaged

32

 

Property as provided in Section 7.5 A, notwithstanding the provision therein
that the rent shall be paid to and adjusted as of the vesting of title in the taking
authority, Company agrees to continue to make payment of the basic rent and the
additional rent until the condemnation award shall be actually received by Issuer;
provided, however, Company shall be repaid, solely out of the net condemnation award,
the amount of rent so paid after the date provided in Section 7.5 A for the
adjustment of rent. This agreement to repay shall not be construed in any way to
impair or diminish Company’s obligations under Section 7.5
to pay as additional
rent the amount of any insufficiency of the net condemnation award and the moneys in
the Bond Fund to pay the total bond redemption expense.

     Section 7.7.
Right of Company to Participate in Condemnation Proceedings.
Company shall have the right to participate in its own name in any negotiations or
condemnation proceedings, but at its own expense, to resist or defend condemnation,
and to make any presentation or conduct any proceeding which in its discretion is
necessary or desirable to obtain any proper relief and, if the condemnation is
concluded, to obtain the maximum award justified by the taking, subject, however, at
all times to the prior rights of Issuer and Trustee with respect to the indebtedness
represented by the Bonds.

     Section 7.8.
Issuer’s Covenant Not to Condemn. Issuer covenants that it will not
take or condemn any part of the Mortgaged Property, or attempt to do so.

ARTICLE VIII

SPECIAL COVENANTS

     Section 8.1. No Warranty of Condition or Suitability by
Issuer. ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE
CONDITION OP THE MORTGAGED PROPERTY OR THAT THE MORTGAGED PROPERTY WILL BE SUITABLE
FOR COMPANY’S PURPOSES OR NEEDS OTHER THAN THE REPRESENTATION AND WARRANTY THAT THE
MORTGAGED PROPERTY HAS THE PROPER ZONING DESIGNATION FOR THE PURPOSES OF THE
COMPANY.

     Section 8.2. Inspection of the Mortgaged Property. Company agrees that
Trustee and Issuer and their duly authorized agents shall have the right at all
reasonable times during business hours to enter upon the Leased Land and to examine
and inspect the Mortgaged Property without interference or prejudice to Company’s
operations. Company further agrees that Issuer and its duly authorized agents who
are acceptable to Company shall have such rights of access to the Mortgaged Property
as may be reasonably necessary to cause to be completed the construction and
installation provided for in Section 4.1 hereof.

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     Section 8.3. Company to Maintain its Corporate Existence. Company will maintain its
corporate existence and will not dissolve or otherwise dispose of all or substantially all of its
assets and will not consolidate with or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it without providing an opinion of Bond Counsel to
the Issuer and the Trustee that such a merger, dissolution or consolidation will not materially
violate the Act or cause interest on the Bonds to be includable in the gross income of the owners
thereof for federal income tax purposes.

     Section 8.4. Release of Certain Land. Notwithstanding any other provision of this Lease
Agreement, the parties hereto, with the prior written consent of Trustee, which consent shall not
be unreasonably withheld, reserve the right at any time and from time to time to amend this Lease
Agreement for the purpose of effecting the release of and removal from this Lease Agreement and
the leasehold estate created hereby (i) of any unimproved part of the Leased Land (on which
neither the Buildings nor any Leased Equipment is located but on which transportation or utility
facilities may be located) on which Issuer proposes to construct improvements for lease to Company
under another and different lease agreement or (ii) any part of the Leased Land with respect to
which Issuer proposes to grant an easement or convey a fee or other title to a railroad or other
public or private carrier or to any public utility or public body in order that transportation
facilities or services by rail, water, road, or other means or utility services for the Mortgaged
Property may be provided, increased, or improved; provided, that if at the time any such amendment
is made any of the Bonds are outstanding and unpaid there shall be deposited with Trustee the
following:

     (a) A copy of the said amendment as executed.

     (b) A resolution of Issuer (i) stating that Issuer is not in default under any of the
provisions of the Indenture and Company is not, to the knowledge of Issuer, in default under
any of the provisions of this Lease Agreement or the Guaranty, (ii) giving an adequate legal
description of that portion of the Leased Land to be released, (iii) stating the purpose for
which Issuer desires the release, (iv) stating that the said improvements which will be
constructed on the said Leased Land and the services which will be provided, increased, or
improved will be such as will promote the continued industrial development of Issuer, and
(v) requesting such release.

     (c) A resolution of the board of directors of Company or executive committee of said
board (if permitted under Company’s by-laws) authorizing the execution of such amendment
together with an officer’s certificate stating that Company is

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not in default under any of the provisions of this Lease Agreement.

     (d) A copy of the agreement between Issuer and Company wherein Issuer agrees to
construct improvements on the portion of the Leased Land so requested to be released and
agrees to lease the same to Company, and wherein Company agrees to lease the same from
Issuer, or a copy of the instrument granting the easement or conveying the title to a
railroad, public utility, or public body.

     (e) A certificate of an Independent Engineer who is acceptable to Trustee, dated not
more than 60 days prior to the date of the release and stating that, in the opinion of the
person signing such certificate, (i) the portion of the Leased Land so proposed to be
released is necessary or desirable for railroad, utility service, or roads to benefit the
Mortgaged Property or is not otherwise needed for the operation of the Mortgaged Property
for the purposes hereinabove stated, (ii) the release so proposed to be made will not impair
the usefulness of the Buildings as a manufacturing facility, and (iii) the remaining portion
of Leased Land after the release will be a legal parcel.

     (f) Company and Issuer agree that all walls presently standing or hereafter erected on
or contiguous to the boundary line of the Leased Land so proposed to be released shall be
party walls-for the purpose of tying-in of new construction. If any party wall is utilized
for the purpose of tying-in new construction with the building to be utilized under common
control with the Mortgaged Property, utility facilities on the Leased Land, including those
within the Buildings, may be interconnected for the purpose of serving the new construction
to be placed on Leased Land so released and any non-loadbearing panels in any party
wall may be removed; provided, however, that if the Leased Land so released and construction
thereon ceases to be operated under common control with the Buildings, non-loadbearing wall
panels similar in quality to those which have been removed will be installed and separate
utility services will be provided for the new construction.

     In the event that the conditions described in Section 8.4(a), (b), (c), (d), (e) and (f) have
been fulfilled, the Issuer agrees to execute and deliver to the Company, all documents reasonably
requested by the Company to evidence the release of the portion of the Leased Land so proposed to
be released, including, but not limited to, a release of lien in recordable form, from the lien of
the Indenture, an amendment to this Lease Agreement in recordable form, evidencing the release of
the Leased Land sought to be released from this demise and from the definition of Mortgaged
Property, and any UCC-3 termination statement required to evidence

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the release of the Leased Land and any Leased Equipment situated thereon sought to be
released from any UCC-1 financing statement and security agreement held by the Issuer, being,
however, a partial release, which does not release the security interest in the balance of the
Mortgaged Property covered by the corresponding UCC-1 financing statement.

     No release effected under the provisions hereof shall entitle Company to any abatement or
diminution of the rents payable under Section 5.3 hereof.

     Section 8.5. Granting of Easements. If no event of default shall have happened and be
continuing, and subject to the prior written consent of Trustee, which consent shall not be
unreasonably withheld, Company may at any time or times grant easements, licenses, rights-of-way
(including the dedication of public highways) , and other rights or privileges in the nature of
easements with respect to any property included in the Mortgaged Property, free from the lien of
the Indenture, or Company may release existing easements, licenses, rights-of-way, and other
rights or privileges with or without consideration, and Issuer agrees that it shall execute and
deliver and will cause and direct Trustee to execute and deliver any instrument necessary or
appropriate to confirm the release of any such easement, license, right of way and other right or
privilege in the nature of easements when so granted from the lien of the Indenture, including,
but not limited to, delivery by the Issuer of a release of lien in recordable-form and a
subordination agreement in recordable form confirming that the lien of the Indenture is subject
and subordinate to such easement, license, right of way or other right or privilege granted
pursuant to this Section 8.5, and grant or release any such easement, license, right-of-way, or
other right or privilege upon receipt of: (i) a copy of the instrument of grant or release; (ii) a
written application signed by the president or any vice president of Company requesting such
instrument; and (iii) a certificate executed by the president or any vice president of Company
stating (1) that such grant or release is not detrimental to the proper conduct of the business of
Company, and (2) that such grant or release will not impair the effective use or interfere with
the operation of the Mortgaged Property and will not weaken, diminish, or impair the security
intended to be given by or under the Indenture.

     Section 8.6. Compliance with Code. Issuer and Company recognize that the Bonds are to be
issued under such circumstances that the interest thereon shall remain excludable from gross
income for federal income taxation purposes, and to that end Company represents to and covenants
with Issuer, Trustee, and each Bondowner as follows:

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     (a) Company will fulfill all conditions specified in section 144 (a) (4) of the
Code and applicable Regulations, to qualify the Bonds as a “small issue” thereunder.

     (b) Company will comply with and fulfill all other requirements and conditions of the
Code and applicable Regulations in the acquisition, construction, and operation of the
Project to the end that the interest on the Bonds shall at all times be free from federal
income taxation.

     (c) No part of the Project reached a degree of completion which would permit operation
at substantially the level for which it was designed and was, in fact, in operation at such
level more than one year prior to April 27, 1995.

     (d) The average maturity of the Bonds (determined by their respective issue prices)
does not exceed 120 percent of the average reasonably expected economic life of the various
facilities to be financed with the proceeds of the Bonds (determined by taking into account
the respective costs of such facilities and by using the guideline economic life for each
respective facility as set forth in the ADR [asset depreciation range] midpoint life tables
for machinery and equipment and as set forth in Revenue Procedure 62-21 for structures).

     (e) In accordance with section 149 (e) of the Code, Company covenants and agrees to
furnish to Issuer not later than 5 days before the issuance and delivery of the Bonds a
fully completed Internal Revenue Service Form 8038 with respect to the Bonds. Company
further covenants and agrees that it or its agents will have the primary responsibility as
between or among any preparers for the overall substantive accuracy of the preparation of
Form 8038. Company will hold harmless Issuer, Bond Counsel, Trustee and any purchaser or
owner of the Bonds against all consequences of any material misrepresentation in or material
omission from such Form 8038.

     (f) Company has delivered to Issuer a certificate in accordance with the provisions of
the Code and Regulation §1.148-2(b) stating that on the basis of the facts, estimates, and
circumstances in existence on April 27, 1995, as such facts, estimates, and circumstances
are set forth in the certificate, it is not expected that the proceeds of the Bonds will be
used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of
section 148 of the Code and the Regulations.

     Section 8.7. Federal Guarantee Prohibition. Issuer and Company covenant that neither Issuer
nor Company shall take any action or permit or suffer any action to be taken if the result of

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the same would be to cause the Bonds to be “federally guaranteed” within the meaning of
section 149(b) of the Code and Regulations.

     Section 8.8. Limitation on Issuance Costs. Issuer and Company covenant that, from the proceeds
of the Bonds received from the Original Purchaser on April 27, 1995 an amount not in excess of 2
percent of the face amount of the Bonds shall be used to pay for, or provide for the payment of,
Issuance Costs. For this purpose, if the fees of the Original Purchaser are retained as a discount
on the purchase of the Bonds, such retention shall be deemed to be an expenditure of proceeds of
the Bonds for said fees to the extent of the amount retained.

     Section 8.9. Limitation on Expenditure of Proceeds. Issuer and Company covenant that not less
than 95 percent of the face amount of the Bonds, plus accrued interest and premium, if any, paid
on the purchase of the Bonds by the Original Purchaser from Issuer, less original issue discount,
shall be used to pay for Qualified Project Costs.

     Section 8.10. Limitation on Land and Certain Facilities. Issuer and Company covenant that not more than 25 percent of the face amount of the Bonds, plus
accrued interest and premium, if any, paid on the purchase of the Bonds by the Original Purchaser
from Issuer, less original issue discount, shall be used, directly or indirectly, for the
acquisition of land or an interest therein or to provide a facility the primary purpose of which
is retail food and beverage services, automobile sales and service, or the provision of recreation
or entertainment.

     Section 8.11. Location of Project; Outstanding Obligations. Company covenants that proceeds of the Bonds shall be used only with respect to facilities located
within the corporate boundaries of the City of Paragould, Arkansas (“City”), and that there are no
outstanding obligations issued for facilities located within the City having as principal users
Company or Guarantor or other principal users of the Project or their related persons, all within
the meaning of sections 144(a) (2) and (3) of the Code and the Regulations.

     Section 8.12. Prohibited Facilities. Issuer and Company covenant that no portion of the
proceeds of the Bonds shall be used directly or indirectly to provide residential real property
for family units, any private or commercial golf course, country club, massage parlor, tennis
club, skating facility (including roller skating, skateboard, and ice skating), racquet sport
facility (including any handball or racquetball court) , hot tub facility, suntan facility,
racetrack, airplane, skybox or other private luxury box, health club facility, facility used for
gambling, or store, the principal business of which is the sale of alcoholic beverages for
consumption off premises.

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     Section 8.13. No Arbitrage. Issuer and Company covenant that neither Issuer nor Company
shall take, or permit or suffer to be taken by Trustee or otherwise, any action with respect to
the proceeds of the Bonds over which Issuer or Company, as the case may be, has control, which if
such action had been reasonably expected to have been taken, or had been deliberately and
intentionally taken, on April 27, 1995 would have caused the Bonds to be “arbitrage bonds” within
the meaning of section 148(a) of the Code and Regulations.

     Section 8.14. Capital Expenditure Limitation. Company covenants that the sum of the principal
amount of the Bonds, plus capital expenditures paid or incurred during the 6-year period beginning
3 years prior to April 27, 1995 and ending 3 years after April 27, 1995, for facilities located
within the City having as principal users Company, Guarantor or other principal users of the
Project or their related persons shall not exceed $10,000,000, all within the meaning of section
144 (a) of the Code and the Regulations. Company further covenants that it will not enter into any
lease or other arrangement, including a sublease or assignment pursuant to Section 9.1 hereof,
for use of any portion of the Project if such lease or other arrangement would cause the covenants
contained in this Section to be violated.

     Section 8.15.
$40,000,000 Limitation. Company covenants” that the sum of the outstanding
principal amount of the Bonds, plus the portions of the aggregate amount of outstanding
tax-exempt facility bonds as defined in section 142 of the Code, qualified small issue bonds as
defined in section 144 (a) of the Code, qualified redevelopment bonds as defined in section
144(c) of the Code, and industrial development bonds as referenced in section
144(a)(10)(B)(ii)(11) of the Code, allocable to each “test period beneficiary” as defined in
Section 144 (a) (10) of the Code on the later of the date the Project is placed in service or
April 27, 1995 shall not exceed $40,000,000, all within the meaning of section 144 (a) (10) of
the Code and the Regulations. Company further covenants that it will not enter into any lease or
other arrangement for ownership or use of any portion of the Project if such lease or other
arrangement would cause the covenants contained in this Section to be violated.

     Section 8.16. Existing Facilities Limitation.

     (a) Company covenants that no proceeds of the Bonds shall be used for the acquisition of
any tangible property or an interest therein, other than land or an
interest in land, unless the
first use of such property is pursuant to such acquisition; provided, however, that this
limitation shall not apply with respect to any building (and the equipment therefor) if
Rehabilitation Expenditures with respect to such building equal or exceed 15 percent of the portion
of the cost of acquiring such building (and equipment) financed with proceeds of the Bonds; and
provided,

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further, that this limitation shall not apply with respect to any structure other than a
building if Rehabilitation Expenditures with respect to such structure equal or exceed 100 percent
of the portion of the cost of acquiring such structure financed with the proceeds of the Bonds.

     (b) For the purpose of this section, the term “Rehabilitation Expenditures” means any amount
properly chargeable to the capital account of Company or a successor to Company or by the seller
under a sales contract with Company for the property acquired in connection with the
rehabilitation of such property or, in the case of property constituting equipment, in connection
with the replacement of such equipment with equipment having substantially the same function,
excluding, however, (A) expenditures described in section 48(g)(2)(B) of the Code and (B) amounts
incurred after the date 2 years after the later of the date of acquisition of the property in
question or April 27, 1995.

     Section 8.17. Compliance With Rebate Provisions. Company covenants that it shall take any and
all actions necessary to assure compliance with section 148 (f) of the Code. In particular, it
shall directly or through independent consultants perform the calculations required to determine
what payments are due under section 148 (f) of the Code, assure the payments required by section
148 (f) of the Code are made, maintain the records required by
section 148 (f) of the Code, pay all
fees, costs, and expenses incurred by Company, Issuer, or Trustee in connection with compliance
with section 148 (f) of the Code, including compensation due to independent consultants, and
coordinate and cooperate in any and all respects necessary to assure compliance with section 148
(f) of the Code.

     Section 8.18. Composite Issues.

     (a) The officer of Company executing this Lease Agreement is familiar with all financing
transactions undertaken and now being planned for Company, including tax-exempt financings by or
for Company or by or for any related person (within the meaning of section 144(a)(3) of the Code).

     (b) There are no other obligations heretofore issued or to be issued by or on behalf of any
state, territory, or possession of the United States of America, or political subdivision of any of
the foregoing, or of the District of Columbia, for the benefit of Company or any related person,
which constitute private activity bonds within the meaning of section 147 (b) of the Code) and
which (i) were or are to be sold at substantially the same time as the Bonds, (ii) were or are to
be sold pursuant to the same plan of financing as the Bonds, and (iii) are payable from the source
from which the Bonds are payable.

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     (c) There are no additional facts or circumstances which may further evidence that the
Bonds are part of any other issue of obligations.

     Section 8.19. Manufacturing Facility. The Project will be a manufacturing facility as
defined in Section 144(a)(12) of the Code. The Project may include ancillary facilities which are
directly related and ancillary to the Project but any such ancillary facilities will be located on
the same site as the Project and not more than 25% of the net proceeds of the Bonds will be used
to provide such ancillary facilities.

ARTICLE IX

ASSIGNMENT, SUBLEASING, PLEDGING, AND SELLING;

REDEMPTION; OPTIONAL AND MANDATORY

PREPAYMENT OF RENT; ABATEMENT OF RENT

     Section 9.1. Assignment and Subleasing. Company may not assign this Lease Agreement or
sublet the Mortgaged Property or part thereof without the prior written consent of Issuer which
shall not be unreasonably withheld. Any such assignment shall include, without limitation, an
assumption in writing by such assignee of all liabilities and obligations of Company under this
Lease Agreement from and after the effective date of such assignment, the Guaranty, the Hazardous
Substance Certification and Indemnification from and after the effective date of the assignment,
and any related documents. Notwithstanding the foregoing, no assignment or subletting and no
dealings or transactions between Issuer or Trustee and any sublessee or assignee shall relieve
Company of any of its obligations under this Lease Agreement, and Company shall remain as fully
bound as though no assignment or subletting had been made, and performance by any assignee or
sublessee shall be considered as performance pro tanto by Company.

     In the event a sublease is permitted as provided in this Section 9.1 of the Lease Agreement,
and in the event of the termination of this Lease Agreement pursuant to an event of default as
defined herein, Issuer will recognize the subtenant under such permitted sublease as the direct
tenant of Issuer for the balance of the sublease term; and provided, however, that at the time of
the termination of this Lease Agreement (i) no default exists under the sublease which at the time
would then permit the landlord thereunder to terminate the same or to exercise any dispossess
remedy provided for them and (ii) the subtenant shall deliver to Issuer an instrument confirming
the agreement of such subtenant to attorn to the Issuer and to recognize the Issuer as the
subtenant’s landlord under its sublease.

     It is understood and agreed that this Lease Agreement (and the Mortgaged Property) will be
assigned and pledged to Trustee as

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security for the payment of the principal of and premium, if any, and interest on the Bonds,
but otherwise Issuer shall not, without the prior written consent of company and Trustee, assign,
encumber, sell, or dispose of all or any part of its rights, title, and interest in and to the
Mortgaged Property and this Lease Agreement, except to Company in accordance with the provisions of
this Lease Agreement and to Trustee or any other Person that takes title to any of the Mortgaged
Property as a result of a foreclosure or deed in lieu of foreclosure, transfer by any Person after
a foreclosure or deed in lieu of foreclosure, or otherwise under the Indenture or this Lease
Agreement.

     Section 9.2. Restrictions on Sale, Mortgage, or other Conveyance of Mortgaged Property by
Issuer. Issuer agrees that, except for the assignment and pledge of this Lease Agreement and the
grant and pledge of the Mortgaged Property to Trustee pursuant to the Indenture, it will not sell,
assign, mortgage, pledge, transfer, or convey the Mortgaged Property during the Lease Term, except
as specifically provided in this Lease Agreement.

     Section 9.3. Redemption of Bonds. Issuer, at the request at any time of Company and if the
Bonds are then callable, shall forthwith take all steps that may be necessary under the applicable
redemption provisions of the Indenture to effect redemption of all or part of the then outstanding
Bonds, as may be specified by Company, on the earliest redemption date on which such redemption
may be made under such applicable provisions or upon the date set for the redemption by Company
pursuant to Section 11.2 hereof.

     Section 9.4. Prepayment of Rents. To permit the redemption of Bonds pursuant to the exercise
of any options of company hereunder, and solely for that purpose, there is expressly reserved to
Company the right, and Company is authorized and permitted, at any time it may choose, to prepay
all or any part of the rents payable under Section 5.3 hereof, and Issuer agrees that Trustee may
accept such prepayment of rents when the same are tendered by Company. All rents so prepaid shall
be credited on the rental payments specified in Section 5.3 hereof, in the order of their
maturities, and shall be used for the redemption of the Bonds in accordance with the Indenture.

     Section 9.5. Mandatory Prepayment of Rent Upon Determination of Taxability. If, for any
reason (including a change in the Code) , without regard to whether such circumstances shall be
caused by any act or failure to act of Issuer, Company, or any other user of the Project, there
shall occur a Determination of Taxability, Issuer or Company shall immediately instruct Trustee to
call the Bonds for redemption pursuant to Section 304 of the Indenture, and Company shall
immediately pay to Trustee, as prepayment of the basic rent, the amount necessary to effect the
redemption of the Bonds then Outstanding in accordance with the provisions of the Indenture.

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     Company shall also pay to Trustee the additional rent in the amounts specified in Section
5.3 of this Agreement.

     Section 9.6. Company Entitled to Certain Rent Abatement if Bonds Paid Prior to Maturity. If at
any time the moneys in the Bond Fund shall be sufficient to retire, in accordance with the
provisions of the Indenture, all of the Bonds at the time outstanding, and to pay all fees and
charges of Trustee due or to become due through the date on which the last of the Bonds is retired,
under circumstances not resulting in termination of the Lease Term, and if Company is not at the
time otherwise in default hereunder, Company shall be entitled to use and occupy the Mortgaged
Property from the date on which such aggregate moneys are in the hands of Trustee to and including
the date on which the last of the Bonds is retired, without the payment of rent during the interval
(but otherwise on the terms and conditions hereof, in the absence of exercise of the purchase
option provided for in Section 11.4 hereof).

     Section 9.7. Reference to Bonds Ineffective After Bonds Paid. Upon payment in full of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Indenture) and all fees and charges of Trustee, all
references in this Lease Agreement to the Bonds and Trustee shall be ineffective and neither
Trustee nor the Bondowners shall thereafter have any rights hereunder, saving and excepting those
that shall have theretofore vested.

ARTICLE X

EVENTS OF DEFAULT AND REMEDIES

     Section 10.1. Events of Default Defined. The following shall be “events of default”
under this Lease Agreement and the terms “event of default” or “default” shall mean, whenever they
are used in this Lease Agreement, any one or more of the following events:

     (a) Failure by Company to pay the basic rent or any part thereof payable hereunder at
the times specified herein.

     (b) Failure by Company or Issuer to observe and perform any covenant, condition, or
agreement on its part to be observed or, performed, other than as referred to in subsection
(a) of this Section, for a period of 30 days after the receipt by Company of notices sent by
certified or registered mail by Issuer or Trustee, specifying such failure and requesting
that it be remedied, unless Issuer and Trustee shall agree in writing to an extension of such
time prior to its expiration.

     (c) An event of default shall occur under the Guaranty or the Hazardous Substance
Certification and Indemnification provided however, with respect to the Hazardous Substance

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Certification and Indemnification, the provisions of this paragraph (c) shall not
constitute an event of default until actual notice of such default by registered or
certified mail (with or without return receipt requested) shall be given to the Company,
and Company shall have 30 days after receipt of such notice to correct said default or
cause said default to be corrected, and if the Company shall not have corrected said
default or cause said default to be corrected within said 30 day period; provided, however,
if said default cannot be corrected within 30 days, it shall not constitute an event of
default if corrective action is instituted within said 30 day period and diligently pursued
until the default is corrected within any applicable period as may be required by
governmental regulation or order.

     (d) (i) Company (or any other Person obligated, as guarantor or otherwise, to make
payments on the Bonds or under the Lease Agreement or the Guaranty) shall (A) apply for or
consent to the appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator, or the like of Company (or such other Person) or of all or any
substantial part of its property, (B) commence a voluntary case under the United States
Bankruptcy Code (as now or hereafter in effect), or (C) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up,
or composition or adjustment of debts; or (ii) a proceeding or case shall be commenced,
without the application or consent of Company which case or proceeding is not discharged
within ninety (90) days (or any other Person obligated, as guarantor or otherwise, to make
payments on the Bonds or under the Lease Agreement), in any court of competent
jurisdiction, seeking (A) the liquidation, reorganization, dissolution, winding-up or
composition or adjustment of debts, of Company (or any such other Person), (B) the
appointment of a trustee, receiver, custodian, liquidator, or the like of Company (or any
such other Person) or of all or any substantial part of its respective property or (C)
similar relief in respect of Company (or any such other Person) under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts.

     The provisions of paragraph (b) above are subject to the following limitations: (a) If said
default be a default that is correctable but that cannot be corrected within 30 days it shall not
constitute an event of default if corrective action is instituted within said 30 day period and
diligently pursued until the default is corrected or (b) If by reason of force majeure Company,
after using its best efforts, is unable in whole or in part to carry out its agreements on its
part herein contained, other than the obligations on the part of Company contained in Article v
and Sections 6.1(d), 6.3, 6.4 and 6.10 hereof, Company shall not be deemed in default during the
continuance of such

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inability. The term “force majeure” as used herein shall mean, without limitation, the
following: acts of God; strikes, lockouts, or other industrial disturbances; acts of public
enemies, orders of any kind of the government of the United States or of the State or any of their
departments, agencies, or officials, or any civil or military authority; insurrections; riots;
epidemics; landslides; lightning; earthquake; fire; hurricanes; storms; floods; washouts; droughts;
arrests; restraint of government and people; civil disturbances; explosions; breakage or accident
to machinery, transmission pipes, or canals; partial or entire failure of utilities; or any other
cause or event not reasonably within the control of Company. Company agrees, however, to remedy
with all reasonable dispatch the cause or causes preventing Company from carrying out its
agreements; provided, that the settlement of strikes, lockouts, and other industrial disturbances
shall be entirely within the discretion of Company, and Company shall not be required to make
settlement of strikes, lockouts, and other industrial disturbances by acceding to the demands of
the opposing party or parties.

     Section 10.2. Remedies on Default. Whenever any event of default shall happen, Issuer (with
the consent of Trustee if the Indenture has not been discharged) or Trustee may take any of the
following remedial steps:

     (a) Declare rent due and payable in an amount equal to the principal and premium, if
any, and interest and other amounts due and payable under the Indenture.

     (b) Re-enter and take possession of the Mortgaged Property without terminating this
Agreement and sublease the Mortgaged Property for the account of Company, holding Company
liable for the difference in the rent and other amounts payable by such sublessee in such
subleasing and the basic and additional rent payable by Company hereunder.

     (c) Terminate the Lease Term, exclude Company from possession of the Mortgaged
Property, and use its commercially reasonable efforts to lease the Mortgaged Property to
another for the account of Company.

     (d) Have access to and inspect, examine, and make copies of such of the books, records,
accounts, and data of Company as pertain to the Mortgaged Property.

     (e) Take whatever action at law or in equity may appear necessary or desirable to
collect the rent and any other amounts payable by Company hereunder, then due and thereafter
to become due, or to enforce performance and observance of any obligation, agreement, or
covenant of Company under this Lease Agreement.

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     Any amounts collected pursuant to action taken under this Section shall be paid into
the Bond Fund and applied in accordance with the provisions of the Indenture.

     Section 10.3. Remedies Not Exclusive. No remedy herein conferred upon or reserved to Issuer
or Trustee is intended to be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every other remedy given under
this Lease Agreement or now or hereafter existing at law or in equity or by statute. No delay or
omission to exercise any right or power 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 as often as
may be deemed expedient.

     Section 10.4. Rental, Damages, and Reletting Go Into Bond Fund. The foregoing provisions of
this Article relating to the receipt of moneys by Issuer or Trustee as the result of an
acceleration, upon a reletting, or otherwise, are each to be construed as providing that all such
payments by Company or others shall be made into the Bond Fund referred to in Section 501 of the
Indenture.

     Section 10.5. Equitable Relief. Issuer, Company, and Trustee shall each be entitled to
specific performance, injunctive, or other appropriate equitable relief for any breach or
threatened breach of any of the provisions of this Lease Agreement, notwithstanding the
availability of an adequate remedy at law, and each party hereby waives the right to raise such
defense in any proceeding in equity.

     Section 10.6.
Trustee May File Proofs of Claim. In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition, or
other judicial proceeding relative to Company, the Mortgaged Property, or any other property of
Company, Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise,

     (a) to file and prove a claim and to file such other papers or documents as may be
necessary or advisable in order to have the claims of Trustee (including any claim for the
reasonable compensation, expenses, disbursements, and advances of Trustee, its agents and
counsel) allowed in such judicial proceeding, and

     (b) to collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute the same.

46

 

ARTICLE XI

OPTIONS IN FAVOR OF COMPANY

     Section
11.1. Option to Terminate. Company shall have the following options to cancel
or terminate the term of this Lease Agreement:

     (a) At any time prior to full payment of the Bonds (or provision for payment thereof
having been made in accordance with the provisions of Article IX of the Indenture), Company
may terminate the Lease Term by giving Issuer and Trustee 60 days notice in writing of such
termination and by paying to Trustee an amount which, when added to the amount on deposit in
the Bond Fund, will be sufficient to pay, retire, and redeem all the outstanding Bonds in
accordance with the provisions of the Indenture (including, without limiting the generality
of the foregoing, principal, interest to maturity or earliest applicable redemption date, as
the case may be, premium, if any, expenses of redemption, Trustee’s and paying agent’s fees,
and registrars’ fees and expenses), and, in case of redemption, making arrangements
satisfactory to Trustee for the giving of the required notice of redemption. Upon any such
redemption and repayment, any surplus moneys shall be paid to Company.

     (b) At any time after full payment of the Bonds, including without limiting the
generality of the foregoing, principal, interest to maturity or earliest redemption date, as
the case may be, premium, if any, expenses of redemption, Trustee’s and paying agent’s fees,
and registrars’ fees and expenses (or provision for payment thereof having been made in
accordance with the provisions of the Indenture), Company may terminate the Lease Term by
giving Issuer notice in writing of such termination and such termination shall forthwith
become effective.

     Section 11.2. Option to Acquire Issuer’s Interest in the Mortgaged Property Prior to Payment
of the Bonds. Company shall have, and is hereby granted, the option to acquire legal title to the
Mortgaged Property (including, at the option of Company, legal title to the Leased Land) prior to
the scheduled maturity of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Indenture), if any of the following events shall have
occurred:

     (a) The Buildings or the Leased Equipment shall have been damaged or destroyed as set
forth in Section 7.1 hereof to such extent that in the judgment of Company (i) it cannot be
reasonably restored within a period of 4 months to the condition thereof immediately
preceding such damage or destruction, or (ii) Company is thereby prevented from carrying on
its normal operation of the Mortgaged Property for a period of 4 months, or (iii) the cost
of restoration thereof would exceed the Net Proceeds of insurance carried thereon pursuant
to the requirements of Section 6.4 hereof, plus the

47

 

granted in this Section any Net Proceeds of insurance or condemnation shall be paid to
Company.

     Section 11.3. Option to Acquire Legal Title Upon Full Payment of the Bonds. Company shall have
and is hereby granted an option to purchase and acquire legal title to and Issuer agrees to sell
the Mortgaged Property (including, at the option of Company, legal title to the Leased Land) at or
at any time after the expiration or sooner termination of the Lease Term (including in the event of
any default), following full payment of the Bonds, including without limiting the generality of the
foregoing, principal, interest to maturity or earliest redemption date, as the case may be,
premium, if any, expenses of redemption, Trustee’s and paying agent’s fees, and registrars’ fees
and expenses (or provision for payment thereof having been made in accordance with the provisions
of the Indenture), for a price of $1.

     Section 11.4. Conveyance on Exercise of Option to Acquire Legal Title.

     (a) Conveyance on Exercise of Option to Acquire Legal Title. At the closing of the purchase
pursuant to the exercise of any option to acquire legal title granted pursuant to Sections 11.2 or
11.3 of this Lease Agreement and, in each case, the payment in full of the Bonds, including
without limiting the generality of the foregoing, principal, interest to maturity or earliest
redemption date, as the case may be, premium, if any, expenses of redemption, Trustee’s and paying
agent’s fees, and registrars’ fees and expenses (or provision for payment thereof having been made
in accordance with the provisions of the Indenture) Issuer will upon receipt of the purchase
price deliver or cause to be delivered to Company the following:

     (i) If the Indenture shall not at the time have been satisfied in full, a release
from Trustee of the property being acquired.

     (ii) A bill of sale to all items of personal property being acquired, subject to no
liens or encumbrances other than: (A) those liens and encumbrances created by Company or to
the creation of which Company consented pursuant to Section 8.5 of this Lease Agreement;
(B) those liens and encumbrances resulting from the failure of Company to perform or
observe any of the agreements on its part contained in this Lease Agreement; (C) Permitted
Encumbrances other than the Indenture and this Agreement; and
(D) the rights and title of
the condemning authority with respect to Section 7.5 A hereof.

     (iii) A general warranty deed conveying to Company good and marketable title to the
real property being acquired, subject to no liens or encumbrances other than: (A) those
liens and encumbrances created by Company or to the creation of which Company consented
pursuant to Section 8.5 of this Lease Agreement; (B) those liens and encumbrances resulting
from the failure of Company to perform or observe any of the

48

 

If intended for Issuer:

City of Paragould, Arkansas

Office of the Mayor

City Hall

301 West Court Street

Paragould, Arkansas 72450

If intended for Trustee:

Fleet National Bank

111 Westminster Street

20th Floor

Providence, Rhode Island 02903

Attention: Corporate Trust Department

     A duplicate copy of each notice, certificate, or other communication given hereunder by either
Issuer or Company to the other shall also be given to Trustee, Issuer, Company, and Trustee may, by
notice given hereunder, designate any further or different address to which subsequent notices,
certificates, or other communications shall be sent.

     Section 12.2. Binding Effect. This Lease Agreement shall inure to the benefit of and shall be
binding upon Issuer, Company, and their respective successors and permitted assigns, subject,
however, to the limitations contained in Sections 8.3, 9.1, and 9.2 hereof.

     Section 12.3. Severability. 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 12.4. Amendments, Changes, and Modifications. Except as otherwise provided in this
Lease Agreement or in the Indenture, subsequent to the initial issuance of Bonds and prior to
their payment in full (or provision for the payment thereof having been made in accordance with
the provisions of the Indenture) , this Lease Agreement may not be effectively amended, changed,
modified, altered, or terminated without the concurring written consent of Trustee given in the
manner and subject to the approval of owners of the Bonds, as provided in Article XIII of the
Indenture.

     Section 12.5. Priority of Agreement. This Lease Agreement (as it may be amended or
supplemented pursuant to the provisions hereof) and the estate of Company hereunder are and shall
continue to be superior and prior to the Indenture (as it may be amended or supplemented).

49

 

     Section 12.6. Execution Counterparts. This Lease Agreement may be executed in
counterparts, each of which shall be an original and all of which shall constitute one and the same
instrument.

     Section 12.7. Captions. The captions or headings of this Lease Agreement are for convenience
only and in no way define, limit, or describe the scope or intent of any provisions of this Lease
Agreement.

     Section 12.8. Security Agreement; Recording and Filing.

     (a) This Lease Agreement is also a security agreement under the Uniform Commercial Code of the
State, and it is contemplated by the parties that a security interest (i) in the rentals and other
money due from Company to Issuer hereunder, (ii) the Leased Equipment, (iii) the Collateral, and
(iv) certain other interests of Issuer, will be granted to Trustee pursuant to the Indenture.

     (b) This Lease Agreement or a memorandum thereof and the Indenture shall be recorded in the
Office of the Circuit Clerk and Ex-Officio Recorder of Greene County, Arkansas, or in such other
office as may at the time be provided by law as the proper place for the recordation thereof.

     (c) Company hereby agrees to execute one or more fixture filings and financing statements and
renewals thereof with respect to the security interests granted by this Lease Agreement and to file
such statements or renewals thereof in any appropriate public office.

     Section 12.9. Law Governing Construction of Agreement. This Lease Agreement shall be governed
by, and construed in accordance with, the laws of the State.

     Section 12.10. Estoppel Certificate. Either party, upon 15 days prior notice from the
requesting party, shall execute and deliver to the requesting party a statement certifying that
this Lease Agreement is unmodified and in full force and effect (or, if there have been
modifications) , that the same is in full force and effect as modified and stating the
modifications, stating the dates which the Basic Rent and Additional Rent have been paid, and
stating whether or not there exists any defaults under this Lease Agreement, and if so, specifying
each such default; provided that Issuer shall be entitled to receive from and rely solely upon the
Trustee to provide the information required by this Section 12.10.

[Remainder of Page Intentionally Left Blank]

50

 

     IN WITNESS WHEREOF, the parties hereto have executed these presents as of the day and year first above written.

	 	 	 	 	 
	 	 	CITY OF PARAGOULD,
ARKANSAS, 
Issuer
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Charles R. Partlow
	 

	 	 	 	 
	 

	 	 	 	Charles R. Partlow, Mayor

Attest:

	 	 	 	 	 
	By:

	 	/s/ Goldie Wise
	 	 
	 

	 	 	 	 
	 

	 	Goldie Wise, City Clerk	 	 

	 	 	 	 	 
	 	 	AMERICAN RAILCAR
INDUSTRIES, INC., Company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ James J. Unger
	 

	 	 	 	 
	 

	 	Its:
	 	President

Attest:

	 	 	 	 	 
	By:

	 	/s/ Umesh Choksi
	 	 
	 

	 	 	 	 

ACKNOWLEDGMENT

	 	 	 
	STATE OF ARKANSAS
	 	)
	 
	 	) ss:
	COUNTY OF Greene
	 	)

     On this 26th day of April, 1995, before me, a Notary Public duly commissioned,
qualified and acting, within and for the County and State aforesaid, appeared in person
the within named Charles R. Partlow and Goldie Wise, Mayor and City Clerk, respectively, of the
city of Paragould, Arkansas, a municipality of the State of
Arkansas, to me personally known, who stated that they were duly
authorized in their respective capacities to execute the foregoing
instrument for and in the name of the City, and further stated and
acknowledged that they had signed, executed, and delivered the
foregoing instrument for the consideration, uses, and purposes
therein mentioned and set forth.

     IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal on the date first above written.

	 	 	 
	

	 	/s/ Harry Truman Moore
	 

	 	Notary Public

My commission expires:

6-1-2001

                                                                    NOTARY PUBLIC

                                                             Greene County, Arkansas

                                                           HARRY TRUMAN MOORE

                                                       Commission Expires: June 1, 2001

51

 

ACKNOWLEDGMENT

	 	 	 	 	 
	STATE OF Missouri

	 	)
	 

	 	) ss:

	COUNTY OF St. Charles

	 	)

     On this 24th day of April, 1995, before me, a Notary Public duly commissioned, qualified and acting within and for the County
and State aforesaid, appeared in person the within named James J. Unger and Umesh Choksi, President and
Asst. Treasurer, respectively, of American Railcar Industries,
Inc., a Missouri corporation, to me personally known, who stated
that they were duly authorized in their respective capacities to
execute the foregoing instrument for and in the name and behalf of
the corporation, and further stated and acknowledged that they had
so signed, executed, and delivered the foregoing instrument for the
consideration, uses, and purposes therein mentioned and set forth.

     IN TESTIMONY WHEREOF, I have hereunto set my hand and Official
seal on the date first above written.

	 	 	 	 	 
	 	 	 
	 	/s/ Nancy Collins
 	 
	 	Notary Public 	 
	 	 	 
	 

	 	 	 
	My commission expires:
	 	 
	 

	 	NANCY COLLINS
	 

	 	NOTARY PUBLIC—STATE OF MISSOURI
	8/2/96

	 	ST. CHARLES COUNTY
	 

	 	MY COMMISSION EXPIRES AUG. 2, 1996

	 	 	 	 	 
	(SEAL)	 	 
	 
	 	 	 	 
	By

	 	/s/ Becky Clifton	 	 
	 

	 	 	 	 

State of ARKANSAS

County of GREENE

     I hereby certify that this instrument was
FILED FOR RECORD and is RECORDED on the
Date and Time and in the Book and Page as
stamped hereon.

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	ELLEN JOHNSON
	 

	 	 	 	Recorder of Greene County
	 
	 	 	 	 
	 

	 	By
	 	/s/ Becky Clifton
	 

	 	 	 	 
	 

	 	 	 	Deputy

52EX-10.12

 

Exhibit 10.12

SERVICES AGREEMENT

          This AMENDED AND RESTATED SERVICES AGREEMENT is dated as of June 30, 2005 (this “Services
Agreement”) between AMERICAN RAILCAR INDUSTRIES, INC., a Missouri corporation (“ARI”) and AMERICAN
RAILCAR LEASING LLC, a Delaware limited liability company (“ARL”).

W I T N E S S E T H:

          WHEREAS, ARI and ARL entered into that certain Services Agreement, dated as of April 1, 2005
(the “Original Agreement”) whereby ARI retained ARL to provide certain administrative services, and
ARL retained ARI to provide certain purchasing and engineering services;

          WHEREAS, ARI and ARL desire to amend the Original Agreement in order that ARL will provide ARI
with access to its Accounting and Finance Services, as set forth in Section 5(g);

          NOW, THEREFORE, the parties hereto, desiring legally to be bound, agree as follows:

          1. Definitions and Rules of Interpretation.

          1.1. Definitions. As used herein, the following terms shall have the following
meanings:

          “Accounting and Finance Services” means the services described in Part 1 of Schedule A.

          “Affiliate” of any Person means any individual, corporation, partnership, joint venture,
association or other entity that directly, or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with such Person. For purposes of this
definition, “control,” when used with respect to any person, means the power to direct the
management or policies of such person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise. The terms “controlling” and “controlled” have the
meanings correlative to the foregoing.

          “Agreement” shall have the meaning set forth in the preamble hereof.

          “ARI” shall have the meaning set forth in the preamble hereof.

          “ARI Services” means Engineering Services and Purchasing Services, and any one of them, an
“ARI Service.”

          “ARL” shall have the meaning set forth in the preamble hereof.

 

 

          “ARL Services” means Accounting and Finance Services, Employee Compensation and Benefits
Administration Services, Information Processing Services, Leasing Services, Rent and Building
Services, and Treasury Services, and any one of them, an “ARL Service.”

          “Business Day” means each day that is neither a Saturday, Sunday nor other day on which
banking institutions or trust companies in New York, New York are legally authorized or required to
close.

          “Employee Compensation and Benefits Administration Services” means the services described in
Part 2 of Schedule A.

          “Engineering Services” means the services described in Part 1 of Schedule B.

          “Event of Default” shall have the meaning set forth in Section 8.1.

          “Fees” shall have the meaning set forth in Section 7.1.

          “Information Processing Services” means the services described in Part 3 of Schedule A.

          “Leasing Services” means the services described in Part 4 of Schedule A.

          “Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, joint stock company, trust, unincorporated organization or other entity, or
governmental authority.

          “Purchasing Services” means the services described in Part 2 of Schedule B.

          “Rent and Building Services” means the services described in Part 5 of Schedule A.

          “Services” means the ARI Services and the ARL Services, and any one of them, a “Service.”

          “Term” means the term of the respective obligations of ARI and ARL hereunder, commencing as of
the date hereof and continuing until terminated in accordance with the terms and provisions set
forth herein.

          “Treasury Services” means the services described in Part 6 of Schedule A.

          1.2. Rules of Interpretation. For purposes of this Agreement, unless otherwise
specified herein:

               (i) accounting terms used and not specifically defined therein shall be
construed in accordance with generally accepted accounting principles and
practices that are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting

- 2 -

 

               Principles Board or by the Financial Accounting Standards Board or
through other appropriate boards or committees thereof consistently applied
as to the party in question;

               (ii) the term “including” means “including without limitation,” and
other forms of the verb “to include” have correlative meanings;

               (iii) references to any Person include such Person’s permitted
successors (and references to any governmental authority include any Person
succeeding to such governmental authority’s functions);

               (iv) in the computation of a period of time from a specified date to a
later specified date, the word “from” means “from and including” and the
words “to” and “until” each means “to but excluding”;

               (v) “month” means a calendar month and “year” means a calendar year
unless specifically noted otherwise;

               (vi) the words “hereof”, “herein” and “hereunder” and words of similar
import refer to this Agreement as a whole and not to any particular
provision of this Agreement;

               (vii) the term “or” means “and/or”, as applicable;

               (viii) the meanings of defined terms are equally applicable to the
singular and plural forms of such defined terms;

               (ix) references to “Section” or “Schedule” herein are references to
Sections in and Schedules to this Agreement;

               (x) the various captions (including any table of contents) are provided
solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement;

               (xi) references to any statute or regulation refer to that statute or
regulation as amended from time to time, and include any successor statute
or regulation of similar import; and

               (xii) all references to any contract, document or agreement shall mean
such contract, document or agreement as amended, supplemented, restated and
otherwise modified and in effect from time to time.

          2. Engagement.

          2.1. Engagement of ARL. ARI hereby engages ARL to provide the ARL Services to and on
behalf of ARI on the terms and conditions set forth herein, and ARL hereby accepts such engagement.
In this regard, ARL will act as an independent contractor on behalf of ARI and not as an agent or
employee of ARI or any other Person.

- 3 -

 

          2.2. Engagement of ARI. ARL hereby engages ARI to provide the ARI Services to and on
behalf of ARL on the terms and conditions set forth herein, and ARI hereby accepts such engagement.
In this regard, ARI will act as an independent contractor on behalf of ARL and not as an agent or
employee of ARL or any other Person.

          3. Term.

          3.1. Duration of Term. The Term of each of the ARL Services and the ARI Services
shall commence as of the date hereof and shall continue until December 31, 2007 unless terminated
on an earlier date by ARL or ARI in accordance with the terms and conditions set forth herein. The
obligations of ARL and ARI hereunder arising during the Term, or as may otherwise be specifically
provided for in this Agreement, shall survive the expiration or earlier termination of the Term.

          3.2. Elective Termination of Services.

          (a) ARI, in its sole discretion, may terminate the Term with respect to any or all of the ARL
Services by six (6) months’ prior notice to ARL, which termination shall be effective as of the
date as such notice may specify, and upon the effective date of any such termination ARI shall no
longer be responsible for the payment of any Fees or other expenses associated with such terminated
ARL Services.

          (b) ARL, in its sole discretion, may terminate the Term with respect to any or all of the ARI
Services by six (6) months’ prior notice to ARI, which termination shall be effective as of the
date as such notice may specify, and upon the effective date of any such termination ARL shall no
longer be responsible for the payment of any Fees or other expenses associated with such terminated
ARI Services.

          3.3. Performance of Services.

          (a) In each case when ARI is able to perform any ARL Service without assistance from ARL, ARI
shall promptly terminate ARL’s provision of such ARL Service pursuant to Section 3.2(a).

          (b) In each case when ARL is able to perform any ARI Service without assistance from ARI, ARL
shall promptly terminate ARI’s provision of such ARI Service pursuant to Section 3.2(b).

          3.4. Resignation.

          (a) ARL may not resign from its obligations and duties to perform the ARL Services hereunder,
except (i) with the prior written consent of ARI or (ii) upon a determination that ARL’s
performance of the ARL Services is no longer permissible under applicable law. Any such
determination permitting the resignation of ARL pursuant to clause (ii) above shall be evidenced by
an opinion of independent counsel, in form and substance reasonably satisfactory to ARI, to such
effect delivered to ARI.

- 4 -

 

          (b) ARI may not resign from its obligations and duties to perform the ARI Services hereunder,
except (i) with the prior written consent of ARL or (ii) upon a determination that ARI’s
performance of the ARI Services is no longer permissible under applicable law. Any such
determination permitting the resignation of ARI pursuant to clause (ii) above shall be evidenced by
an opinion of independent counsel, in form and substance reasonably satisfactory to ARL, to such
effect delivered to ARL.

          4. Duties.

          4.1. Duties of ARL. Subject to the terms and provisions hereof, ARL shall provide or
arrange for the provision of the ARL Services to and on behalf of ARI during the Term in the same
manner as ARL performs such services on its own behalf. ARI shall furnish to ARL all such
information as may be reasonably necessary to enable ARL to provide the ARL Services. Any ARL
Service to be provided by ARL under this Agreement shall be performed by ARL, any of its
Affiliates, or any other Person with the capability to provide such ARL Service that ARL arranges
to provide such ARL Service. 

          4.2. Duties of ARI. Subject to the terms and provisions hereof, ARI shall provide or
arrange for the provision of the ARI Services to and on behalf of ARL during the Term in the same
manner as ARI performs such services on its own behalf. ARL shall furnish to ARI all such
information as may be reasonably necessary to enable ARI to provide the ARI Services.

          5. Records and Information.

          (a) ARL and ARI each shall maintain separate, complete and accurate records relating to the
Services provided by it hereunder and all matters covered by this Agreement in equivalent or better
form and to an equivalent or better extent as it customarily maintains records for itself or in
respect of its performance of similar services for and on behalf of other Persons. During the
period that ARL provides any of the Accounting and Finance Services and Treasury Services to ARI
pursuant to this Agreement, ARL shall provide ARI with a calendar monthly statement of all amounts
received by ARL for the account of ARI.

          (b) ARI and its designees shall have the right, at ARI’s expense, for their respective
representatives to examine ARL’s books and records relating to the provision by ARL of the ARL
Services to ARI, and to make copies thereof or extracts therefrom, at any time during normal
business hours upon not less than two (2) Business Days’ prior written notice.

          (c) ARL and its designees shall have the right, at ARL’s expense, for their respective
representatives to examine ARI’s books and records relating to the provision by ARI of the ARI
Services to ARL, and to make copies thereof or extracts therefrom, at any time during normal
business hours upon not less than two (2) Business Days’ prior written notice.

          (d) Upon the expiration or termination of the Term or of the termination by ARI of ARL’s
obligation with respect to any ARL Service provided hereunder, ARL shall promptly deliver to ARI or
its designees originals or copies of any records maintained by ARL in respect of all of the ARL
Services or any such terminated ARL Service, as the case may be, and

- 5 -

 

ARL shall reasonably cooperate, at the expense of ARI, with ARI or its designees in connection
with the transfer of ARL’s duties hereunder to ARI or a third Person so as to ensure, to the extent
practicable, an orderly transition to the provision of ARL Services by ARI or any such third
Person.

          (e) Upon the expiration or termination of the Term or of the termination by ARL of ARI’s
obligation with respect to any ARI Service provided hereunder, ARI shall promptly deliver to ARL or
its designees originals or copies of any records maintained by ARI in respect of all of the ARI
Services or any such terminated ARI Service, as the case may be, and ARI shall reasonably
cooperate, at the expense of ARL, with ARL or its designees in connection with the transfer of
ARI’s duties hereunder to ARL or a third Person so as to ensure, to the extent practicable, an
orderly transition to the provision of ARI Services by ARL or any such third Person.

          (f) Following the expiration or termination of the Term or of the termination of ARI’s or
ARL’s obligation with respect to any Service provided hereunder, ARL and ARI shall each provide the
other with access to any records maintained by it relating to the Services or any terminated
Service for any valid business purpose, including the preparation of financial statements and tax
returns, in connection with tax audits and in connection with litigation.

          (g) Without limiting any of the provisions and terms of this Agreement, if ARI shall have a
class of securities registered under the Securities and Exchange Act of 1934, as amended, or
otherwise be required to file periodic reports under said Act:

               (i) ARL will, and will use its commercially reasonable efforts to cause its independent
auditors to, provide ARI with such information, records, reports or documentation as ARI may
reasonably request (to the extent in ARL’s possession or otherwise generally available to ARL) to
permit ARI to comply with applicable laws, including, without limitation, the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act of 2002
and rules and regulations promulgated under such Acts or any successor provisions. Such
information, records, reports and documentation and testing thereof may include, without
limitation, a SAS 70 Type II Report within 45 days of the end of each calendar year commencing with
the calendar year ending December 31, 2006 prepared by ARL’s independent auditors in accordance
with Statement on Auditing Standards No. 70, Service Organizations (“SAS 70”), which report shall
include an opinion with respect to the controls that are in effect at ARL over the practices and
procedures relating to ARL’s performance of such Services under this Agreement (“SAS 70 Type II
Report”), and such other information, records, reports or documentation as may be reasonably
requested of ARL and its management for ARI to comply with Section 404, entitled “Management’s
Assessment of Internal Controls”, of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder or any successor provisions;

               (ii) ARL will, and will use its commercially reasonable efforts to cause its independent
auditors to, provide to the independent public accountants of ARI such information, records,
reports or documentation as ARI or its independent public accountants may reasonably request (to
the extent in ARL’s possession or otherwise generally available to ARL) to allow ARI’s independent
public accountants to complete audits and limited reviews of the financial

- 6 -

 

statements and other accounting or financial data or information of ARI (including, without
limitation, such information, records, reports (including SAS 70 Type II Reports) and documentation
and testing thereof as may be necessary for such independent public accountants to provide the
attestation to, and report on, the internal control assessment made by ARI and its management
required under the Sarbanes-Oxley Act of 2002, the rules and regulations promulgated thereunder or
any successor provisions and the rules of the Public Company Accounting Oversight Board);

               (iii) ARL shall correct as promptly as practicable, any deficiencies in books and records and
associated controls and procedures relating to the information provided under this Section 5 that
are identified by ARI in writing in reasonable detail in connection with any internal control
assessment, audit or similar review or report conducted or to be conducted by ARI, its management
or its independent public accountants pursuant to the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder or any successor provisions. If at any time ARI reasonably
determines that any changes are needed to be made to ARL’s internal controls and identifies such
changes in reasonable detail in writing then ARL shall work diligently to make such changes as
promptly as practicable. ARL shall have no responsibility for determining what changes or
corrections are necessary and shall follow only those instructions provided by ARI; and

               (iv) All direct and indirect costs and expenses relating to any of the requests made by ARI of
ARL under and pursuant to this Section 5(g) (including employee time required to compile
information or otherwise comply with this Section 5(g), changes to systems maintained by ARL to
provide information in a specific format, fees and expenses charged by ARL’s independent auditor or
other third parties) shall be at the expense of ARI, unless (A) ARL prepares the same exact
information for itself in its ordinary course of business, in which case the cost shall be a
nominal processing fee, or (B) ARL provides the same exact information or report to ARI as a
service hereunder, in which case the cost shall be covered by the applicable Exhibit’s cost
calculation(s). The intent of the parties is not to double charge for any service or other work
performed by one party for the other hereunder.

          6. Representations and Warranties. Each of ARI and ARL represents and warrants to the
other as follows:

          (a) It is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. It has all necessary entity power and authority and has taken all
entity action necessary to enter into this Agreement, to consummate the transactions contemplated
hereby and to perform its obligations hereunder.

          (b) This Agreement has been duly executed and delivered by it and is a legal, valid and
binding obligation of it, enforceable against it in accordance with its terms, except as such
enforceability may be limited by (i) the effect of bankruptcy, insolvency, reorganization,
moratorium, marshalling or other similar laws now or hereafter in effect relating to or affecting
the rights and remedies of creditors generally and (ii) general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law.

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          (c) Neither the execution and delivery by it of this Agreement, the performance by it of its
obligations hereunder nor the consummation of the transactions contemplated hereby will (i) with or
without the giving of notice or the passage of time, or both, violate, or be in conflict with, or
permit the termination of, or constitute a default under, or cause the acceleration of the maturity
of, any agreement, debt or obligations of any nature of it or to which it is a party or bound, (ii)
require the consent of any party to any agreement, instrument or commitment to which it is a party
or to which it or its properties is bound, (iii) violate any statute or law or any judgment,
decree, order, regulation or rule of any court or other governmental authority to which it is
subject, or (iv) result in the creation of any lien, security interest or other encumbrance on its
assets, which in the case of (i), (ii), (iii) or (iv) would cause the transactions contemplated by
this Agreement not to be consummated or that would have a material adverse effect on the business,
financial condition or operations of the other party to this Agreement.

          (d) No consent, approval or authorization of, or declaration, filing or registration with, any
governmental authority is required to be made or obtained by it in connection with the execution,
delivery and performance of this Agreement, the performance by it of its obligations hereunder or
the consummation of the transactions contemplated hereby, the failure of which to have been made or
obtained would have a material adverse effect on the ability of such party to perform its
obligations hereunder or on the business, financial condition, or operations of any party to this
Agreement.

          7. Fees.

          7.1. Fees. For each of the ARL Services provided under this Agreement by ARL, ARI
will pay ARL the fees set forth on Schedule A, and for each of the ARI Services provided
under this Agreement by ARI, ARL will pay ARI the fees set forth on Schedule B
(collectively, the “Fees”). The Fees are intended to include all direct costs and expenses
relating to the performance by ARI and ARL of their respective Services under this Agreement.

          7.2. ARL Service Invoices. ARL will invoice ARI monthly in advance for all ARL
Services performed hereunder, and each such invoice shall be accompanied by a summary, in
reasonable detail, of ARL’s calculation of the Fees for such ARL Services, which calculation shall
be binding upon ARI absent manifest error. ARI will pay all such invoiced amounts within ten (10)
days from the date of delivery of each such invoice.

          7.3. ARI Service Invoices. ARI will invoice ARL monthly in advance for all ARI
Services performed hereunder, and each such invoice shall be accompanied by a summary, in
reasonable detail, of ARI’s calculation of the Fees for such ARI Services, which calculation shall
be binding upon ARL absent manifest error. ARL will pay all such invoiced amounts within ten (10)
days from the date of delivery of each such invoice.

          8. Events of Default; Remedies.

          8.1. Events of Default. The occurrence of any of the following events shall
constitute an “Event of Default” under this Agreement:

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          (a) the failure by ARI or ARL, as the case may be, to pay when due any amount payable by it
hereunder unless such failure shall have been remedied within ten (10) days;

          (b) breach or failure to comply with or perform any covenant (other than the covenants
referred to in clause (a) hereof) to be complied with or performed by ARI or ARL hereunder, and
such default shall not have been remedied within thirty (30) days;

          (c) the commencement of any case or proceeding against any party hereto (i) under any
applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (ii)
seeking to adjudge such party a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment or composition of or in respect of such party under any applicable federal or state law,
or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of such party or of any substantial part of the property of such party, or ordering the
winding up or liquidation of the affairs of such party, and (x) the entry of an order for relief in
any of the foregoing or any such adjudication or appointment shall occur or (y) the continuance of
any such case or proceeding undismissed, undischarged or unbonded for a period of sixty (60)
consecutive days;

          (d) the commencement by any party hereto of a voluntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the
entry of a decree or order for relief in respect of such party in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law
or to the commencement of any bankruptcy or insolvency case or proceeding against such party, or
the filing by it of a petition or answer or consent seeking reorganization or relief under any
applicable federal or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator, assignee, trust,
sequestrator or similar official of such party or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due, or the taking of limited liability
company action by it in furtherance of any such action;

          (e) any representation or warranty made herein by any party hereto shall prove to have been
false or misleading as of the time made or furnished in any material respect; or

          (f) (i) with respect to ARL only, if, other than as provided for in this Agreement, ARL shall
cease to be actively involved in the business of providing the services constituting the ARL
Services or (ii) with respect to ARI only, if, other than as provided for in this Agreement, ARI
shall cease to be actively involved in the business of providing the services constituting the ARI
Services.

          8.2. Remedies Upon Default.

          (a) Upon the occurrence and during the continuation of any Event of Default by ARL, ARI, as
the non-defaulting party, in its sole discretion, may (i) terminate the Term or

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the provision of any Services hereunder by notice to ARL, which termination shall be effective
as of the date of such notice or such later date, in the discretion of ARI, as such notice may
specify, (ii) proceed by appropriate court action to enforce performance of this Agreement by ARL,
or (iii) sue to recover actual direct damages (including lost revenues but not consequential
damages) that result from a breach hereof, and ARL shall bear ARI’s costs and expenses, including
reasonable attorney’s fees, in securing such enforcement or damages.

          (b) Upon the occurrence and during the continuation of any Event of Default by ARI, ARL, as
the non-defaulting party, in its sole discretion, may (i) terminate the Term or the provision of
any Services hereunder by notice to ARI, which termination shall be effective as of the date of
such notice or such later date, in the discretion of ARL, as such notice may specify, (ii) proceed
by appropriate court action to enforce performance of this Agreement by ARI, or (iii) sue to
recover actual direct damages (including lost revenues but not consequential damages) that result
from a breach hereof, and ARI shall bear ARL’s costs and expenses, including reasonable attorney’s
fees, in securing such enforcement or damages.

          8.3. Remedies Cumulative. Each and every right, power and remedy herein specifically
given to ARI or ARL shall be in addition to every other right, power and remedy herein specifically
given or now or hereafter existing at law or in equity, and each and every right, power and remedy
may be exercised from time to time and simultaneously and as often and in such order as may be
deemed expedient by ARI or ARL, as the case may be. All such rights, powers and remedies shall be
cumulative, and the exercise of one shall not be deemed a waiver of the right to exercise any other
or others. No delay or omission of ARI or ARL in the exercise of any such right, power or remedy
and no extension of time for any payment due hereunder shall impair any such power or shall be
construed to be a waiver of any default or an acquiescence therein. Any extension of time for
payment hereunder or other indulgence duly granted by any party hereto to any other party hereto
shall not otherwise alter or affect the respective rights and obligations of the parties hereto.
The acceptance of any payment by any party hereto after it shall have become due hereunder shall
not be deemed to alter or affect the respective rights and obligations of the parties hereto with
respect to any subsequent payments or defaults hereunder.

          9. Force Majeure. Neither party hereto shall be deemed to be in breach or in
violation of this Agreement if such Person is prevented from performing any of its obligations
hereunder for any reason beyond its reasonable control, including acts of God, riots, strikes,
fires, storms, wars, terrorism, insurrections, or public disturbances, or any regulation of any
Federal, state or local government or any agency thereof.

          10. Entire Agreement; Modification and Waiver. This Agreement (including the recitals
herein and any schedules or exhibits hereto, each of which is an integral part of this Agreement)
sets forth the entire agreement and understanding between ARI and ARL with respect to the subject
matter hereof. This Agreement may not be waived, changed, altered, modified or amended in any
respect without a writing to that effect, signed by all of the parties hereto affected by such
waiver, change, alteration, modification, or amendment. Failure of a party to enforce one or more
of the provisions of this Agreement or to exercise any option or other rights hereunder or to
require at any time performance of any of the obligations hereof shall

- 10 -

 

not in any manner be construed (a) to be a waiver of such provisions by such party, (b) to
affect the validity of this Agreement or such party’s right thereafter to enforce each and every
provision of this Agreement, or (c) to preclude such party from taking any other action at any time
that it would be legally entitled to take.

          11. Communications. All notices, requests, demands, consents, approvals, reports,
statements and other communications under this Agreement shall be in writing and shall be deemed to
have been given (a) upon receipt when delivered by hand, overnight delivery service or facsimile
transmission with respect to which receipt has been acknowledged or (b) three (3) business days
after mailing, by registered or certified mail, postage prepaid, return receipt requested, and
addressed to the party for whom intended at the following addresses or such changed address as such
parties may have fixed by notice:

To ARL:

American Railcar Leasing LLC

100 Clark Street

St. Charles, Missouri 63301

Attention: Treasurer

Telecopy no.: (636) 940-6044

Telephone no.: (636) 940-6000

To ARI:

American Railcar Industries, Inc.

100 Clark Street

St. Charles, Missouri 63301

Attention: Treasurer

Telecopy no.: (636) 940-6044

Telephone no.: (636) 940-6000

provided, however, that any notice of change of address shall be effective only
upon receipt.

          12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES)
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.

          13. Severability. Any provision of this Agreement that may be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof so long
as the economic or legal substance of the transactions contemplated thereby is not affected in any
manner adverse to any party. Any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction. To the extent
permitted by law, the parties hereby waive any provision of law that renders any provision of this
Agreement prohibited or unenforceable in any respect. In addition, in the event of any such
prohibition or unenforceability, the parties agree that it is their intention and agreement that
any

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such provision that is held or determined to be prohibited or unenforceable, as written, in
any jurisdiction shall nonetheless be in force and binding to the fullest extent permitted by the
law of such jurisdiction as though such provision had been written in such a manner and to such an
extent as to be enforceable therein under the circumstances.

          14. Successors and Assigns. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted assigns of the parties
hereto; provided, however, that no assignment hereof by ARI or transfer of ARI’s
rights or obligations hereunder whether by operation or law or otherwise shall be valid and
effective as against ARL without the prior consent of ARL.

          15. Third Party Beneficiaries. The terms and provisions of this Agreement are
intended for the benefit of each party hereto and their respective successors or permitted assigns,
and it is not the intention of the parties to confer third-party beneficiary rights upon any other
Person.

          16. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

          17. CONSENT TO JURISDICTION. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ARI OR ARL
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY TRANSACTION CONTEMPLATED HEREBY, MAY BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, STATE OF NEW YORK AND ARI AND ARL
EACH WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING AND, SOLELY FOR THE PURPOSES OF ENFORCING THIS AGREEMENT, ARI AND ARL
EACH IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING.

          18. Limitation on Liability; Non-Recourse. Notwithstanding anything in this Agreement
to the contrary, none of ARL’s Affiliates shall have any liability with respect to, and ARI
expressly waives, releases and agrees not to sue for, any special, indirect or consequential, and,
to the extent permitted under applicable law, punitive damages suffered by ARI or any other Person
in connection with any breach or default hereunder by ARL. This Agreement is solely and
exclusively between ARL and ARI and any obligations of ARL created herein shall be the sole
obligations of ARL, and ARI shall not have recourse to any of ARL’s Affiliates for the performance
of ARL’s obligations hereunder, unless such obligations are expressly assumed in writing by the
Person against whom recourse is sought. ARL or any successor thereto shall be acting hereunder
solely in its capacity as provider of the ARL Services.

          19. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, AS AGAINST
THE OTHER PARTY HERETO, ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL ACTION OR
PROCEEDING (WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE), INCLUDING ANY COUNTERCLAIM, ARISING
UNDER OR

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RELATING TO THIS AGREEMENT, INCLUDING IN RESPECT OF THE NEGOTIATION, ADMINISTRATION OR
ENFORCEMENT HEREOF OR THEREOF.

[Signature page follows]

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          IN WITNESS WHEREOF, the parties hereto have executed this Services Agreement as of the date
first above written.

	 	 	 	 	 
	 	AMERICAN RAILCAR LEASING LLC

 	 
	 	By:  	                               American Railcar Industries, Inc.,
 	 
	 	 	its managing member 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	     /s/ James J. Unger
 	 
	 	 	Name:  	James J. Unger 	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 
	 	AMERICAN RAILCAR INDUSTRIES, INC.

 	 
	 	By:  	/s/ James J. Unger 	 
	 	 	Name:  	James J. Unger 	 
	 	 	Title:  	President

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