Exhibit 10.5


 


 





 


CREDIT AGREEMENT


 


dated as of


 


March 24, 2005


 


 


among


 


 


PROGRESS RAIL SERVICES HOLDINGS CORP.


 


 


Each of its Subsidiaries that are Signatories Hereto


 


PROGRESS RAIL CANADA CORPORATION


 


PROGRESS RAIL TRANSCANADA CORPORATION


 


 


The Lenders Party Hereto


 


 


GENERAL ELECTRIC CAPITAL CORPORATION,

as U.S. Administrative Agent


 


and


 


GE CANADA FINANCE HOLDING COMPANY,

as Canadian Administrative Agent


 






 


 


J.P. MORGAN SECURITIES INC.,

as Sole Bookrunner,  Sole Lead Arranger and Syndication Agent


 


WACHOVIA BANK, NATIONAL ASSOCIATION, NATIONAL CITY
BANK AND BANK


OF AMERICA, N.A.,

as Co-Documentation Agents


 


 












 


TABLE OF CONTENTS


 


	
  ARTICLE I Definitions

  	
  1

  
	
  SECTION 1.01

  	
  Defined Terms

  	
  1

  
	
  SECTION 1.02

  	
  Classification of Loans
  and Borrowings

  	
  40

  
	
  SECTION 1.03

  	
  Terms Generally

  	
  40

  
	
  SECTION 1.04

  	
  Accounting Terms; GAAP

  	
  40

  
	
  SECTION 1.05

  	
  The Term “Borrower” or
  “Borrowers”

  	
  41

  
	
  SECTION 1.06

  	
  Currencies; Exchange
  Rates

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE II The Credits

  	
  44

  
	
  SECTION 2.01

  	
  The Facility

  	
  44

  
	
  SECTION 2.02

  	
  Revolving Loans

  	
  44

  
	
  SECTION 2.03

  	
  Loans and Borrowings

  	
  45

  
	
  SECTION 2.04

  	
  Requests for Revolving
  Borrowings

  	
  45

  
	
  SECTION 2.05

  	
  Acceptances

  	
  47

  
	
  SECTION 2.06

  	
  Protective Advances

  	
  53

  
	
  SECTION 2.07

  	
  Swingline Loans

  	
  54

  
	
  SECTION 2.08

  	
  Letters of Credit

  	
  57

  
	
  SECTION 2.09

  	
  Funding of Borrowings

  	
  63

  
	
  SECTION 2.10

  	
  Interest Elections

  	
  65

  
	
  SECTION 2.11

  	
  Termination or
  Reduction of Commitments

  	
  66

  
	
  SECTION 2.12

  	
  Repayment of Loans;
  Evidence of Debt

  	
  67

  
	
  SECTION 2.13

  	
  Prepayment of Loans

  	
  69

  
	
  SECTION 2.14

  	
  Fees

  	
  71

  
	
  SECTION 2.15

  	
  Interest

  	
  73

  
	
  SECTION 2.16

  	
  Alternate Rate of
  Interest

  	
  75

  
	
  SECTION 2.17

  	
  Increased Costs

  	
  75

  
	
  SECTION 2.18

  	
  Break Funding Payments

  	
  76

  
	
  SECTION 2.19

  	
  Taxes

  	
  77

  
	
  SECTION 2.20

  	
  Payments Generally;
  Allocation of Proceeds; Sharing of Set-offs

  	
  79

  
	
  SECTION 2.21

  	
  Mitigation Obligations;
  Replacement of Lenders

  	
  83

  
	
  SECTION 2.22

  	
  Indemnity for Returned
  Payments

  	
  84

  
	
  SECTION 2.23

  	
  Money of Account, etc.

  	
  84

  
	
  SECTION 2.24

  	
  Currency Fluctuations,
  etc.

  	
  84

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  Representations and Warranties

  	
  85

  
	
  SECTION 3.01

  	
  Organization; Powers

  	
  85

  
	
  SECTION 3.02

  	
  Authorization;
  Enforceability

  	
  85

  
	
  SECTION 3.03

  	
  Governmental Approvals;
  No Conflicts

  	
  85

  
	
  SECTION 3.04

  	
  Financial Condition; No
  Material Adverse Change

  	
  86

  
	
  SECTION 3.05

  	
  Intellectual Property

  	
  86

  
	
  SECTION 3.06

  	
  Litigation

  	
  87

  
	
  SECTION 3.07

  	
  Compliance with Laws

  	
  87

  



 


i












 


	
  SECTION 3.08

  	
  Investment and Holding
  Company Status

  	
  87

  
	
  SECTION 3.09

  	
  Taxes

  	
  87

  
	
  SECTION 3.10

  	
  ERISA

  	
  87

  
	
  SECTION 3.11

  	
  Disclosure

  	
  88

  
	
  SECTION 3.12

  	
  Material Agreements

  	
  88

  
	
  SECTION 3.13

  	
  Solvency

  	
  90

  
	
  SECTION 3.14

  	
  Reportable Transaction

  	
  91

  
	
  SECTION 3.15

  	
  Capitalization and
  Subsidiaries

  	
  91

  
	
  SECTION 3.16

  	
  Common Enterprise

  	
  91

  
	
  SECTION 3.17

  	
  Security Interest in
  Collateral

  	
  91

  
	
  SECTION 3.18

  	
  Labor Matters

  	
  92

  
	
  SECTION 3.19

  	
  Affiliate Transactions

  	
  92

  
	
  SECTION 3.20

  	
  Acquisition
  Documentation

  	
  92

  
	
  SECTION 3.21

  	
  Senior Unsecured Debt
  Documents; Equity Documents

  	
  92

  
	
  SECTION 3.22

  	
  Broker’s and
  Transaction Fees

  	
  92

  
	
  SECTION 3.23

  	
  Title; Real Property

  	
  92

  
	
  SECTION 3.24

  	
  Environment

  	
  94

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV Conditions

  	
  95

  
	
  SECTION 4.01

  	
  Effective Date

  	
  95

  
	
  SECTION 4.02

  	
  Each Credit Event

  	
  97

  
	
   

  	
   

  	
   

  
	
  ARTICLE V Affirmative
  Covenants

  	
  98

  
	
  SECTION 5.01

  	
  Financial Statements;
  Borrowing Base and Other Information

  	
  98

  
	
  SECTION 5.02

  	
  Notices of Material
  Events

  	
  102

  
	
  SECTION 5.03

  	
  Existence; Conduct of
  Business

  	
  104

  
	
  SECTION 5.04

  	
  Payment of Obligations

  	
  104

  
	
  SECTION 5.05

  	
  Maintenance of
  Properties and Intellectual Property Rights

  	
  104

  
	
  SECTION 5.06

  	
  Books and Records;
  Inspection Rights

  	
  104

  
	
  SECTION 5.07

  	
  Compliance with Laws

  	
  105

  
	
  SECTION 5.08

  	
  Use of Proceeds and
  Letters of Credit

  	
  105

  
	
  SECTION 5.09

  	
  Insurance

  	
  105

  
	
  SECTION 5.10

  	
  Appraisals

  	
  106

  
	
  SECTION 5.11

  	
  Additional Collateral;
  Further Assurances

  	
  106

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI Negative
  Covenants

  	
  107

  
	
  SECTION 6.01

  	
  Indebtedness

  	
  107

  
	
  SECTION 6.02

  	
  Liens

  	
  109

  
	
  SECTION 6.03

  	
  Fundamental Changes;
  Asset Sales

  	
  110

  
	
  SECTION 6.04

  	
  Investments, Loans,
  Advances, Guarantees and Acquisitions

  	
  112

  
	
  SECTION 6.05

  	
  Swap Agreements

  	
  113

  
	
  SECTION 6.06

  	
  Restricted Payments

  	
  114

  
	
  SECTION 6.07

  	
  Transactions with
  Affiliates

  	
  115

  
	
  SECTION 6.08

  	
  Restrictive Agreements

  	
  115

  
	
  SECTION 6.09

  	
  Prepayment of
  Indebtedness; Subordinated Indebtedness

  	
  115

  
	
  SECTION 6.10

  	
  Capital Expenditures

  	
  116

  
	
  SECTION 6.11

  	
  Financial Covenants.

  	
  116

  



 


ii












 


	
  SECTION 6.12

  	
  Activities of Parent

  	
  116

  
	
  SECTION 6.13

  	
  Hazardous Materials

  	
  116

  
	
  SECTION 6.14

  	
  Amendment or
  Modification of Acquisition Documentation

  	
  117

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII Events of
  Default

  	
  117

  
	
   

  	
   

  
	
  ARTICLE VIII The
  Administrative Agents

  	
  120

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  Miscellaneous

  	
  124

  
	
  SECTION 9.01

  	
  Notices

  	
  124

  
	
  SECTION 9.02

  	
  Electronic
  Transmissions

  	
  126

  
	
  SECTION 9.03

  	
  Waivers; Amendments

  	
  127

  
	
  SECTION 9.04

  	
  Expenses; Indemnity;
  Damage Waiver

  	
  129

  
	
  SECTION 9.05

  	
  Successors and Assigns

  	
  134

  
	
  SECTION 9.06

  	
  Survival

  	
  137

  
	
  SECTION 9.07

  	
  Counterparts;
  Integration; Effectiveness

  	
  138

  
	
  SECTION 9.08

  	
  Severability

  	
  138

  
	
  SECTION 9.09

  	
  Right of Setoff

  	
  138

  
	
  SECTION 9.10

  	
  Governing Law;
  Jurisdiction; Consent to Service of Process

  	
  139

  
	
  SECTION 9.11

  	
  WAIVER OF JURY TRIAL

  	
  140

  
	
  SECTION 9.12

  	
  Headings

  	
  140

  
	
  SECTION 9.13

  	
  Confidentiality

  	
  140

  
	
  SECTION 9.14

  	
  Several Obligations;
  Nonreliance; Violation of Law

  	
  141

  
	
  SECTION 9.15

  	
  USA PATRIOT Act

  	
  141

  
	
  SECTION 9.16

  	
  Disclosure

  	
  141

  
	
  SECTION 9.17

  	
  Execution of Loan
  Documents

  	
  141

  
	
  SECTION 9.18

  	
  Interest Rate
  Limitation

  	
  141

  
	
  SECTION 9.19

  	
  Progress Rail as Agent
  for Borrowers

  	
  142

  
	
  SECTION 9.20

  	
  Subordination and
  Contribution

  	
  143

  



 


iii












 


	
  SCHEDULES:

  
	
   

  
	
  Commitment Schedule

  
	
  Schedule 1.1(a) –
  Acquisition Documentation

  
	
  Schedule 1.1(b) –
  Mortgaged Properties

  
	
  Schedule 3.05 –
  Intellectual Property

  
	
  Schedule 3.06 –
  Disclosed Matters

  
	
  Schedule 3.09 – Taxes

  
	
  Schedule 3.12 –
  Material Agreements

  
	
  Schedule 3.15 –
  Capitalization and Subsidiaries

  
	
  Schedule 3.17 –
  Financing Statements

  
	
  Schedule 3.18 – Labor
  Matters

  
	
  Schedule 3.19 –
  Affiliate Transactions

  
	
  Schedule 3.23 –
  Properties

  
	
  Schedule 3.24 –
  Environmental Matters

  
	
  Schedule 6.01 –
  Existing Indebtedness

  
	
  Schedule 6.02 –
  Existing Liens

  
	
  Schedule 6.04 –
  Existing Investments

  
	
  Schedule 6.08 –
  Existing Restrictions

  
	
   

  
	
  EXHIBITS:

  
	
   

  
	
  Exhibit A – Form of
  Assignment and Assumption

  
	
  Exhibit B – Form of
  Borrowing Base Certificate

  
	
  Exhibit C – Form of
  Compliance Certificate

  
	
  Exhibit D – Closing
  Checklist

  
	
  Exhibit E – Form of
  Discount Note

  
	
  Exhibit F – Form of
  Notice of Drawing

  
	
  Exhibit G – Form of
  Guaranty

  



 


iv












 


CREDIT AGREEMENT


 


CREDIT
AGREEMENT dated as of March 24, 2005 (as it may be amended or modified from
time to time, this “Agreement”), among PROGRESS RAIL SERVICES HOLDINGS
CORP., a Delaware corporation (the “Parent”), each of Parent’s domestic
Subsidiaries identified on the signature pages hereof (together with the
Parent, the “U.S. Borrowers”), Progress Rail Canada Corporation and
Progress Rail Transcanada Corporation (the “Canadian Borrowers”; the
Canadian Borrowers, together with the U.S. Borrowers, are referred to
hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”, as governed by
the provisions of Section 1.05 of this Agreement), the Lenders party
hereto, GENERAL ELECTRIC CAPITAL CORPORATION, as U.S. Administrative Agent and
U.S. Swingline Lender, JPMORGAN CHASE BANK, N.A., as U.S. Issuing Bank, GE
CANADA FINANCE HOLDING COMPANY, as Canadian Administrative Agent and Canadian
Swingline Lender and JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as Canadian
Issuing Bank.


 


The
parties hereto agree as follows:


 


ARTICLE I


 


Definitions


 


SECTION 1.01                   
Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:


 


“ABR,”
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.


 


“Acceptance”
means a Draft drawn by either Canadian Borrower on a Canadian Lender conforming
to the requirements of Section 2.05 and accepted by such Canadian
Lender in accordance with Section 2.05(c). As the context shall
require, “Acceptance” shall also have the meaning ascribed to it in Section 2.05(j).


 


“Acceptance
Equivalent Loan” means an advance made under this Agreement by a Canadian
Lender evidenced by a Discount Note.


 


“Acceptance
Exposure” means, at any time, the aggregate full face amount or principal
amount of the outstanding Acceptances and Acceptance Equivalent Loans at such
time, expressed in U.S. Dollars. The Acceptance Exposure of any Canadian Lender
at any time shall be its Applicable Percentage of the aggregate Acceptance
Exposure at such time.


 


“Acceptance
Fee” has the meaning assigned to it in Section 2.14(d).


 












 


“Account”
has the meaning assigned to such term in the Canadian Security Agreement, the
U.S. Security Agreement or both, as the context may require.


 


“Account
Debtor” means any Person obligated on an Account.


 


“Acquisition”
means any transaction or series of related transactions for the purpose of or
resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person, or of any business or division of
a Person, (b) the acquisition of in excess of 50% of the Equity Interests of
any Person, or otherwise causing any Person to become a Subsidiary, or (c) a
merger, amalgamation or consolidation or any other combination with another
Person (other than a Person that is a Subsidiary) provided that the applicable
Borrower or the Subsidiary is the surviving entity.


 


“Acquisition
Documentation” means, collectively, the agreements, documents and
instruments listed on Schedule 1.1(a).


 


“Adjusted
LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period and, in the
case of a U.S. Eurodollar Borrowing, multiplied by (b) the Statutory Reserve
Rate.


 


“Administrative
Agents” means the U.S. Administrative Agent and the Canadian Administrative
Agent.


 


“Administrative
Borrower” has the meaning set forth in Section 9.19.


 


“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the applicable Administrative Agent.


 


“Affiliate”
means, with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.


 


“Aggregate
Commitment” means the aggregate of the Commitments of all the Lenders, as
reduced from time to time pursuant to the terms hereof, which Aggregate
Commitment shall initially be in the amount of U.S.$220,000,000.


 


“Aggregate
Credit Exposure” means, at any time, the aggregate Credit Exposure of all
the Lenders.


 


“Alternate
Base Rate” means, for any day, a rate per annum equal to the greatest of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1⁄2 of 1%. Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.


 


2












 


“Annualized
Basis” shall mean, with respect to the components of the Fixed Charge
Coverage Ratio and Fixed Charges for the periods ending on or prior to February
28, 2006, the following:


 


(a)                                 
for the Fiscal
Quarter ending May 31, 2005, each such component of the Fixed Charge Coverage
Ratio during the period beginning on the Effective Date and ending on May 31,
2005, divided by the number of days in such period and multiplied by 90 (the “Adjusted
Quarter”), multiplied by four (4);


 


(b)                                
for the Fiscal
Quarter ending August 31, 2005, each such component of the Fixed Charge
Coverage Ratio during the Adjusted Quarter and the Fiscal Quarter ending August
31, 2005, multiplied by two (2);


 


(c)                                 
for the Fiscal
Quarter ending November 30, 2005, each such component of the Fixed Charge
Coverage Ratio during the Adjusted Quarter, the Fiscal Quarter ending August
31, 2005 and the Fiscal Quarter ending November 30, 2005, divided by 0.75; and


 


(d)                                
for the Fiscal Quarter
ending February 28, 2006, each such component of the Fixed Charge Coverage
Ratio during the Adjusted Quarter, the Fiscal Quarter ending August 31, 2005,
the Fiscal Quarter ending November 30, 2005 and the Fiscal Quarter ending
February 28, 2005.


 


“Applicable
Percentage” means (i) in the case of a Canadian Lender in respect of
its Canadian Commitment or any extension of credit thereunder, the percentage
of the total Canadian Commitments represented by such Canadian Lender’s
Commitment, or (ii) in the case of a U.S. Lender in respect of its U.S.
Commitment or any extension of credit thereunder, the percentage of the total
U.S. Commitments represented by such U.S. Lender’s Commitment. If the
Commitments have terminated or expired, the Applicable Percentage shall be
determined based upon the U.S. Commitments or Canadian Commitments, as
applicable, most recently in effect, after giving effect to any assignments
pursuant to Section 2.11.


 


3












 


“Applicable
Rate” means, for any day, with respect to any ABR Loan, Eurodollar Loan or
Canadian Prime Loan or any Acceptance Fees payable hereunder, as the case may
be, the applicable rate per annum set forth below under the caption “ABR
Spread”, “Eurodollar Spread”, “Canadian Prime Spread”, or “Acceptance Fee
Rate”, as the case may be, based upon the average of the Borrowers’
Availability on the last day of each of the three most recently ended calendar
months:


 


	
  Availability

  	
   

  	
  RevolverABR

  Spread

  	
   

  	
  RevolverEurodollar

  Spread

  	
   

  	
  CanadianPrime

  Spread

  	
   

  	
  AcceptanceFee

  Rate

  	
   

  
	
  > U.S.$100,000,000

  	
   

  	
  0.00

  	
  %

  	
  1.75

  	
  %

  	
  0.00

  	
  %

  	
  1.75

  	
  %

  
	
  < U.S.$100,000,000 but >
  U.S.$75,000,000

  	
   

  	
  0.25

  	
  %

  	
  2.00

  	
  %

  	
  0.25

  	
  %

  	
  2.00

  	
  %

  
	
  < U.S.$75,000,000 but > U.S.$50,000,000

  	
   

  	
  0.50

  	
  %

  	
  2.25

  	
  %

  	
  0.50

  	
  %

  	
  2.25

  	
  %

  
	
  < U.S.$50,000,000

  	
   

  	
  0.75

  	
  %

  	
  2.50

  	
  %

  	
  0.75

  	
  %

  	
  2.50

  	
  %

  



 


For
the period commencing on the Effective Date and ending on the last day of the
first complete Fiscal Quarter of the Borrowers following the Effective Date,
the Applicable Rate shall be as set forth in the pricing grid in the applicable
columns opposite the row entitled “< U.S.$75,000,000 but >
U.S.$50,000,000”.


 


“Approved
Fund” has the meaning assigned to such term in Section 9.05.


 


“Assignment
and Assumption” means an assignment and assumption entered into by a Lender
and an assignee (with the consent of any party whose consent is required by Section
9.05), and accepted by the applicable Administrative Agent, in the form of Exhibit
A or any other form approved by the applicable Administrative Agent.


 


“Authorized
Officer” means, with respect to any Person, any of the principal executive
officers, managing members or general partners of such Person but, in any
event, with respect to financial matters, a Financial Officer.


 


“Availability”
means the sum of the U.S. Availability and the Canadian Availability.


 


“Availability
Period” means the period from and including the Effective Date to but
excluding the earlier of the Maturity Date and the date of termination of the
Commitments.


 


“Available
Canadian Commitment” means, at any time, the Canadian Commitment then in
effect minus the Canadian
Exposure of all Canadian Lenders at such time.


 


“Available
U.S. Commitment” means, at any time, the U.S. Commitment then in effect minus the U.S. Exposure of all U.S.
Lenders at such time.


 


“Average
20-Day Availability” means, at any time, the average daily Availability for
the immediately preceding twenty (20) Business Day period.


 


4












 


“Banking
Services” means each and any of the following bank services provided to any
Loan Party by any Lender or any of such Lender’s Affiliates: (a) commercial
credit cards, purchasing cards or other similar charge cards, (b) stored value
cards, and (c) treasury management services (including, without limitation,
controlled disbursement, automated clearinghouse transactions, return items, overdrafts
and interstate depository network services).


 


“Banking
Services Obligations” of the Loan Parties means any and all obligations of
the Loan Parties, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.


 


“Board”
means the Board of Governors of the Federal Reserve System of the United States
of America.


 


“Borrower”
and “Borrowers” have the respective meanings set forth in the preamble
to this Agreement.


 


“Borrowing”
means (a) Revolving Loans of the same Class and Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, and in the case of Acceptances, as to
which a single maturity date is in effect, (b) a Swingline Loan and (c) a
Protective Advance.


 


“Borrowing
Base” means either the Canadian Borrowing Base or the U.S. Borrowing Base,
as the context requires.


 


“Borrowing
Base Certificate” means a certificate, signed by a Financial Officer of the
Administrative Borrower, in the form of Exhibit B or another form which
is acceptable to the Administrative Agents in their sole discretion.


 


“Borrowing
Request” means a request by the Administrative Borrower for a Revolving
Borrowing in accordance with Section 2.04.


 


“Business
Day” means, as the context shall require, a U.S. Business Day, a Canadian
Business Day, or both.


 


“Calculation
Date” means the last U.S. Business Day of each calendar week.


 


“Canadian
Administrative Agent” means GE Canada Finance Holding Company, in its
capacity as administrative agent for the Canadian Lenders hereunder, together
with its successors and assigns.


 


“Canadian
Availability” means the amount by which the lesser of the aggregate
outstanding Canadian Commitment and the Canadian Borrowing Base, within all
applicable sublimits, exceeds the sum of the Canadian Exposure.


 


“Canadian
Borrowers” has the meaning set forth in the preamble to this Agreement.


 


5












 


“Canadian
Borrowing Base” means, at any time, the sum, expressed in U.S. Dollars, of
(a) 85% of Canadian Borrowers’ Eligible Accounts at such time, plus  (b) the lesser of (i) the sum of
(A) the lesser of (x) 60% of Canadian Borrowers’ Eligible Inventory (other than
scrap steel and finished wheelsets), valued on an average cost basis,
consistent with the Canadian Borrowers’ practices as of the Effective Date and
(y) 85% of the Net Recovery Rate of Canadian Borrowers’ Eligible Inventory
(other than scrap steel and finished wheelsets), multiplied by the value of
such inventory determined on an average cost basis, consistent with the
Canadian Borrowers’ practices as of the Effective Date, plus  (B) the lesser of (x) 70% of the
value of Canadian Borrowers’ Eligible Inventory consisting of scrap steel and
finished wheelsets, determined on an average cost basis, consistent with the
Canadian Borrowers’ practices as of the Effective Date and (y) 85% of the Net
Recovery Rate of Canadian Borrowers’ Eligible Inventory consisting of scrap
steel and finished wheelsets, multiplied by the value of such inventory
determined on an average cost basis, consistent with the Canadian Borrowers’
practices as of the Effective Date and (ii) an amount equal to 50% of the
Canadian Borrowing Base, plus
(c) 75% of the appraised Fair Market Value of Eligible Real Estate of the
Canadian Borrowers, plus
(d) 80% of the appraised Net Orderly Liquidation Value of Eligible Equipment of
the Canadian Borrowers, minus
(e) Canadian Reserves.  The maximum amount of Eligible Equipment and
Eligible Real Estate that may be included in the Canadian Borrowing Base is the
amount equal to the lesser of (i) the Fixed Asset Percentage multiplied by
U.S.$5,000,000 and (ii) (x) the Fixed Asset Percentage multiplied by
U.S.$40,000,000 minus (y)
the amount of Eligible Equipment and Eligible Real Estate included in the U.S.
Borrowing Base.


 


“Canadian
Borrowing” means a Borrowing comprised of Canadian Loans.


 


“Canadian
Business Day” means any day that is not a Saturday, Sunday or legal holiday
in the Province of Ontario, on which banks are open for business in Toronto and
in New York City; provided that when used in connection with a Eurodollar Loan,
the term “Canadian Business Day” shall also exclude any day on which banks are
not open for dealings in U.S. Dollar deposits in the London interbank market.


 


“Canadian
Collateral Agent” means GE Canada Finance Holding Company, in its capacity
as collateral agent for the Canadian Secured Parties hereunder, together with
its successors and assigns.


 


“Canadian
Collection Account” has the meaning assigned to such term in the Canadian
Security Agreement.


 


“Canadian
Commitment” means, with respect to each Lender, such Lender’s commitment, if
any, to make Canadian Loans, to acquire participations in any Canadian Letter
of Credit and to accept Acceptances hereunder, expressed as an amount in U.S.
Dollars representing the maximum aggregate amount of such Lender’s Canadian
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.11, and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.05. 
The initial amount of each Lender’s Canadian Commitment is set forth on the
Commitment Schedule, or in the Assignment and Assumption pursuant to which such
Lender shall have assumed its Canadian Commitment, as applicable.


 


6












 


“Canadian
Controlled Disbursement Account” means, collectively, any accounts of the
Canadian Borrowers maintained as a zero balance, cash management account
pursuant to and under any agreement between the Canadian Borrowers and the
Canadian Administrative Agent, as modified and amended from time to time, and
through which all disbursements of the Canadian Borrowers, any Canadian Loan
Party and any designated Subsidiary of the Canadian Borrowers are made and
settled on a daily basis with no uninvested balance remaining overnight.


 


“Canadian
Dollar Equivalent” means, with respect to an amount of U.S. Dollars on any
date, the amount of Canadian Dollars that may be purchased with such amount of
U.S. Dollars at the Exchange Rate with respect to U.S. Dollars on such date.


 


“Canadian
Dollars” and the symbol “Cdn.$” mean the lawful currency of Canada.


 


“Canadian
Exposure” means, at any time, the aggregate principal amount of outstanding
Acceptance Exposure, Canadian Loans and Canadian LC Exposure at such time, in
each case expressed in U.S. Dollars. The Canadian Exposure of any Canadian
Lender at any time shall be the sum of its Acceptance Exposure and Canadian LC
Exposure plus the aggregate principal amount of its outstanding Canadian Loans
at such time, in each case expressed in U.S. Dollars.


 


“Canadian
Hypothec” means a hypothec granted by any Loan Party having assets located
in the province of Quebec, and any bonds or debentures, any pledge of bonds or
debentures and documentation related thereto.


 


“Canadian
Issuing Bank” means JPMorgan Chase Bank, N.A., Toronto Branch, in its
capacity as the issuer of Canadian Letters of Credit hereunder, or such other
financial institution as may be approved by the Administrative Agents and the
Administrative Borrower as the successor Canadian Issuing Bank as provided in Section 2.08(i).
The Canadian Issuing Bank may, in its discretion, arrange for one or more
Canadian Letters of Credit to be issued by Affiliates of the Canadian Issuing
Bank, in which case the term “Canadian Issuing Bank” shall include any such
Affiliate with respect to Canadian Letters of Credit issued by such Affiliate.


 


“Canadian
LC Collateral Account” has the meaning assigned to such term in Section
2.08(j).


 


“Canadian
LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Canadian Letters of Credit at such time plus (b) the
aggregate principal amount of all LC Disbursements made pursuant to Canadian
Letters of Credit that have not yet been reimbursed by or on behalf of the
Canadian Borrowers at such time, in each case expressed in U.S. Dollars. The
Canadian LC Exposure of any Canadian Lender at any time shall mean its
Applicable Percentage of the aggregate Canadian LC Exposure at such time.


 


“Canadian
LC Shortfall Amount” means an amount equal to the difference of (x) the
amount of Canadian LC Exposure at such time, less (y) the amount on deposit in
the Canadian LC Collateral Account at such time which is free and clear of all
rights and claims of third parties and has not been applied against the
Obligations.


 


7












 


“Canadian
Lender” means any Lender that has a Canadian Commitment or any Canadian
Exposure. The initial Canadian Lenders are listed on the Commitment Schedule
under the caption “Canadian Lenders”.


 


“Canadian
Letter of Credit” means any Letter of Credit issued by the Canadian Issuing
Bank for the account of a Canadian Borrower.  Each Existing Canadian
Letter of Credit shall be deemed to constitute a Canadian Letter of Credit
issued hereunder on the Effective Date for all purposes of the Loan Documents.


 


“Canadian
Loan” means a Loan made pursuant to Section 2.02(b), a Canadian
Swingline Loan and a Canadian Protective Advance, and shall be deemed to
include the acceptance and purchase of Acceptances, where applicable.


 


“Canadian
Loan Parties” means each Canadian Borrower and each Canadian Subsidiary
made a party hereto pursuant to Section 5.11.


 


“Canadian
Obligations” means all unpaid principal of and accrued and unpaid interest
on the Canadian Loans (including interest that accrues or that would accrue but
for the filing of a bankruptcy case or a proceeding under the Companies’
Creditors Arrangement Act (Canada) by a Canadian Loan Party, whether or not
such interest would be an allowable claim under any applicable bankruptcy or
other similar proceeding, and other obligations accruing or arising after
commencement of any case under any bankruptcy or similar laws by or against any
Canadian Loan Party (or that would accrue or arise but for the commencement of
any such case)), all Acceptance Exposure, all Canadian LC Exposure, all accrued
and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the Canadian Loan Parties to the Canadian Lenders or to any
Canadian Lender, the Canadian Administrative Agent, the Canadian Issuing Bank
or any indemnified party arising under the Loan Documents.  Canadian
Obligations shall also include (i) all Banking Services Obligations of any
Canadian Loan Party, and (ii) all Swap Obligations owing to one or more
Canadian Lenders or their respective Affiliates by any Canadian Loan Party, provided
that a Swap Obligation to a Canadian Lender or an Affiliate of a Canadian
Lender shall not be “Obligations” unless within a reasonable time after any
transaction relating to such Swap Obligation is executed, the Canadian Lender
or Affiliate of a Canadian Lender shall have delivered written notice to the
Canadian Administrative Agent that such a transaction has been entered into and
that it constitutes a Canadian Obligation entitled to the benefits of the
Collateral Documents.


 


“Canadian
Pledge Agreement” means that certain Pledge Agreement, dated as of the date
hereof, between Progress Rail Services Corporation, Progress Rail Holdings,
Inc. and the Canadian Collateral Agent, for the benefit of the Canadian
Collateral Agent and the Canadian Secured Parties, as the same may be amended,
restated or otherwise modified from time to time.


 


“Canadian
Prime” means, when used in reference to any Loan or Borrowing, whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Canadian Prime Rate.


 


“Canadian
Prime Rate” means, for any day, a rate per annum equal to the higher of
(i) the rate per annum publicly announced from time to time by JPMorgan
Chase Bank, N.A., Toronto


 


8












 


Branch as its prime rate
in effect for Canadian Dollar denominated loans made  at its principal
office in Toronto and (ii) the one-month CDOR Rate plus one hundred bps
(1.00%) per annum.


 


“Canadian
Protective Advance” has the meaning assigned to such term in Section
2.06.


 


“Canadian
Railcar Security Agreement” means that certain Memorandum of Canadian
Pledge and Security Agreement, dated as of the date hereof, between the
Canadian Borrowers and the Canadian Collateral Agent, for the benefit of the
Canadian Collateral Agent and the Canadian Secured Parties, as the same may be
amended, restated or otherwise modified from time to time.


 


“Canadian
Reserves” means (i) any and all reserves which the Canadian Administrative
Agent deems necessary, in its Permitted Discretion, to from time to time
establish against the gross amounts of Eligible Accounts, Eligible Inventory
and Eligible Equipment (including, without limitation, reserves for rent at
locations leased by any Canadian Borrower and for which no Collateral Access Agreement
is in effect, to the extent property at such locations is included in the
Canadian Borrowing Base; reserves for consignee’s, warehousemen’s and bailee’s
charges at locations for which no Collateral Access Agreement is in effect, to
the extent property at such locations is included in the Canadian Borrowing
Base; Canadian Vendor Retention of Title Reserves; reserves for dilution of
Accounts; reserves for Inventory shrinkage; reserves for customs charges and
shipping charges related to any Inventory in transit; reserves for contingent
liabilities of any Canadian Borrower; reserves for uninsured losses of any
Canadian Borrower and reserves for taxes, employee source deductions, workers’
compensation obligations, vacation pay, pension fund obligations, fees,
assessments, and other Liens created by applicable law which rank or are
capable of ranking prior to or pari passu with Canadian Collateral Agent’s Lien
against all or part of the Collateral) and (ii) any and all reserves for Swap
Obligations of any Canadian Loan Party which any Lender to whom Swap
Obligations are owing directs the Canadian Administrative Agent to establish,
or which the Canadian Administrative Agent deems necessary in its Permitted
Discretion to establish, from time to time against the gross amounts of
Eligible Accounts, Eligible Inventory and Eligible Equipment.


 


“Canadian
Revolving Loan” means a Loan made pursuant to Section 2.02(b).


 


“Canadian
Secured Parties” means, collectively, (i) the Canadian Administrative
Agent, (ii) the Canadian Lenders, (iii) the Canadian Issuing Bank, (iv) any
Person indemnified under the Loan Documents, (v) any Canadian Lender or an
Affiliate of any Canadian Lender with respect to any Banking Services
Obligations, and (vi) any Canadian Lender or Affiliate of a Canadian Lender
which is a counterparty to any Swap Obligation with any Loan Party that
constitutes an Obligation.


 


“Canadian
Security Agreements” means that certain Security Agreement, dated as of the
date hereof, between the Canadian Borrowers and the Canadian Collateral Agent,
for the benefit of the Canadian Collateral Agent and the Canadian Secured
Parties, together with the Canadian Pledge Agreement and each Canadian
Hypothec, as the same may be amended, restated or otherwise modified from time
to time.


 


9












 


“Canadian
Subsidiary” means the Canadian Borrowers and each other Subsidiary that is
incorporated or otherwise organized under the laws of Canada or any political
subdivision thereof.


 


“Canadian
Swingline Lender” means GE Canada Finance Holding Company, in its capacity
as lender of Canadian Swingline Loans hereunder.


 


“Canadian
Swingline Loan” has the meaning assigned to such term in Section 2.07.


 


“Canadian
Vendor Retention of Title Reserve” means an amount calculated by the
Canadian Administrative Agent to provide for vendor liabilities relating to
Inventory of the Canadian Borrowers which may be subject to Section 81.1
of the Bankruptcy and Insolvency Act (Canada).


 


“Capital
Expenditures” means, without duplication, any expenditure or commitment to
expend money for any purchase or other acquisition of any asset which would be
classified as a fixed or capital asset on a consolidated balance sheet of the
Parent and its Subsidiaries  prepared in accordance with GAAP.


 


“Capital
Lease Obligations” of any Person means the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal or movable property, or a combination
thereof, which obligations are required to be classified and accounted for as
capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.


 


“CDOR
Rate” means, on any day, the annual discount rate which is the rate
determined by the Canadian Administrative Agent as being the arithmetic average
of the rates applicable to Canadian Dollar bankers’ acceptances for the
applicable period displayed and identified as such on the “Reuters’ Screen CDOR
Page” at approximately 10:00 a.m. (Toronto time) on such day for
Schedule I chartered banks, or if such day is not a Canadian Business Day
then on the immediately preceding Canadian Business Day (as adjusted by a
Canadian bank after 10:00 a.m. (Toronto time) to reflect any error in a posted
discount rate or in the posted average annual discount rate). Each change in
the Canadian Prime Rate shall be effective on the date after such change is
publicly announced.


 


“CERCLA”
means the United States Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. §§ 9601 et seq.).


 


“Change
in Control” means (a) One Equity Partners LLC and its Affiliates shall
cease to own and control, directly or indirectly, free and clear of all Liens
or other encumbrances, Equity Interests of the Parent representing at least
50.1% of the voting power on a fully diluted basis, (b) Parent shall cease to
own, directly or indirectly, free and clear of all Liens or other encumbrances,
100% of the outstanding Equity Interests of Progress Rail on a fully diluted
basis or (c) the occurrence of any “Change of Control” under the Senior
Unsecured Debt Documents.


 


“Change
in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or


 


10












 


application thereof by
any Governmental Authority after the date of this Agreement, or (c) compliance
by any Lender or any Issuing Bank (or, for purposes of Section 2.17(b), by
any lending office of such Lender or by such Lender’s or such Issuing Bank’s
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement.


 


“ChaseLincoln”
means Chase Lincoln First Commercial Corporation, a Delaware corporation, in
its individual capacity, and its successors.


 


“Class”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Canadian Loans or U.S. Loans, and
when used in reference to any Commitment, refers to whether such Commitment is
a Canadian Commitment or U.S. Commitment.


 


“Closing
Checklist” means the closing checklist attached hereto as Exhibit D.


 


“Code”
means the Internal Revenue Code of 1986, as amended from time to time.


 


“Collateral”
means all “Collateral”, or “Mortgaged Property” as defined in any Collateral
Document, whether such “Collateral” or “Mortgaged Property” is now existing or hereafter
acquired.


 


“Collateral
Access Agreement” has the collective meanings assigned to such term in the
U.S. Security Agreement, the Canadian Security Agreement or both, as the
context may require.


 


“Collateral
Agent” means the U.S. Collateral Agent, the Canadian Collateral Agent or
both, as the context may require.


 


“Collateral
Documents” means, collectively, the Security Agreements, the Railcar
Security Agreement, the Canadian Railcar Security Agreement, the Mortgages and
any other security documents delivered pursuant to Section 4.01(b) or Section
5.11 to secure payment of the Obligations.


 


“Collection
Account” means the U.S. Collection Account, the Canadian Collection
Account, or both, as the context requires.


 


“Commitment”
means a U.S. Commitment or a Canadian Commitment, or both, as the context
requires.


 


“Commitment
Schedule” means the Schedule attached hereto identified as such.


 


“Consolidated
Net Tangible Assets” of the Parent and its Subsidiaries means the total
amount of assets (less applicable reserves and other properly deductible items)
which under generally accepted accounting principles would be included on a
consolidated balance sheet of the Parent and its Subsidiaries after deducting
therefrom, without duplication, the sum of (a) all liabilities and liability
items which under GAAP would be included on such balance sheet, except funded
debt, liabilities in respect of Capital Lease Obligations (other than the
current portion thereof), capital stock and surplus, surplus reserves and provisions
for deferred income


 


11












 


taxes, and (b) all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, which in each case under GAAP would be
included on such consolidated balance sheet.


 


“Contracts”
has the meaning assigned to such term in Section 3.12.


 


“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling”
and “Controlled” have meanings correlative thereto.


 


“Controlled
Disbursement Account” means the U.S. Controlled Disbursement Account, the
Canadian Controlled Disbursement Account, or both, as the context may require.


 


“Copyright
Security Agreement” means that certain Copyright Security Agreement dated
as of the date hereof by and among the Loan Parties party thereto and the U.S.
Collateral Agent.


 


“Credit
Exposure” means, as to any Lender at any time, the sum of (a) such Lender’s
Revolving Credit Exposure at such time, plus
(b) an amount equal to such Lender’s Applicable Percentage, if any, of the
aggregate principal amount of Protective Advances outstanding at such time.


 


“DBRS”
means Dominion Bond Rating Service and its successors.


 


“Default”
means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an
Event of Default.


 


“Defaulting
Lender” has the meaning assigned to such term in Section 2.09(b).


 


“Departing
Lender” has the meaning assigned to such term in Section 2.21(b).


 


“Disclosed
Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 3.06.


 


“Discount
Note” means a non-interest bearing, non-negotiable promissory note
denominated in Canadian Dollars, issued by either Canadian Borrower to a
Canadian Lender, substantially in the form of Exhibit E.


 


“Discount
Proceeds” means proceeds in respect of any Acceptance to be purchased by a
Lender under Section 2.05 on any day, in an amount (rounded to the
nearest whole Canadian cent, and with one-half of one Canadian cent being
rounded up) calculated on such day by dividing:


 


(a)              
the face amount of
such Acceptance; by


 


(b)             
the sum of one plus
the product of:


 


12












 


(i)                 
the Discount Rate
(expressed as a decimal) applicable to such Acceptance; and


 


(ii)              
a fraction, the
numerator of which is the number of days in the term of such Acceptance
commencing on the date of acceptance of the Acceptance and ending on, but
excluding, the maturity date of such Acceptance, and the denominator of which
is 365;


 


with such product being
rounded up or down to the fifth decimal place and .000005 being rounded up.


 


“Discount
Rate” with respect to an issue of Acceptances with the same maturity date,
(a) for a Canadian Lender which is a Schedule I Lender, (i) the
average CDOR Rate for banker’s acceptances with the applicable term and face
value and (b) for a Canadian Lender which is not a Schedule I Lender, the
rate determined by the Canadian Administrative Agent based on the arithmetic
average (rounded upwards to the nearest multiple of 0.01%) of the actual
discount rates, calculated on the basis of a year of 365 days, for Acceptances
for such term and face value accepted by the Schedule II or III Reference
Banks established in accordance with their normal practices at or about 10:00
a.m. (Toronto time) on the date of issuance of such Acceptances, but not to
exceed the actual rate of discount applicable to Acceptances established
pursuant to clause (a) for the same Acceptances issue plus ten bps (0.10%) per
annum.


 


“Document”
has the collective meanings assigned to such term in the U.S. Security
Agreement and the Canadian Security Agreement.


 


“Draft”
means a depository bill issued in accordance with the Depository Bills and
Notes Act (Canada) or a bill of exchange in the form used from time to time by
each Canadian Lender, respectively, in connection with the creation of bankers’
acceptances in accordance with the provisions of Section 2.05 and
payable in Canadian Dollars.


 


“EBITDA”
means for any period Net Income for such period plus, to the extent deducted from revenues for such period
in determining Net Income, (a) Interest Expense, (b) expense for taxes paid or
accrued net of tax refunds, (c) depreciation, (d) amortization and other
non-cash charges, (e) purchase price adjustments, restructuring charges and
fees and expenses (including legal, accounting, and debt issuance costs) in
each case, incurred (whether or not invoiced) on or before the Effective Date
in connection with the Transactions, (f) any item for which the Borrowers have
recovered pursuant to any indemnification or reimbursement provision contained
in the Acquisition Documentation, (g) extraordinary losses (as determined in
accordance with GAAP) and non-cash non-recurring losses, in each case incurred
other than in the ordinary course of business and (h) cash non-recurring losses
incurred other than in the ordinary course of business in an amount not to
exceed U.S.$5,000,000 in any Fiscal Year or U.S.$20,000,000 over the term of
this Agreement, minus, to
the extent included in Net Income for such period, extraordinary gains (as
determined in accordance with GAAP) realized other than in the ordinary course
of business, all calculated for the Parent and its Subsidiaries on a
consolidated basis.


 


“E-Fax”
means any system used to receive or transmit faxes electronically.


 


13












 


“Effective
Date” means the date on which the conditions specified in Section 4.01
are satisfied (or waived in accordance with Section 9.03).


 


“Electronic
Transmission” means each document, instruction, authorization, file,
information and any other communication transmitted, posted or otherwise made
or communicated by e-mail, E-Fax, Internet or extranet-based site or any other
equivalent electronic service, whether owned, operated or hosted by an
Administrative Agent, any of such Administrative Agent’s Related Persons or any
other Person.


 


“E-Signature”
means the process of attaching to or logically associating with an Electronic
Transmission an electronic symbol, encryption, digital signature or process
(including, without limitation, the name or an abbreviation of the name of the
party transmitting the Electronic Transmission) with the intent to sign,
authenticate or accept such Electronic Transmission.


 


“E-Systems”
means any electronic system, including IntralinksTM and any other
Internet or extranet-based site, whether such electronic system is owned,
operated or hosted by an Administrative Agent, any of its Related Persons or
any other Person, providing for access to data protected by passcodes or other
security system.


 


“Eligible
Accounts” means, at any time, the Accounts of the applicable Borrowers
which an Administrative Agent determines in its Permitted Discretion are
eligible as the basis for the extension of Revolving Loans, Swingline Loans and
the issuance of Acceptances and Letters of Credit hereunder. Without limiting
such Administrative Agent’s discretion provided herein, Eligible Accounts shall
not include any Account:


 


(a)                                 
which is not subject
to a first priority perfected security interest in favor of the applicable
Collateral Agent;


 


(b)                                
which is subject to
any Lien other than (i) a Lien in favor of the applicable Collateral Agent and
(ii) a Permitted Encumbrance which does not have priority over the Lien in
favor of such Collateral Agent;


 


(c)                                 
with respect to which
more than 90 days have elapsed
since the date of the original invoice therefor or which is more than 60 days past the due date for payment;


 


(d)                                
which is owing by an
Account Debtor for which more than 50% of the Accounts owing from such Account
Debtor and its Affiliates are ineligible hereunder;


 


(e)                                 
which is owing by an
Account Debtor to the extent the aggregate amount of Accounts owing from such
Account Debtor and its Affiliates to such Borrowers exceeds 25% of the
aggregate Eligible Accounts;


 


(f)                                   
with respect to which
any covenant, representation, or warranty relating to such Account contained in
this Agreement or in the Security Agreements has been breached or is not true;


 


14












 


(g)                                
which (i) does not
arise from the sale of goods or performance of services in the ordinary course
of business, (ii) is not evidenced by an invoice, or other documentation
satisfactory to such Administrative Agent, which has been sent to the Account
Debtor, (iii) represents a progress billing, (iv) is contingent upon such
Borrowers’ completion of any further performance, or (v) represents a sale on a
bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment
which is billed prior to actual sale to the end user, cash-on-delivery or any
other repurchase or return basis;


 


(h)                                
for which the goods
giving rise to such Account have not been shipped to the Account Debtor or for
which the services giving rise to such Account have not been performed by such
Borrowers;


 


(i)                                    
with respect to which
any check or other instrument of payment has been returned uncollected for any
reason;


 


(j)                                    
which is owed by an
Account Debtor which (i) has applied for, suffered, or consented to the
appointment of any receiver, interim receiver, receiver and manager, custodian,
trustee, or liquidator of its assets, (ii) has had possession of all or a
material part of its property taken by any receiver, interim receiver, receiver
and manager, custodian, trustee or liquidator, (iii) has filed, or has had
filed against it, any request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or
voluntary or involuntary case under any state, provincial or federal bankruptcy
laws, (iv) to the knowledge of such Borrowers, has admitted in writing its
inability, or is generally unable to, pay its debts as they become due, (v) to
the knowledge of such Borrowers, has become insolvent, or (vi) has ceased
operation of its business;


 


(k)                                 
which is owed by any
Account Debtor which has sold all or substantially all of its assets;


 


(l)                                    
which is owed by an
Account Debtor which (i) does not maintain its chief executive office in the
U.S. or Canada or (ii) is not organized under applicable law of the U.S., any
state of the U.S., Canada, or any province of Canada unless, in either case,
such Account is backed by a letter of credit or other credit support acceptable
to such Administrative Agent which is in the possession of such Administrative
Agent; provided that up to $1,000,000 of Accounts owing from Grupo
Transportacion Ferroviaria Mexicana, S.A. de C.V., a sociedad anonima de
capital variable organized under the laws of the United Mexican States, may be
included as Eligible Accounts even if not backed by a letter of credit or other
credit support acceptable to the applicable Administrative Agent;


 


(m)                              
which is owed in any
currency other than U.S. or Canadian dollars;


 


(n)                                
which is owed by (i)
the government (or any department, agency, public corporation, or
instrumentality thereof) of any country other than the U.S. unless


 


15












 


such Account is backed by a Letter of Credit
acceptable to such Administrative Agent which is in the possession of such
Administrative Agent, or (ii) the government of the U.S., or any department,
agency, public corporation, or instrumentality thereof, unless the Federal Assignment
of Claims Act of 1940, as amended (31 U.S.C. § 3727 et  seq. and
41 U.S.C. § 15 et  seq.), and any other steps necessary to perfect
the Lien of the applicable Collateral Agent in such Account have been complied
with to such Administrative Agent’s satisfaction;


 


(o)                                
which is owed by any
Affiliate, employee, director, or officer of any Loan Party;


 


(p)                                
which, for any
Account Debtor, exceeds a credit limit determined by such Administrative Agent
of which the Administrative Borrower has been previously notified, to the
extent of such excess;


 


(q)                                
which is owed by an
Account Debtor or any Affiliate of such Account Debtor (other than a Lender or
any Affiliate of a Lender) which is the holder of Indebtedness issued or
incurred by any Loan Party, but only to the extent of such Indebtedness;


 


(r)                                   
which is subject to
any counterclaim, deduction, defense, setoff or dispute, but only to the extent
of the amount of such counterclaim, deduction, defense, setoff or dispute,
unless such Administrative Agent, in its Permitted Discretion, has established
an appropriate Reserve and determines to include such Account as an Eligible
Account;


 


(s)                                 
which is evidenced by
any promissory note, chattel paper, or instrument;


 


(t)                                   
which is owed by an
Account Debtor located in any jurisdiction that requires, as a condition to
access to the courts of such jurisdiction, that a creditor qualify to transact
business, file a business activities report or other report or form, or take
one or more other actions, unless such Borrowers have so qualified, filed such
reports or forms, or taken such actions (and, in each case, paid any required
fees or other charges), except to the extent such Borrowers may qualify
subsequently as a foreign entity authorized to transact business in such state
or jurisdiction and gain access to such courts, without incurring any cost or
penalty reasonably viewed by such Administrative Agent to be material in
amount, and such later qualification cures any access to such courts to enforce
payment of such Account;


 


(u)                                
with respect to which
such Borrowers have made any agreement with the Account Debtor for any
reduction thereof, but only to the extent of such reduction, other than
discounts and adjustments given in the ordinary course of business; or


 


(v)                                
which such
Administrative Agent determines in its Permitted Discretion may not be paid by
reason of the Account Debtor’s inability to pay.


 


In the
event that an Account which was previously an Eligible Account ceases to be an
Eligible Account hereunder, the applicable Borrowers shall notify the
Administrative Agents


 


16












 


thereof on and at the
time of submission to the Administrative Agents of the next Borrowing Base
Certificate.


 


“Eligible
Equipment” means, at any time, the equipment owned by one of the applicable
Borrowers which an Administrative Agent determines in its Permitted Discretion
is eligible as the basis for the extension of Revolving Loans, Swingline Loans
and the issuance of Acceptances and Letters of Credit hereunder.  Without
limiting such Administrative Agent’s discretion provided herein, Eligible
Equipment shall not include any equipment unless:


 


(a)                                 
one of the Borrowers
has good title to such equipment;


 


(b)                                
the Borrower having
title to such Equipment has the right to subject such equipment to a Lien in
favor of the applicable Collateral Agent; such equipment is subject to a first
priority perfected Lien in favor of such Collateral Agent and is free and clear
of all other Liens of any nature whatsoever (except for Permitted Encumbrances
which do not have priority over the Lien in favor of such Collateral Agent);


 


(c)                                 
the full purchase
price for such equipment has been paid by a Borrower;


 


(d)                                
such equipment is
located on premises (i) owned by one of the Borrowers, or (ii) leased by one of
the Borrowers and (x) the lessor has delivered to such Administrative Agent a
Collateral Access Agreement or (y) a Reserve for rent, charges, and other
amounts due or to become due with respect to such facility has been established
by such Administrative Agent in its Permitted Discretion;


 


(e)                                 
such equipment is in
good working order and condition (ordinary wear and tear excepted) and is used
or held for use by the Borrowers in the ordinary course of business of the
Borrowers;


 


(f)                                   
such equipment is not
subject to any agreement which restricts the ability of the Borrowers to use,
sell, transport or dispose of such equipment or which restricts such
Administrative Agent’s ability to take possession of, sell or otherwise dispose
of such equipment; and


 


(g)                                
such equipment does
not constitute “fixtures” under the applicable laws of the jurisdiction in
which such equipment is located.


 


“Eligible
Inventory” means, at any time, the Inventory owned by one of the applicable
Borrowers which an Administrative Agent determines in its Permitted Discretion
is eligible as the basis for the extension of Revolving Loans, Swingline Loans
and the issuance of Acceptances and Letters of Credit hereunder. Without
limiting such Administrative Agent’s discretion provided herein, Eligible
Inventory shall not include any Inventory:


 


(a)                                 
which is not subject
to a first priority perfected Lien in favor of the applicable Collateral Agent;


 


17












 


(b)                                
which is subject to
any Lien other than (i) a Lien in favor of the applicable Collateral Agent and
(ii) a Permitted Encumbrance which does not have priority over the Lien in
favor of such Collateral Agent;


 


(c)                                 
which is, in such
Administrative Agent’s Permitted Discretion, slow moving, obsolete,
unmerchantable, defective, unfit for sale, not salable at prices approximating
at least the cost of such Inventory in the ordinary course of business or
unacceptable due to age, type, category and/or quantity;


 


(d)                                
with respect to which
any covenant, representation, or warranty contained in this Agreement or any
Security Agreement has been breached or is not true;


 


(e)                                 
which does not
conform to all standards imposed by any governmental authority;


 


(f)                                   
which is not finished
goods or which constitutes work-in-process, subassemblies (unless such
Administrative Agent determines, in its Permitted Discretion, to include such work-in-process
or subassemblies as Eligible Inventory), packaging and shipping material,
manufacturing supplies other than scrap steel, display items, bill-and-hold
goods, returned or repossessed goods, defective goods, goods held on
consignment, or goods which are not of a type held for sale in the ordinary
course of business;


 


(g)                                
which is not located
in the U.S. or Canada or is in transit with a common carrier from vendors and
suppliers;


 


(h)                                
which is located in
any location leased by the Borrowers unless (i) the lessor has delivered to
such Administrative Agent a Collateral Access Agreement or (ii) a Reserve for
rent, charges, and other amounts due or to become due with respect to such facility
has been established by such Administrative Agent in its Permitted Discretion;


 


(i)                                    
which is located in
any third party warehouse or is in the possession of a bailee and is not
evidenced by a Document, unless (i) such warehouseman or bailee has delivered
to such Administrative Agent a Collateral Access Agreement and such other
documentation as such Administrative Agent may require or (ii) an appropriate
Reserve has been established by such Administrative Agent in its Permitted
Discretion;


 


(j)                                    
which is the subject
of a consignment by any Borrower as consignor unless (i) (a) at the time of
determination, the consignee is rated at least Investment Grade or (b) a
protective UCC-1 financing statement has been properly filed against the
consignee, such Administrative Agent has determined in its Permitted Discretion
to include such Inventory as Eligible Inventory and the aggregate amount of all
Inventory eligible under this subclause (b) does not exceed $2,000,000 at any
time, and (ii) there is a written agreement clearly acknowledging that such
Inventory is held on consignment, that the Borrower retains title to such
Inventory, that no Lien arising by, through or under such consignee has
attached or will attach to such Inventory and requiring consignee to segregate
the


 


18












 


consigned Inventory from the consignee’s other
personal or movable property and having other terms consistent with the
Borrowers’ past practices for consigned Inventory; provided that the
aggregate amount of all Inventory eligible under this clause (j) shall not
exceed U.S.$20,000,000 at any time;


 


(k)                                 
which is perishable;
or


 


(l)                                    
which contains or
bears any intellectual property rights licensed to the Borrowers unless such
Administrative Agent is satisfied that it may sell or otherwise dispose of such
Inventory without (i) infringing the rights of such licensor, (ii) violating
any contract with such licensor, or (iii) incurring any liability with respect
to payment of royalties other than royalties incurred pursuant to sale of such
Inventory under the current licensing agreement.


 


In the
event that Inventory which was previously Eligible Inventory ceases to be
Eligible Inventory hereunder, the Borrowers shall notify the Administrative
Agents thereof on and at the time of submission to the Administrative Agents of
the next Borrowing Base Certificate.


 


“Eligible
Real Estate” means, at any time, the real or immovable property owned, or
in the case of the real or immovable property described in Part II of Schedule
1.1(b), leased, by one of the applicable Borrowers which an Administrative
Agent determines in its Permitted Discretion is eligible as the basis for the
extension of Revolving Loans, Swingline Loans and the issuance of Acceptances
and Letters of Credit hereunder. As of the Effective Date, but subject to such
Administrative Agent’s Permitted Discretion based upon post-Effective Date
events, the properties described on Schedule 1.1(b) are Eligible Real
Estate.  Without limiting such Administrative Agent’s discretion provided
herein, Eligible Real Estate shall not include any such real or immovable
property unless:


 


(a)                                 
one of the Borrowers
is the record owner of and has good and marketable fee title to, or a valid
leasehold interest in, such real or immovable property;


 


(b)                                
one of the Borrowers
has the right to subject such real or immovable property (or, if the real or
immovable property is leased by such Borrower, such Borrower’s leasehold
interest therein) to a mortgage Lien in favor of the applicable Collateral
Agent; such real or immovable property (or, if the real or immovable property
is leased by such Borrower, such Borrower’s leasehold interest therein) is
subject to a first priority perfected Lien in favor of such Collateral Agent
and is free and clear of all other Liens of any nature whatsoever (except for
Permitted Encumbrances);


 


(c)                                 
except for Permitted
Encumbrances, such real or immovable property (or, if the real or immovable
property is leased by such Borrower, such Borrower’s leasehold interest
therein) is not subject to any agreement or condition which could restrict or
otherwise adversely affect such Administrative Agent’s ability to sell or
otherwise dispose of such real or immovable property (or, if the real or
immovable property is leased by such Borrower, such Borrower’s leasehold
interest therein); and


 


19












 


(d)                                
the applicable
Borrower has delivered to such Administrative Agent such environmental audits,
mortgage title insurance, real or immovable property survey, local counsel
opinion(s) as to such real or immovable property (and, if the real or immovable
property is leased by such Borrower, such Borrower’s leasehold interest
therein), supplemental casualty insurance and flood insurance, and other
documents, instruments or agreements as may be reasonably requested by such
Administrative Agent, in each case, in form and substance reasonably
satisfactory to such Administrative Agent.


 


“Environmental
Laws” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
pollution or protection of the environment or the preservation or reclamation
of natural resources, including those relating to the management, release or
threatened release of any Hazardous Material, or to employee health and safety
matters.


 


“Environmental
Liabilities” means all Liabilities (including costs of Remedial Actions,
natural resource damages and costs and expenses of investigation and
feasibility studies) that may be imposed on, incurred by or asserted against
any Loan Party as a result of, or related to, any claim, suit, action,
investigation, proceeding or demand by any Person, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute
or common law or otherwise, arising under any Environmental Law or in
connection with any environmental, health or safety condition or with any
Release or resulting from the ownership, lease, sublease or other operation or
occupation of property by any Loan Party, whether on, prior to or after the
date hereof.


 


“Equity
Funding” means the consummation by the Sponsor Group of a cash equity
investment to Parent Holdco and a simultaneous contribution by Parent Holdco to
Parent of not less than U.S.$100,000,000 and, to the extent such investment is
not used to finance a portion of the consideration for the Progress Rail
Acquisition, the contribution by Parent of such investment to Progress Rail or
Progress Metal, each on the date hereof.


 


“Equity
Interests” means, with respect to any Person, shares of capital stock,
partnership interests, membership interests in a limited liability company,
beneficial interests in a trust or other equity ownership interests in such
Person, and any warrants, options or other rights entitling the holder thereof
to purchase or acquire any such equity interest.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.


 


“ERISA
Affiliate” means Loan Parties, their Subsidiaries and Affiliates, but
excluding those Persons having a Controlling or ownership interest in Parent.


 


“ERISA
Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30 day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or


 


20












 


not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by any
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g)
the receipt by any Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from any Borrower or any ERISA Affiliate of
any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.


 


“Eurodollar”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted LIBO Rate.


 


“Event
of Default” has the meaning assigned to such term in Article VII.


 


“Exchange
Rate” means, on any day, (a) with respect to Canadian Dollars in relation
to U.S. Dollars, the spot rate at which U.S. Dollars are offered on such day by
JPMorgan Chase Bank, N.A. in New York City for Canadian Dollars at
approximately 12:00 p.m. (New York City time), and (b) with respect to U.S.
Dollars in relation to Canadian Dollars, the spot rate at which Canadian
Dollars are offered on such day by JPMorgan Chase Bank, N.A. in New York City
for U.S. Dollars at approximately 12:00 p.m. (New York City time), as quoted
generally to customers of JPMorgan Chase Bank, N.A.


 


“Excluded
Taxes” means, with respect to any Person, (a) income or franchise
taxes imposed on or measured by (or for which of two or more alternative bases
is based on or measured by reference to) such Person’s net income by the United
States of America (or any political subdivision thereof), Canada (or any
political subdivision thereof), or the jurisdiction under the laws of which
such Person is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by Canada or any other jurisdiction, (c) any gift,
inheritance, succession or similar taxes, (d) U.S. withholding tax imposed
with respect to amounts payable to a Non-U.S. Lender to the extent that such
withholding tax is in effect and is applicable to such Non-U.S. Lender (after
giving effect to any treaty or other applicable basis for reduction or
exemption) on the date such Non-U.S. Lender becomes a party to this Agreement
(or designates a new lending office), (e) Canadian withholding tax imposed
with respect to amounts payable to a Non-Canadian Lender (other than a
Non-Canadian Lender that becomes a Lender pursuant to an assignment permitted
by Section 9.05(b)(ii)(D)) to the extent that such withholding tax is in
effect and is applicable to such Non-Canadian Lender (after giving effect to
any treaty or other applicable basis for reduction or exemption) on the date
such Non-Canadian Lender becomes a party to this Agreement (or designates a new
lending office) and (f) any tax that is attributable to a Lender’s failure to
comply with Section 2.19(e); provided, that clauses (d) and (e)
above shall not include amounts that arise (i) as a result of an
assignment or the designation of a new lending office made at the


 


21












 


request of the
Administrative Borrower under Section 2.21(b), or (ii) to the
extent that such Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to Section
2.19(a).


 


“Extraordinary
Receipts” means any Net Cash Proceeds, received by any Loan Party or any of
its Subsidiaries not in the ordinary course of business (and not consisting of
proceeds described in Section 2.13(b)(ii), (iii) or (iv)
hereof), including, without limitation, (i) foreign, Canadian, provincial,
United States, state or local tax refunds, (ii) pension plan reversions,
(iii) proceeds of insurance, (iv) judgments, proceeds of settlements or
other consideration of any kind in connection with any cause of action, (v)
condemnation awards (and payments in lieu thereof), (vi) indemnity payments and
(vii) any purchase price adjustment received in connection with any purchase
agreement.


 


“Fair
Market Value” shall mean, with respect to real or immovable property of any
Person, the fair market value thereof as determined in the most recent
appraisal received by an Administrative Agent in accordance with the terms
hereof, which appraisal shall be performed in a manner reasonably acceptable to
such Administrative Agent by an appraiser reasonably acceptable to such
Administrative Agent.


 


“Federal
Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such date, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the U.S. Administrative Agent from three Federal funds
brokers of recognized standing selected by it.


 


“Financial
Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Administrative Borrower.


 


“Fiscal
Quarter” means a fiscal quarter of the Parent and its Subsidiaries ending
on February 28 or February 29 (as applicable), May 31, August 31 or November 30
of each year.


 


“Fiscal
Year” means the fiscal year of the Parent and its Subsidiaries ending on
November 30 of each year.


 


“Fixed
Asset Percentage” shall mean, as of any date, the percentage equal to one
hundred percent (100%) minus the percentage obtained by dividing the number of
full Fiscal Quarters elapsed since the Effective Date by twenty (20).


 


“Fixed
Charge Coverage Ratio” means, the ratio, determined as of the end of each
Fiscal Quarter of the Parent for the most-recently ended four Fiscal Quarters,
of (a) EBITDA for such four Fiscal Quarters, plus Rentals for such four Fiscal
Quarters, minus Capital Expenditures during such four Fiscal Quarters
(excluding Capital Expenditures to the extent financed with Indebtedness for
borrowed money (other than Indebtedness incurred hereunder) or to the extent
actually reimbursed in cash pursuant to indemnification or reimbursement
provisions of the


 


22












 


Acquisition
Documentation) to (b) Fixed Charges for such four Fiscal Quarters, all
calculated for the Parent and its Subsidiaries on a consolidated basis; provided,
for calculations of Fixed Charge Coverage Ratio with respect to annual periods
ending on or prior to February 28, 2006, the components of the Fixed Charge
Coverage Ratio and Fixed Charges shall be determined on an Annualized Basis
based upon the one (1), two (2), three (3) or four (4) most recent consecutive
Fiscal Quarters of the Parent occurring after the Effective Date.


 


“Fixed
Charges” means, with reference to any period, without duplication, cash
Interest Expense for such period, plus Rentals for such period, plus scheduled
principal payments on Indebtedness made during such period, plus expense for
taxes paid in cash during such period, plus dividends or distributions paid in
cash during such period, plus Capital Lease Obligation payments (to the extent
not already included in Rentals) during such period, all calculated for the Parent
and its Subsidiaries on a consolidated basis.


 


“Flex-Pricing
Provisions” means any term or provision of any fee letter, commitment
letter or term sheet delivered in connection with the transaction which is the
subject of this Agreement which purports to permit the Syndication Agent or the
lead arranger to change any or all of the structure, terms or pricing of the
credit facility evidenced by this Agreement either before or after the
Effective Date in order to allow the Syndication Agent and/or lead arranger to
successfully syndicate such credit facility either before or after the
Effective Date.


 


“Funding
Accounts” has the meaning assigned to such term in Section 4.01(h).


 


“GAAP”
means generally accepted accounting principles in the United States of America.


 


“Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, including
without limitation the Surface Transportation Board.


 


“Guarantee”
of or by any Person (the “guarantor”) means any obligation, contingent
or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation or (d) as an account party in respect of
any letter of credit or letter of guaranty issued to support such Indebtedness
or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.


 


23












 


“Guaranty”
means the Guaranty dated as of the Effective Date by the U.S. Borrowers in
substantially the form of Exhibit G.


 


“Hazardous
Material” means any substance, material or waste that is classified,
regulated or otherwise characterized under any Environmental Law as hazardous,
toxic, a contaminant or a pollutant or by other words of similar meaning or
regulatory effect, including petroleum or any fraction thereof, asbestos,
polychlorinated biphenyls and radioactive substances.


 


“Indebtedness”
of any Person means, without duplication, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person, (d)
all obligations of such Person in respect of the deferred purchase price of
property or services (excluding accounts payable incurred in the ordinary
course of business and not overdue by more than 60 days), (e) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the Indebtedness secured
thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of
others, (g) all Capital Lease Obligations of such Person, (h) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (i) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances, (j) obligations
under any liquidated earn-out, (k) all Swap Obligations (and the amount of
Indebtedness under any Swap Obligation shall be deemed the Net Mark-to-Market
Exposure thereunder) and (l) obligations of such Person to purchase securities
or other property arising out of or in connection with the sale of the same or
substantially similar securities or property or any other Off-Balance Sheet
Liability. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not
liable therefor.


 


“Indemnified
Taxes” means taxes other than Excluded Taxes.


 


“Indemnitee”
has the meaning set forth in Section 9.04(b).


 


“Information
Memorandum” means the Confidential Information Memorandum dated February,
2005 relating to Progress Rail and the Transactions.


 


“Interest
Election Request” means a request by the Administrative Borrower to convert
or continue a Revolving Borrowing in accordance with Section 2.10.


 


“Interest
Expense” means, with reference to any period, the interest expense (net of
interest income) of the Parent and its Subsidiaries calculated on a
consolidated basis for such period.


 


“Interest
Payment Date” means (a) with respect to any ABR Loan (other than a
Swingline Loan) or Canadian Prime Loan, the last day of each calendar quarter
and the Maturity Date, (b) with respect to any Eurodollar Loan, the last day of
the Interest Period applicable to the


 


24












 


Borrowing of which such
Loan is a part, and in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period and the Maturity Date and (c) with
respect to any Swingline Loan, the day that such Loan is required to be repaid
and the Maturity Date.


 


“Interest
Period” means with respect to any Eurodollar Borrowing, the period commencing
on the date of such Borrowing and ending on the numerically corresponding day
in the calendar month that is one, two, three or six months thereafter, as the
Administrative Borrower may elect; provided, that (i) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day, unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest
Period that commences on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the last calendar month
of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and, in
the case of a Revolving Borrowing, thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.


 


“Inventory”
has the meaning assigned to such term in the U.S. Security Agreement, the
Canadian Security Agreement or both, as the context may require.


 


“Investment
Grade” means a rating of (a) “BBB” or better by S&P or (b) “Baa” or
better by Moody’s.


 


“Issuing
Bank” means, as the context may require, the U.S. Issuing Bank or the
Canadian Issuing Bank, and “Issuing Banks” means both of such banks.


 


“Joinder
Agreement” has the meaning assigned to such term in Section 5.11.


 


“LC
Disbursement” means a payment made by an Issuing Bank pursuant to a Letter
of Credit.


 


“LC
Exposure” means the U.S. LC Exposure and the Canadian LC Exposure.


 


“Lenders”
means the Persons listed on the Commitment Schedule and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption. Unless the context otherwise requires, the term
“Lenders” includes the Swingline Lenders.


 


“Letter
of Credit” means any letter of credit issued pursuant to this Agreement.


 


“LIBO
Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or on
any successor page or any successor to such Service, or any substitute page or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
applicable Administrative Agent from time to time for purposes of providing


 


25












 


quotations of interest
rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to
such Eurodollar Borrowing for such Interest Period shall be determined by
reference to such other comparable publicly available service for displaying
the offered rate for dollar deposits in the London interbank market as may be
selected by the applicable Administrative Agent and, in the absence of availability,
such other method to determine such eurodollar rate as may be selected by such
Administrative Agent in its Permitted Discretion.


 


“Lien”
means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset, and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.


 


“Loan
Documents” means this Agreement, any promissory notes issued pursuant to
this Agreement, any Letter of Credit applications, the Guaranty, the Collateral
Documents and all other agreements, instruments, documents and certificates
identified in Section 4.01 executed and delivered to, or in favor of, an
Administrative Agent or any Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, letter of credit
agreements and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Loan Party, or any employee of any Loan Party,
and delivered to an Administrative Agent or any Lender in connection with the
Agreement or the transactions contemplated thereby. Any reference in this
Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to this Agreement
or such Loan Document as the same may be in effect at any and all times such
reference becomes operative.


 


“Loan
Parties” means U.S. Loan Parties and the Canadian Loan Parties.


 


“Loans”
means the Canadian Loans (including Acceptances) and the U.S. Loans.


 


“Management
Agreement” means that certain Management Agreement dated of even date
herewith by and between One Equity Partners LLC and Parent Holdco.


 


“Material
Adverse Effect” means a material adverse effect on (a) the business,
assets, operations or condition, financial or otherwise, of the Parent and its
Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any
of its obligations under the Loan Documents to which it is a party, (c) the
Collateral, or the Collateral Agents’ Liens (on behalf of themselves and the
Secured Parties) on the Collateral or the priority of such Liens, or (d) the
rights of or benefits available to the Administrative Agents, the Issuing Banks
or the Lenders thereunder.


 


“Material
Environmental Liabilities” means Environmental Liabilities exceeding
U.S.$5,000,000 in the aggregate.


 


26






 










 


“Material
Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one
or more of the Parent and its Subsidiaries in an aggregate principal amount
exceeding U.S.$5,000,000. For purposes of determining Material Indebtedness,
the “obligations” of the Parent or any of its Subsidiaries in respect of any
Swap Agreement at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that the Parent or such Subsidiary would be required
to pay if such Swap Agreement were terminated at such time.


 


“Maturity
Date” means March 24, 2010 or any earlier date on which the Commitments are
reduced to zero or otherwise terminated pursuant to the terms hereof.


 


“Merger
Agreement” means the Agreement and Plan of Merger, dated as of February 17,
2005, by and among Parent, PRSC Acquisition Corp., PMRC Acquisition Co.,
Progress Rail, Progress Metal, Progress Fuels Corporation and Progress Energy,
Inc.


 


“Mexican
Pledge Agreement” means that certain Pledge Agreement, dated as of the date
hereof, between Railcar, Ltd. and the Collateral Agents, for the benefit of the
Collateral Agents and the Secured Parties, as the same may be amended, restated
or otherwise modified from time to time.


 


“Moody’s”
means Moody’s Investors Service, Inc. or if such company shall cease to issue
ratings, another nationally recognized statistical rating company selected in
good faith by mutual agreement of the Administrative Agents and the Administrative
Borrower.


 


“Mortgaged
Properties” means the real or immovable property listed on Schedule
1.1(b).


 


“Mortgages”
means any mortgage, deed of trust or other agreement which conveys or evidences
a Lien in favor of the Collateral Agents, for the benefit of the Collateral
Agents and the Secured Parties, on real or immovable property of a Loan Party,
including any amendment, modification or supplement thereto.


 


“Multiemployer
Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.


 


“Net
Cash Proceeds” means, if in connection with (a) an asset disposition, cash
proceeds net of (i) commissions, brokers’ fees, legal, accounting and
professionals’ fees and other reasonable and customary transaction costs, fees
and expenses properly attributable to such transaction and payable by such Loan
Party in connection therewith (in each case, paid to non-Affiliates), (ii)
transfer taxes paid in connection therewith, (iii) amounts payable to holders
of senior Liens on such asset (to the extent such Liens constitute Permitted
Encumbrances hereunder), if any, and (iv) cash taxes paid in connection
therewith, (b) the issuance or incurrence of Indebtedness, cash proceeds net of
attorneys’ fees, investment banking fees, accountants’ fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith, (c) an equity issuance, cash proceeds net of
underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith or (d) Extraordinary Receipts, cash
proceeds received net of (i) expenses related thereto payable by such Loan
Party in connection therewith (in each case, paid to non-Affiliates), (ii)
transfer taxes paid, and (iii) cash taxes paid in connection therewith.


 


27












 


“Net
Income” means, with reference to any period, the net income (or loss) of
the Parent and its Subsidiaries calculated on a consolidated basis for such
period.


 


“Net
Mark-to-Market Exposure” shall mean, with respect to any Person, as of any
date of determination, the excess (if any) of all unrealized losses over all
unrealized profits of such Person arising from Swap Agreement
transactions.  As used in this definition, “unrealized losses” means the
fair market value of the cost to such Person of replacing such Swap Agreement
transactions as of the date of determination (assuming the Swap Agreement
transactions were to be terminated as of that date), and “unrealized profits”
means the fair market value of the gain to such Person of replacing such Swap
Agreement transactions as of the date of determination (assuming such Swap
Agreement transactions were to be terminated as of that date).


 


“Net
Orderly Liquidation Value” means, with respect to Inventory or equipment of
any Person, the orderly liquidation value thereof as determined in a manner
acceptable to an Administrative Agent by an appraiser reasonably acceptable to
such Administrative Agent, net of all costs of liquidation thereof.


 


“Net
Recovery Rate” means the quotient of (x) the estimated net income, payments
and proceeds from the sale, exchange, collection or other disposition of each
Loan Party’s Inventory (as determined on a Net Orderly Liquidation Value
basis), based on an appraisal provided by an appraiser retained or approved by
the Administrative Agents in consultation with the Borrowers and (y) the cost
of the Eligible Inventory as of the effective date of the estimate provided
pursuant to clause (x) of this definition.


 


“Non-Acceptance
Canadian Lender” has the meaning assigned to such term in Section 2.05(i).


 


“Non-Canadian
Lender” means a Lender or a Participant that is not a resident of Canada
for purposes of the Income Tax Act (“ITA”) nor an “authorized foreign bank”
within the meaning of the ITA for whom any amount paid or credited to such
Lender or Participant hereunder is paid or credited in respect of its Canadian
banking business for purposes of the ITA.


 


“Non-Consenting
Lender” has the meaning assigned to such term in Section 9.03(f).


 


“Non-U.S.
Lender” means a Lender or a Participant that is (x) organized under the
laws of a jurisdiction other than the United States, any State thereof or the
District of Columbia or (y) organized under the laws of the United States, any
State thereof, or the District of Columbia and whose separate existence from a
Person that is not treated as a “United States person” for purposes of Section
7701(a)(30) of the Code is disregarded for U.S. federal income tax purposes
under Treasury Regulations Section 301.7701-3 or any similar provision.


 


“Non-U.S.
Plan” means any pension, retirement, superannuation or similar policy or
arrangement sponsored, maintained or contributed to by any Borrower in a
jurisdiction other than the United States.


 


“Non-U.S.
Subsidiary” means any Subsidiary that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or
the District of Columbia.


 


28












 


“Notice
of Drawing” has the meaning assigned to such term in Section 2.05(c)(i).


 


“Obligations”
means the Canadian Obligations and the U.S. Obligations.


 


“Off-Balance
Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any indebtedness, liability or obligation under any sale and
leaseback transaction which is not a Capital Lease Obligation, (c) any
indebtedness, liability or obligation under any so-called “synthetic lease”
transaction entered into by such Person, or (d) any indebtedness, liability or
obligation arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the balance sheets of such Person, but excluding from
this clause (d) operating leases.


 


“Other
Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies (but, for the
avoidance of doubt, not including any income or withholding taxes) arising from
any payment made hereunder or from the execution, delivery or enforcement of,
or otherwise with respect to, this Agreement or any other Loan Document.


 


“Parent”
has the meaning set forth in the preamble to this Agreement.


 


“Parent
Holdco” means Progress Rail Services Parent Corp., a Delaware corporation.


 


“Participant”
has the meaning set forth in Section 9.05.


 


“Patent
Security Agreement” means that certain Patent Security Agreement dated as
of the date hereof by and among the Loan Parties party thereto and the U.S.
Collateral Agent.


 


“PBGC”
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.


 


“Permit”
means, with respect to any Person, any permit, approval, authorization, license,
registration, certificate, concession, grant, franchise, variance or permission
from, and any other agreement, document, undertaking, lease, indenture,
mortgage, deed of trust or other instrument with, any Governmental Authority,
in each case whether or not having the force of law and applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.


 


“Permitted
Acquisition” has the meaning set forth in Section 6.04(i).


 


“Permitted
Discretion” means a determination made by an Administrative Agent in its
sole discretion exercised reasonably.


 


“Permitted
Encumbrances” means:


 


(a)                                 
Liens imposed by law
for taxes that are not yet due or are being contested in compliance with Section
5.04 other than those arising pursuant to ERISA;


 


29












 


(b)                                
carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 60 days or are being contested in
compliance with Section 5.04;


 


(c)                                 
pledges and deposits
made in the ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations;


 


(d)                                
deposits to secure
the performance of bids, trade contracts, leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature, in
each case in the ordinary course of business;


 


(e)                                 
judgment liens in
respect of judgments that do not constitute an Event of Default under clause
(k) of Article VII;


 


(f)                                   
easements, zoning
restrictions, rights-of-way and encumbrances on real or immovable property that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or materially interfere with the ordinary
conduct of business of a Borrower or any Subsidiary;


 


(g)                                
Liens in favor of the
Collateral Agents granted pursuant to any Loan Document; and


 


(h)                                
title exceptions
identified on the title policies delivered on or prior to the Effective Date
pursuant to Section 4.01(b).


 


“Permitted
Investments” means:


 


(a)                                 
direct obligations
of, or obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America or Canada (or by any agency thereof
to the extent such obligations are backed by the full faith and credit of the
United States of America or Canada), in each case maturing within one year from
the date of acquisition thereof;


 


(b)                                
investments in
commercial paper maturing within 270 days from the date of acquisition thereof
and rated, at such date of acquisition, at least A-1 by S&P, at least P-1
by Moody’s or the highest credit rating attainable by DBRS;


 


(c)                                 
investments in
certificates of deposit, banker’s acceptances and time deposits maturing within
270 days from the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United States of
America or any State thereof or under the Federal laws of Canada which has a
combined capital and surplus and undivided profits of not less than
U.S.$100,000,000 or its equivalent in Canadian Dollars;


 


30












 


(d)                                
fully collateralized
repurchase agreements with a term of not more than 30 days for securities
described in clause (a) above and entered into with a financial institution
satisfying the criteria described in clause (c) above; and


 


(e)                                 
money market funds
that (i) have substantially all of their assets invested continuously in the
types of investments listed in clauses (a), (b), (c) and (d) above, (ii) are
rated AAA by S&P, Aaa by Moody’s or the highest credit rating attainable by
DBRS and (iii) have portfolio assets of at least U.S.$5,000,000,000 or its
equivalent in Canadian Dollars.


 


“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.


 


“Plan”
means any employee pension benefit plan (other than a Multiemployer Plan) subject
to the provisions of Title IV of ERISA or Section 412 of the Code or Section
302 of ERISA, and in respect of which any Borrower or any ERISA Affiliate is
(or, if such plan were terminated, would under Section 4069 of ERISA be deemed
to be) an “employer” as defined in Section 3(5) of ERISA.


 


“Post-Closing
Letter” means that certain Post-Closing Letter dated as of the date hereof
by the Loan Parties in favor of the Administrative Agents.


 


“PPSA”
means the Personal Property Security Act (Ontario) or similar personal or
movable property security legislation in the Provinces of Canada other than
Ontario, as the same may be in effect on the date of determination in the
applicable jurisdiction.


 


“Prepayment
Fee” means a fee payable to the applicable Administrative Agent, for the
benefit of the applicable Lenders, in the following amount:


 


	
  Period
  during which early termination

  or reduction occurs

  	
   

  	
  Prepayment Fee

  
	
  On or prior to the
  first anniversary of the date of this Agreement

  	
   

  	
  2.0% of the Aggregate
  Commitment terminated or reduced

  
	
   

  	
   

  	
   

  
	
  After the first
  anniversary of the date of this Agreement but on or prior to the second
  anniversary of the date of this Agreement

  	
   

  	
  1.0% of the Aggregate
  Commitment terminated or reduced

  



 


“Prime
Rate” means (a) in respect of ABR Loans provided by U.S. Lenders, the rate
of interest per annum publicly announced from time to time by JPMorgan Chase
Bank, N.A. as its prime rate and (b) in respect of ABR Loans provided by
Canadian Lenders, the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank, N.A., Toronto Branch as its U.S. base rate in
effect at its office in Toronto; each change in the Prime Rate shall be
effective on the date such change is publicly announced as being effective.


 


“Pro
Forma Information” has the meaning assigned to such term in clause (k) of Section
4.01.


 


31












 


“Progress
Metal” means Progress Metal Reclamation Company, a Kentucky corporation.


 


“Progress
Rail” means Progress Rail Services Corporation, an Alabama corporation.


 


“Progress
Rail Acquisition” means the acquisition by Parent Holdco of all of the
Equity Interests of Parent and the mergers of (i) Progress Rail with and into
PRSC Acquisition Corp., a wholly owned Subsidiary of Parent, with Progress Rail
as the surviving entity, and (ii) Progress Metal with and into PMRC Acquisition
Co., a wholly owned Subsidiary of Parent, with Progress Metal as the surviving
entity.


 


“Projections”
has the meaning assigned to such term in Section 5.01(f).


 


“Protective
Advance” means a means a U.S. Protective Advance or a Canadian Protective
Advance, or both, as the context requires.


 


“Railcar
Security Agreement” means that certain Memorandum of Domestic Pledge and
Security Agreement, dated as of the date hereof, between the U.S. Loan Parties
and the Collateral Agents, for the benefit of the Collateral Agents and the
Secured Parties, as the same may be amended, restated or otherwise modified
from time to time.


 


“Register”
has the meaning set forth in Section 9.05.


 


“Related
Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.


 


“Release”
means any release, threatened release, spill, emission, leaking, pumping,
pouring, emitting, emptying, escape, injection, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Material into or through
the environment.


 


“Remedial
Action” means all actions required to (a) clean up, remove, treat or in any
other way address any Hazardous Material in the indoor or outdoor environment,
(b) prevent or minimize any Release so that a Hazardous Material does not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment or (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care with respect to any
Hazardous Material.


 


“Rentals”
means all payments due by the Parent and its Subsidiaries under all operating
leases.


 


“Report”
means reports prepared in good faith by an Administrative Agent or another
Person showing the results of appraisals, field examinations or audits
pertaining to the Borrowers’ assets from information furnished by or on behalf
of the Borrowers, after such Administrative Agent has exercised its rights of
inspection pursuant to this Agreement, which Reports may be distributed to the
Lenders by such Administrative Agent.


 


“Required
Lenders” means, at any time, Lenders having Commitments representing a
majority of the Aggregate Commitment at such time or, if the Commitments of the
Lenders have


 


32












 


been terminated, Lenders
representing a majority of the Aggregate Credit Exposure.  For purposes of
determining the Required Lenders, any amounts denominated in Canadian Dollars
shall be translated into the U.S. Dollar Equivalent at the Exchange Rate in
effect on the Effective Date.


 


“Reserve”
means a Canadian Reserve or a U.S. Reserve.


 


“Reset
Date” has the meaning set forth in Section 2.24(a).


 


“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in any
Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such Equity Interests in any Borrower or any Subsidiary or any option,
warrant or other right to acquire any such Equity Interests in any Borrower or
any Subsidiary.


 


“Revolving
Commitment” means, with respect to each Revolving Lender, the commitment of
such Lender to make Revolving Loans and to acquire participations in Letters of
Credit and Swingline Loans hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.11, and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to Section
9.05.  The initial amount of each Revolving Lender’s Revolving
Commitment is set forth on the Commitment Schedule, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Revolving
Commitment, as applicable. The initial aggregate amount of the Revolving
Lenders’ Revolving Commitments is U.S.$220,000,000.


 


“Revolving
Credit Exposure” means, with respect to any Revolving Lender at any time,
the sum of (a) the outstanding principal amount of such Revolving Lender’s
Revolving Loans and its LC Exposure, plus
(b) an amount equal to its Applicable Percentage of the aggregate principal
amount of Swingline Loans at such time.


 


“Revolving
Lenders” means, as of any date of determination, Lenders having a Revolving
Commitment or, if the Revolving Commitments have been terminated, the Lenders having
Revolving Credit Exposure.


 


“Revolving
Loan” means a U.S. Revolving Loan, a Canadian Revolving Loan, or both, as
the context may require.


 


“S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc. or if such company shall cease to issue ratings, another
nationally recognized statistical rating company selected in good faith by
mutual agreement of the Administrative Agents and the Administrative Borrower.


 


“Schedule I
Lender” means, any Canadian Lender named on Schedule I to the Bank Act
(Canada).


 


33












 


“Schedule II
or III Lender” means any Canadian Lender named on Schedule II or
Schedule III to the Bank Act (Canada).


 


“Schedule II
or III Reference Banks” means JPMorgan Chase Bank, N.A., Toronto Branch, or
any bank named on Schedule II or Schedule III to the Bank Act
(Canada) and agreed upon by the Canadian Administrative Agent and the Canadian
Borrowers.


 


“Secured
Parties” means, collectively, (i) the Administrative Agents, (ii) the
Lenders, (iii) the  Issuing Banks, (iv) any Person indemnified under the
Loan Documents, (v) any Lender or an Affiliate of any Lender with respect to
any Banking Services Obligations, and (vi) any Lender or Affiliate of a Lender
which is a counterparty to any Swap Obligation with any Loan Party that
constitutes an Obligation.


 


“Security
Agreements” means the U.S. Security Agreement, the Canadian Security
Agreements, the Mexican Pledge Agreement, the Patent Security Agreement, the
Trademark Security Agreement, the Copyright Security Agreement and any other
pledge or security agreement entered into, after the date of this Agreement by
any other Loan Party (as required by this Agreement or any other Loan
Document), or any other Person, as the same may be amended, restated or
otherwise modified from time to time.


 


“Senior
Unsecured Debt Documents” means that certain Indenture, dated as of March
24, 2005, among Progress Rail, Progress Metal, Parent, as parent guarantor and
The Bank of New York, as trustee, and all documents relating thereto or
executed in connection therewith.


 


“Senior
Unsecured Debt Funding” means the receipt by Progress Rail and Progress
Metal of not less than $200,000,000 in net proceeds from the issuance of 7.75%
Senior Unsecured Notes due 2012 pursuant to the Senior Unsecured Debt
Documents.


 


“Settlement”
has the meaning assigned to such term in Section 2.06(d).


 


“Settlement
Date” has the meaning assigned to such term in Section 2.06(d).


 


“Sponsor
Group” means One Equity Partners LLC, its Affiliates, members of senior
management of the Borrowers and certain other equity investors who acquired
equity interests in Parent Holdco from One Equity Partners LLC within 60 days
of the Effective Date not to exceed 30% of the aggregate Equity Interests in
Parent Holdco.


 


“Statutory
Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal established
by the Board with respect to the Adjusted LIBO Rate, for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.


 


34












 


“Subordinated
Indebtedness” of a Person means any Indebtedness of such Person the payment
of which is subordinated to payment of the Obligations to the written
satisfaction of the Administrative Agents.


 


“subsidiary”
means, with respect to any Person (the “parent”) at any date, any corporation,
limited liability company, partnership, association or other entity the
accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.


 


“Subsidiary”
means any subsidiary of any Borrower or a Loan Party, as applicable.


 


“Supporting
Letter of Credit” means a standby letter of credit, in form and substance
satisfactory to the Canadian Administrative Agent or U.S. Administrative Agent,
as applicable, issued by an issuer satisfactory to such Administrative Agent,
in a stated amount equal to 105% of the Canadian LC Shortfall Amount or U.S. LC
Shortfall Amount, as applicable.


 


“Swap
Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no
phantom stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
any Borrower or any Subsidiary shall be a Swap Agreement.


 


“Swap
Obligations” of a Person means any and all obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all Swap Agreements, and
(b) any and all cancellations, buy backs, reversals, terminations or
assignments of any Swap Agreement transaction.


 


“Swingline
Lender” means the U.S. Swingline Lender, the Canadian Swingline Lender, or
both, as the context requires.


 


“Swingline
Loan” means a means a U.S. Swingline Loan or a Canadian Swingline Loan, or
both, as the context requires.


 


“Syndication
Agent” means J.P. Morgan Securities Inc., in its capacity as syndication
agent with respect to the Loans.


 


35












 


“tax”,
“Tax” or “Taxes” means any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority, together with any interest, penalties or additions to
tax imposed thereon or with respect thereto.


 


“Tax
Sharing Agreement” means any tax sharing agreement or arrangement, as the
same may be amended from time to time, in form and substance reasonably
satisfactory to the Administrative Agents, between and among the Borrowers or
between Parent or any other Borrower and one or more other Persons, provided
that in the later case (x) in no event shall the amount paid by the Borrowers
to such other Person or Persons pursuant to all such agreements and/or
arrangements exceed a reasonable estimate of the amount that the Parent would
be required to pay for taxes (including interest, penalties and additions to
tax and including estimated taxes) were it to file a consolidated, combined,
unitary or similar tax return for itself and its subsidiaries as if it were the
common parent (or analogous person) with respect to a consolidated, combined,
unitary or similar tax group, (y) in the event that such reasonable estimate
exceeds the actual amount that Parent would be required to pay, such other
Person or Persons are required to repay the excess to Parent or the other
Borrowers within a reasonable period after the later of the date on which such
excess is determined and the date on which such other Person or Persons
receives any refund related to such excess and (z) the agreement or arrangement
contains an acknowledgement by Parent Holdco or any other Person entitled to
receive payments from Parent or any other Borrower that payments under such
agreement or arrangement may be restricted by the terms of this Agreement.


 


“Trademark
Security Agreement” means that certain Trademark Security Agreement dated
as of the date hereof by and among the Loan Parties party thereto and the U.S.
Collateral Agent.


 


“Transactions”
means the execution, delivery and performance by the Borrowers of this
Agreement and the other Loan Documents, the borrowing of Loans and other credit
extensions, the use of the proceeds thereof and the issuance of Letters of
Credit hereunder and the consummation of (a) the Senior Unsecured Debt Funding,
(b) the Equity Funding and (c) the Progress Rail Acquisition.


 


“Type”,
when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined
by reference to the Adjusted LIBO Rate, the Alternate Base Rate or the Canadian
Prime Rate or whether the Loan or Borrowing is made available by Acceptances.


 


“U.S.
Administrative Agent” means General Electric Capital Corporation, in its
capacity as administrative agent for the Lenders hereunder.


 


“U.S.
Availability” means, at any time, an amount equal to the lesser of (a) the
U.S. Commitment and (b) the U.S. Borrowing Base, in each case, minus the U.S. Revolving Credit
Exposure of all U.S. Lenders.


 


“U.S.
Borrowers” has the meaning set forth in the preamble to this Agreement.


 


“U.S.
Borrowing” means a Borrowing comprised of U.S. Loans.


 


36












 


“U.S.
Borrowing Base” means, at any time, the sum of (a) 85% of U.S. Borrowers’
Eligible Accounts at such time, plus
(b) the lesser of (i) the sum of (A) the lesser of (x) 60% of U.S.
Borrowers’ Eligible Inventory (other than scrap steel and finished wheelsets),
valued on an average cost basis, consistent with the U.S. Borrowers’ practices
as of the Effective Date and (y) 85% of the Net Recovery Rate of U.S.
Borrowers’ Eligible Inventory (other than scrap steel and finished wheelsets),
multiplied by the value of such Inventory determined on an average cost basis,
consistent with the U.S. Borrowers’ practices as of the Effective Date, plus  (B) the lesser of (x) 70% of the
value of U.S. Borrowers’ Eligible Inventory consisting of scrap steel and
finished wheelsets, determined on an average cost basis, consistent with the
U.S. Borrowers’ practices as of the Effective Date and (y) 85% of the Net
Recovery Rate of U.S. Borrowers’ Eligible Inventory consisting of scrap steel
and finished wheelsets, multiplied by the value of such Inventory determined on
an average cost basis, consistent with the U.S. Borrowers’ practices as of the
Effective Date and (ii) an amount equal to 50% of the U.S. Borrowing Base, plus (c) 75% of the appraised Fair
Market Value of Eligible Real Estate of the U.S. Borrowers, plus (d) 80% of the appraised Net
Orderly Liquidation Value of Eligible Equipment of the U.S. Borrowers, minus (e) U.S. Reserves.  The
maximum amount of Eligible Equipment and Eligible Real Estate that may be
included in the U.S. Borrowing Base is the amount equal to the Fixed Asset
Percentage multiplied by U.S.$40,000,000.


 


“U.S.
Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar
Loan, the term “Business Day” shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.


 


“U.S.
Collateral Agent” means General Electric Capital Corporation, in its
capacity as collateral agent for the Secured Parties hereunder, together with
its successors and assigns.


 


“U.S.
Collection Account” has the meaning assigned to such term in the U.S.
Security Agreement.


 


“U.S.
Commitment” means, with respect to each U.S. Lender, such Lender’s
Revolving Commitment, together with the commitment of such Lender to acquire
participations in U.S. Protective Advances hereunder, as such Revolving
Commitment may be (a) reduced from time to time pursuant to Section 2.11,
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.05.  The initial amount of each
U.S. Lender’s U.S. Commitment is set forth on the Commitment Schedule, or in
the Assignment and Assumption pursuant to which such Lender shall have assumed
its U.S. Commitment, as applicable.


 


“U.S.
Controlled Disbursement Account” means, collectively, any accounts of the
U.S. Borrowers maintained as a zero balance, cash management account pursuant
to and under any agreement between the U.S. Borrowers and the U.S.
Administrative Agent, as modified and amended from time to time, and through
which all disbursements of the U.S. Borrowers, any U.S. Loan Party and any
designated Subsidiary of the U.S. Borrowers are made and settled on a daily
basis with no uninvested balance remaining overnight.


 


37












 


“U.S.
Dollar Equivalent” means, with respect to an amount of Canadian Dollars on
any date, the amount of U.S. Dollars that may be purchased with such amount of
Canadian Dollars at the Exchange Rate with respect to Canadian Dollars on such
date.


 


“U.S.
Dollars” or “U.S.$” refers to lawful money of the United States of
America.


 


“U.S.
Exposure” means, at any time, the aggregate principal amount of outstanding
U.S. Loans and U.S. LC Exposure at such time. The U.S. Exposure of any U.S.
Lender at any time shall be the sum of its U.S. LC Exposure plus the aggregate
principal amount of its outstanding U.S. Loans at such time.


 


“U.S.
Issuing Bank” means (a) JPMorgan Chase Bank, N.A., in its capacity as the
issuer of Letters of Credit hereunder, or (b) any Person that hereafter becomes
a U.S. Issuing Bank pursuant to Section 2.08(i), and the successors of a
U.S. Issuing Bank in such capacity as provided in Section 2.08(i). 
The U.S. Issuing Bank may, in its discretion, arrange for one or more Letters
of Credit to be issued by Affiliates of the U.S. Issuing Bank, in which case
the term “U.S. Issuing Bank” shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.


 


“U.S.
LC Collateral Account” has the meaning assigned to such term in Section
2.08(j).


 


“U.S.
LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding U.S. Letters of Credit at such time plus (b) the aggregate amount of all
LC Disbursements made pursuant to U.S. Letters of Credit that have not yet been
reimbursed by or on behalf of the Borrowers at such time.  The U.S. LC
Exposure of any Revolving Lender at any time shall be its Applicable Percentage
of the total U.S. LC Exposure at such time.


 


“U.S.
LC Shortfall Amount” means an amount equal to the difference of (x) the
amount of U.S. LC Exposure at such time, less (y) the amount on deposit in the
U.S. LC Collateral Account at such time which is free and clear of all rights
and claims of third parties and has not been applied against the Obligations.


 


“U.S.
Lender” means any Lender that has a U.S. Commitment or any U.S.
Exposure.  The initial U.S. Lenders are listed on the Commitment Schedule
under the caption “U.S. Lenders”.


 


“U.S.
Letter of Credit” means any Letter of Credit issued by the U.S. Issuing
Bank for the account of a U.S. Borrower. Each Existing U.S. Letter of Credit
shall be deemed to constitute a U.S. Letter of Credit issued hereunder on the
Effective Date for all purposes of the Loan Documents.


 


“U.S.
Loan” means the loans and advances made by the U.S. Lenders pursuant to
this Agreement, including U.S. Swingline Loans and U.S. Protective Advances.


 


“U.S.
Loan Parties” means each of the U.S. Borrowers and each U.S. Subsidiary
made a party hereto pursuant to Section 5.11.


 


“U.S.
Obligations” means all unpaid principal of and accrued and unpaid interest
on the U.S. Loans (including interest that accrues or that would accrue but for
the filing of a bankruptcy


 


38












 


case by a U.S. Loan
Party, whether or not such interest would be an allowable claim under any
applicable bankruptcy or other similar proceeding, and other obligations
accruing or arising after commencement of any case under any bankruptcy or
similar laws by or against any U.S. Loan Party (or that would accrue or arise
but for the commencement of any such case)), all U.S. LC Exposure, all accrued
and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the U.S. Loan Parties to the U.S. Lenders or to any U.S. Lender,
the U.S. Administrative Agent, the U.S. Issuing Bank or any indemnified party
arising under the Loan Documents.  U.S. Obligations shall also include (i)
all Banking Services Obligations of any U.S. Loan Party, and (ii) all Swap
Obligations owing to one or more U.S. Lenders or their respective Affiliates by
any U.S. Loan Party, provided that a Swap Obligation to a U.S. Lender or
an Affiliate of a U.S. Lender shall not be “Obligations” unless within a
reasonable time after any transaction relating to such Swap Obligation is
executed, the U.S. Lender or Affiliate of a U.S. Lender party thereto shall
have delivered written notice to the U.S. Administrative Agent that such a
transaction has been entered into and that it constitutes a U.S. Obligation
entitled to the benefits of the Collateral Documents.


 


“U.S.
Protective Advance” has the meaning assigned to such term in Section
2.06.


 


“U.S.
Reserves” means (i) any and all reserves which the U.S. Administrative
Agent deems necessary, in its Permitted Discretion, to from time to time
establish against the gross amounts of Eligible Accounts, Eligible Inventory,
Eligible Equipment and Eligible Real Estate (including, without limitation,
reserves for rent at locations leased by any U.S. Borrower and for which no
Collateral Access Agreement is in effect, to the extent property at such
locations is included in the U.S. Borrowing Base; reserves for consignee’s,
warehousemen’s and bailee’s charges at locations for which no Collateral Access
Agreement is in effect, to the extent property at such locations is included in
the U.S. Borrowing Base; reserves for dilution of Accounts; reserves for
Inventory shrinkage; reserves for customs charges and shipping charges related
to any Inventory in transit; reserves for contingent liabilities of any U.S.
Borrower; reserves for uninsured losses of any U.S. Borrower and reserves for taxes,
fees, assessments, and other governmental charges) and (ii) any and all
reserves for Swap Obligations of any U.S. Loan Party which any Lender to whom
Swap Obligations are owing directs the U.S. Administrative Agent to establish,
or which the U.S. Administrative Agent deems necessary in its Permitted
Discretion to establish, from time to time against the gross amounts of
Eligible Accounts, Eligible Inventory, Eligible Equipment and Eligible Real
Estate.


 


“U.S.
Revolving Loan” means a Loan made pursuant to Section 2.02(a).


 


“U.S.
Secured Parties” means, collectively, (i) the U.S. Administrative Agent,
(ii) the U.S. Lenders, (iii) the U.S. Issuing Bank, (iv) any Person indemnified
under the Loan Documents, (v) any U.S. Lender or an Affiliate of any U.S. Lender
with respect to any Banking Services Obligations, and (vi) any U.S. Lender or
Affiliate of a U.S. Lender which is a counterparty to any Swap Obligation with
any Loan Party that constitutes an Obligation.


 


“U.S.
Security Agreement” means that certain Domestic Pledge and Security
Agreement, dated as of the date hereof, between the U.S. Borrowers and the U.S.
Collateral Agent, for the benefit of the U.S. Collateral Agent and the Secured
Parties.


 


39












 


“U.S.
Subsidiary” means each Subsidiary which is not a Non-U.S. Subsidiary; “U.S.
Subsidiaries” means all such Subsidiaries.


 


“U.S.
Swingline Lender” means General Electric Capital Corporation, in its
capacity as lender of U.S. Swingline Loans hereunder.


 


“U.S.
Swingline Loan” has the meaning assigned to such term in Section 2.07.


 


“UCC”
means the Uniform Commercial Code as in effect from time to time in the State
of New York or any other state the laws of which are required to be applied in
connection with the issue of perfection of security interests.


 


“Unliquidated
Obligations” means, at any time, any Obligations (or portion thereof) that
are contingent in nature or unliquidated at such time, including any Obligation
that is: (i) an obligation to reimburse a bank for drawings not yet made under
a letter of credit issued by it; (ii) any other obligation (including any
guarantee) that is contingent in nature at such time; or (iii) an obligation to
provide collateral to secure any of the foregoing types of obligations.


 


“Withdrawal
Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.


 


SECTION 1.02              
Classification of Loans and Borrowings.  For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “U.S.
Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type
(e.g., a “U.S. Eurodollar Loan”).  Borrowings also may be
classified and referred to by Class (e.g., a “U.S. Borrowing”) or by
Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “U.S.
Eurodollar Borrowing”).


 


SECTION 1.03              
Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”. The word
“will” shall be construed to have the same meaning and effect as the word
“shall”. Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.


 


SECTION 1.04              
Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with


 


40












 


GAAP, as in effect from
time to time; provided that, if the Borrower notifies the Administrative
Agents that the Borrower requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or
in the application thereof on the operation of such provision (or if an
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until  such notice shall have been withdrawn or such provision 
amended in accordance herewith.


 


SECTION 1.05              
The Term “Borrower” or “Borrowers”.  (a)  Subject to Section
1.05(d) and unless otherwise specifically provided herein, all references
to “Borrower” or “Borrowers” herein shall refer to and include each of the U.S.
Borrowers and Canadian Borrowers separately and all representations contained
herein shall be deemed to be separately made by each of them, and each of the
covenants, agreements and obligations set forth herein shall be deemed to be
the joint and several covenants, agreements and obligations of them.  Any
notice, request, consent, report or other information or agreement delivered to
an Administrative Agent or any other Lender by the U.S. Borrowers or the
Canadian Borrowers shall be deemed to be ratified by, consented to and also
delivered by the other of the U.S. Borrowers or Canadian Borrowers.  Each
Borrower recognizes and agrees that each covenant and agreement of “Borrower”
or “Borrowers” under this Agreement and the other Loan Documents shall create a
joint and several obligation of the U.S. Borrowers and the Canadian Borrowers,
which may be enforced against Borrowers, jointly or against each of the U.S.
Borrowers and the Canadian Borrowers separately.  Except as expressly set
forth in this Agreement and the other Loan Documents and without limiting the
terms of this Agreement and the other Loan Documents, security interests,
assets and collateral shall extend to the properties, interests, assets and
collateral of each of the U.S. Borrowers and the Canadian Borrowers. 
Similarly, the term “Obligations” shall include, without limitation, all
obligations, liabilities and indebtedness of such entities, or any one of them,
to any Lender, whether such obligations, liabilities and indebtedness shall be
joint, several, joint and several or individual.  Unless otherwise
specified in this Agreement, the parties hereto anticipate that any notice,
request, consent, report or other information or agreement to be delivered in
connection with this Agreement by U.S. Borrowers or Canadian Borrowers to the
Administrative Agents will be executed by Parent as Administrative Borrower, on
behalf of such U.S. Borrowers or Canadian Borrowers, and that any such notice,
request, consent, report or other information or agreement delivered to the
Administrative Agents and executed by Parent shall be deemed to be executed by
Parent on behalf of all such U.S. Borrowers or Canadian Borrowers.  Each
U.S. Borrower’s and each Canadian Borrower’s obligation to pay and perform the
Obligations shall be absolute, unconditional and irrevocable, and shall be paid
and performed strictly in accordance with the terms of this Agreement under any
and all circumstances whatsoever and irrespective of (i) any lack of validity
or enforceability of this Agreement, or any term or provision therein, as to
any other Borrower, or (ii) any other event or circumstance whatsoever, whether
or not similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of, or provide a right
of setoff against, any Borrower’s obligations hereunder.


 


(b)          
Subject to Section 1.05(d) and unless otherwise specifically provided
herein, all references to “U.S. Borrower” or “U.S. Borrowers” herein shall
refer


 


41












 


to and include each U.S. Borrower separately and all
representations contained herein shall be deemed to be separately made by each
of them, and each of the covenants, agreements and obligations set forth herein
shall be deemed to be the joint and several covenants, agreements and
obligations of them.  Any notice, request, consent, report or other
information or agreement delivered to an Administrative Agent or any other
Lender by any U.S. Borrower shall be deemed to be ratified by, consented to and
also delivered by each other U.S. Borrower.  Each U.S. Borrower recognizes
and agrees that each covenant and agreement of “U.S. Borrower” or “U.S. Borrowers”
under this Agreement and the other Loan Documents shall create a joint and
several obligation of the U.S. Borrowers, which may be enforced against the
U.S. Borrowers, jointly or against each U.S. Borrower separately.  Except
as expressly set forth in this Agreement and the other Loan Documents and
without limiting the terms of this Agreement and the other Loan Documents,
security interests, assets and collateral shall extend to the properties,
interests, assets and collateral of each U.S. Borrower.  Similarly, the
term “Obligations” shall include, without limitation, all obligations,
liabilities and indebtedness of such entities, or any one of them, to any
Lender, whether such obligations, liabilities and indebtedness shall be joint,
several, joint and several or individual.  Unless otherwise specified in
this Agreement, the parties hereto anticipate that any notice, request,
consent, report or other information or agreement to be delivered in connection
with this Agreement by U.S. Borrowers to the Administrative Agents will be
executed by Parent as Administrative Borrower, on behalf of U.S. Borrowers, and
that any such notice, request, consent, report or other information or
agreement delivered to the Administrative Agents and executed by the Administrative
Borrower shall be deemed to be executed by the Administrative Borrower on
behalf of all the U.S. Borrowers.  In addition, unless otherwise specified
in this Agreement, the parties hereto anticipate that any advances made
hereunder by any Lender to U.S. Borrowers shall be disbursed directly to the
Administrative Borrower.  Each U.S. Borrower’s obligation to pay and
perform the Obligations of any other U.S. Borrower shall be absolute,
unconditional and irrevocable, and shall be paid and performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of
this Agreement, or any term or provision therein, as to any other U.S.
Borrower, or (ii) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, any U.S. Borrower’s obligations hereunder.


 


(c)          
Subject to Section 1.05(d) and unless otherwise specifically provided
herein, all references to “Canadian Borrower” or “Canadian Borrowers” herein
shall refer to and include each Canadian Borrower separately and all
representations contained herein shall be deemed to be separately made by each
of them, and each of the covenants, agreements and obligations set forth herein
shall be deemed to be the joint and several covenants, agreements and
obligations of them.  Any notice, request, consent, report or other
information or agreement delivered to an Administrative Agent or any other
Lender by any Canadian Borrower shall be deemed to be ratified by, consented to
and also delivered by each other Canadian Borrower.  Each Canadian Borrower
recognizes and agrees that each covenant and agreement of “Canadian Borrower”
or “Canadian Borrowers” under this Agreement and the other Loan Documents shall
create


 


42












 


a joint and several obligation of the Canadian
Borrowers, which may be enforced against the Canadian Borrowers, jointly or
against each Canadian Borrower separately.  Except as expressly set forth
in this Agreement and the other Loan Documents and without limiting the terms
of this Agreement and the other Loan Documents, security interests, assets and
collateral shall extend to the properties, interests, assets and collateral of
each Canadian Borrower.  Similarly, the term “Obligations” shall include,
without limitation, all obligations, liabilities and indebtedness of such
entities, or any one of them, to any Lender, whether such obligations,
liabilities and indebtedness shall be joint, several, joint and several or
individual.  Unless otherwise specified in this Agreement, the parties
hereto anticipate that any notice, request, consent, report or other
information or agreement to be delivered in connection with this Agreement by
Canadian Borrowers to the Administrative Agents will be executed by Parent as
Administrative Borrower, on behalf of Canadian Borrowers, and that any such
notice, request, consent, report or other information or agreement delivered to
the Administrative Agents and executed by the Administrative Borrower shall be
deemed to be executed by the Administrative Borrower on behalf of all the
Canadian Borrowers.  In addition, unless otherwise specified in this
Agreement, the parties hereto anticipate any advances made hereunder by any
Lender to the Canadian Borrowers shall be disbursed directly to the Canadian
Borrower specified in the Borrowing Request provided pursuant to Section
2.04 hereof or Notice of Drawing pursuant to Section 2.05 hereof or,
if no Borrowing Request or Notice of Drawing was provided in connection with
such advance, to the Canadian Borrower whose operations or activities the
Canadian Administrative Agent reasonably determines give rise to such
advance.  Each Canadian Borrower’s obligation to pay and perform the
Obligations of any other Canadian Borrower shall be absolute, unconditional and
irrevocable, and shall be paid and performed strictly in accordance with the
terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of this Agreement,
or any term or provision therein, as to any other Canadian Borrower, or (ii)
any other event or circumstance whatsoever, whether or not similar to any of
the foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, any
Canadian Borrower’s obligations hereunder.


 


(d)          
Notwithstanding any other provision of this Agreement, including clause (a),
(b) or (c) of this Section 1.05, in no event shall any Canadian Borrower
be liable or otherwise responsible for, directly or indirectly, as a primary
obligor, guarantor, surety or otherwise, any principal of, interest on or fee
payable with respect to any U.S. Loan or U.S. LC Exposure.


 


SECTION 1.06              
Currencies; Exchange Rates.  If, at any time, any amount
denominated in Canadian Dollars is required pursuant to any Loan Document to be
expressed in U.S. Dollars, then such amount shall be expressed at the U.S.
Dollar Equivalent determined by the U.S. Administrative Agent based on the
Exchange Rate then in effect (as provided in Section 2.20(a)),
unless the Exchange Rate is required to be determined as of another date. If,
at any time, any amount is required to be expressed in Canadian Dollars, then
such amount shall be expressed at the Canadian Dollar Equivalent determined as
of such date by the U.S. Administrative Agent based on the Exchange Rate then
in effect (as provided in Section 2.20(a)), unless the Exchange


 


43












 


Rate is required to be
determined as of another date. Any such determinations by the U.S.
Administrative Agent shall be conclusive absent manifest error.


 


ARTICLE II


 


The Credits


 


SECTION 2.01              
The Facility.  (a)  Subject to the terms and conditions set
forth herein, each U.S. Lender agrees to make Loans to the U.S. Borrowers from
time to time during the Availability Period in an aggregate principal amount
that will not result in (i) such Lender’s U.S. Exposure exceeding such Lender’s
U.S. Commitment or (ii) the sum of the total Credit Exposures exceeding the
Aggregate Commitment.  The U.S. Issuing Bank will issue U.S. Letters of
Credit hereunder on the terms and conditions set forth below.  The U.S.
facility shall be composed of U.S. Revolving Loans, U.S. Swingline Loans, U.S.
Protective Advances and U.S. Letters of Credit as set forth below.


 


(b)          
Canadian Facility.


 


(i)           
Subject to the terms and conditions set forth herein, each Canadian Lender
agrees to make Loans to the Canadian Borrowers from time to time during the
Availability Period in an aggregate principal amount that will not result in
(i) such Lender’s Canadian Exposure exceeding such Lender’s Canadian Commitment
or (ii) the sum of the total Credit Exposures exceeding the Aggregate
Commitment.  The Canadian Issuing Bank will issue Canadian Letters of
Credit hereunder on the terms and conditions set forth below.  The
Canadian facility shall be composed of Canadian Revolving Loans, Canadian
Swingline Loans, Canadian Protective Advances, Acceptances and Canadian Letters
of Credit as set forth below.


 


(ii)          
Except as may result from Section 9.05(b)(ii)(D), Canadian Loans may
only be made, and Acceptances may only be accepted, by Lenders that are not
Non-Canadian Lenders.  Any Canadian Lender who should become a
Non-Canadian Lender shall forthwith notify the Canadian Borrowers of such event.


 


(c)          
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrowers may borrow, prepay and reborrow Loans from each Lender
during the Availability Period.


 


SECTION 2.02              
Revolving Loans.  (a)  Subject to the terms and conditions set
forth herein, each U.S. Lender agrees to make U.S. Loans to the U.S. Borrowers
at any time and from time to time during the Availability Period in an
aggregate principal amount that will not result in (i) such Lender’s U.S.
Exposure exceeding such Lender’s U.S. Commitment, (ii) the total U.S.
Exposure exceeding the total U.S. Commitments, (iii) the sum of the total
U.S. Exposure and the total Canadian Exposure exceeding the Aggregate
Commitment or (iv) the total U.S. Exposure exceeding the U.S. Borrowing
Base then in effect.


 


(b)          
Subject to the terms and conditions set forth herein, each Canadian Lender
agrees at any time and from time to time during the Availability Period to make


 


44












 


Canadian Loans (including by way of acceptance and
purchase of Acceptances in accordance with Section 2.05) to the Canadian
Borrowers in an aggregate principal amount that will not result in
(i) such Lender’s Canadian Exposure exceeding such Lender’s Canadian
Commitment, (ii) the total Canadian Exposure exceeding the total Canadian
Commitments, (iii) the sum of the total U.S. Exposure and the total
Canadian Exposure exceeding the Aggregate Commitment or (iv) the total
Canadian Exposure exceeding an amount that equals the Canadian Borrowing Base
then in effect.


 


(c)          
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.


 


SECTION 2.03              
Loans and Borrowings.  (a)  Each Loan shall be made as part of
a Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable
Class.  Any Protective Advance shall be made in accordance with the
procedures set forth in Section 2.06.


 


(b)          
Subject to Section 2.15, (i) each U.S. Borrowing shall be
denominated in U.S. Dollars and comprised entirely of ABR Loans or Eurodollar
Loans as the applicable U.S. Borrower may request in accordance herewith; and
(ii) each Canadian Borrowing shall be either (A) denominated in U.S.
Dollars and comprised entirely of ABR Loans or Eurodollar Loans as the
applicable Canadian Borrower may request or (B) denominated in Canadian Dollars
and comprised of Canadian Prime Loans or Acceptances.  Each U.S. Swingline
Loan shall be denominated in U.S. Dollars and shall be an ABR Loan and each
Canadian Swingline Loan shall be denominated in Canadian Dollars or U.S.
Dollars and shall be a Canadian Prime Loan or an ABR Loan, as applicable. 
Each Lender at its option may make any Eurodollar Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of the Borrowers
to repay such Loan in accordance with the terms of this Agreement.


 


(c)          
At the commencement of each Interest Period for any Eurodollar Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of U.S.$1,000,000 and not less than U.S.$1,000,000.  Canadian
Prime Borrowings and ABR Revolving Borrowings may be in any amount. 
Borrowings of more than one Type and Class may be outstanding at the same time;
provided that there shall not at any time be more than a total of five
(5) U.S. Eurodollar Revolving Borrowings, five (5) Canadian Eurodollar
Revolving Borrowings outstanding or five (5) Borrowings
by way of Acceptances outstanding.


 


(d)          
Notwithstanding any other provision of this Agreement, the Borrowers shall not
be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Maturity
Date.


 


SECTION 2.04              
Requests for Revolving Borrowings. To request a Revolving Borrowing
(other than Acceptances), the Administrative Borrower shall notify the
applicable Administrative Agent of such request by telephone (a) in the case of
a Eurodollar Borrowing, not


 


45












 


later than 11:00 a.m.,
New York time (or in the case of a Canadian Borrowing, Toronto time), three
Business Days before the date of the proposed Borrowing, (b) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York time (or in the case of a
Canadian Borrowing, Toronto time), on the day of the proposed Borrowing, or (c)
in the case of a Canadian Prime Borrowing, not later than 11:00 a.m., Toronto
time, on the day of the proposed Canadian Borrowing; provided that any such
notice of an ABR Borrowing or Canadian Prime Borrowing to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.08(e)
may be given not later than 10:00 a.m., New York City time (or, in the case of
a Canadian Prime Borrowing, Toronto time) on the date of the proposed
Borrowing.  Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or facsimile to the applicable
Administrative Agent of a written Borrowing Request in a form approved by the
applicable Administrative Agent and signed by the Administrative Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:


 


(i)           
whether the requested Borrowing is to be a U.S. Borrowing or a Canadian
Borrowing;


 


(ii)          
the currency (in the case of a Canadian borrowing) and aggregate amount of the
requested Borrowing;


 


(iii)         
the date of such Borrowing, which shall, in the case of a U.S. Borrowing, be a
U.S. Business Day, and in the case of a Canadian Borrowing, be a day that is
both a Canadian Business Day and a U.S. Business Day;


 


(iv)         
in the case of a Borrowing denominated in U.S. Dollars, whether such Borrowing
is to be an ABR Borrowing or a Eurodollar Borrowing;


 


(v)          
in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”;


 


(vi)         
the U.S. Availability (after giving effect to such Borrowing) (in the case of a
U.S. Borrowing) or the Canadian Availability (after giving effect to such
Borrowing) (in the case of a Canadian Borrowing); and


 


(vii)        
the U.S. Borrower or Canadian Borrower to whom the proceeds from such Borrowing
are to be disbursed.


 


If no election as to the
Type of Revolving Borrowing in U.S. Dollars or Canadian Dollars is specified,
then the requested Revolving Borrowing shall be an ABR Borrowing or a Canadian
Prime Borrowing, respectively.  If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrowers
shall be deemed to have selected an Interest Period of one month’s
duration.  Promptly following receipt of a Borrowing Request in accordance
with this Section, the applicable Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender’s Loan to be made as
part of the requested Borrowing.


 


46












 


SECTION 2.05              
Acceptances.  (a)  Acceptance Commitment. Subject to
the terms and conditions set forth herein, each Canadian Lender severally
agrees that the Canadian Borrowers may, at any time and from time to time
during the Availability Period, issue Acceptances denominated in Canadian
Dollars, in minimum denominations of Cdn.$100,000 or a whole multiple thereof
and in minimum aggregate amounts of Cdn.$5,000,000 or any greater whole
multiple of Cdn.$100,000, each in accordance with the provisions of this Section 2.05
and in an aggregate face amount that will not result in (i) such Lender’s
Canadian Exposure exceeding such Lender’s Canadian Commitment, (ii) the
total Canadian Exposure exceeding the total Canadian Commitments,
(iii) the sum of the total U.S. Exposure and the total Canadian Exposure
exceeding the Aggregate Commitment or (iv) the total Canadian Exposure
exceeding an amount that equals the Canadian Borrowing Base then in effect;
provided that at all times the outstanding aggregate face amount of all
Acceptances made by a Canadian Lender shall equal its Applicable Percentage of
the outstanding face amount of all Acceptances made by all Canadian
Lenders.  For purposes of this Agreement, the full face value of an
Acceptance, without discount, shall be used when calculations are made to
determine the outstanding amount of a Canadian Lender’s Acceptances; provided
that in computing the face amount of Acceptances outstanding, the face amount
of an Acceptance in respect of which the Acceptance Obligation has been cash
collateralized by the Canadian Borrowers and received by the Canadian Lender that
created the same in accordance with the terms of this Agreement shall not be
included.


 


(b)          
Terms of Acceptance.  Each Draft shall be accepted by a Canadian
Lender, upon the written request of the Administrative Borrower given in
accordance with paragraph (c), by the completion and acceptance by such
Canadian Lender of a Draft (i) payable in Canadian Dollars, drawn by
either Canadian Borrower on the Canadian Lender in accordance with this
Agreement, to the order of the Canadian Lender and (ii) maturing prior to
the Maturity Date with respect to such Canadian Lender on a day not less than
28 days nor more than 180 days after the date of such Draft (and in integral
maturities of one month, two months, three months or six months, or, from time
to time, such other nonstandard periods as the Canadian Administrative Agent
and the affected Canadian Lender(s) may agree), excluding days of grace, all as
specified in the relevant Notice of Drawing to be delivered under paragraph (c)
of this Section; provided that any maturity date that would otherwise
fall on a day that is not a Canadian Business Day shall be extended to the next
succeeding Canadian Business Day in accordance with the provisions of Section
2.09  mutatis  mutandis.


 


(c)          
Notice of Drawing and Discount of Acceptances.


 


(i)          
With respect to each requested acceptance of Drafts, the Administrative
Borrower shall give the Canadian Administrative Agent a Notice of Drawing,
substantially in the form of Exhibit F (a “Notice of Drawing”)
(which shall be irrevocable and may be by telephone confirmed in writing within
one Business Day) to be received prior to 12:00 noon, Toronto time, at least
one day that is both a Canadian Business Day and a U.S. Business Day prior to
the date of the requested acceptance, specifying:


 


(1)          
the date on which such Drafts are to be accepted, which shall be a day that is
both a Canadian Business Day and a U.S. Business Day;


 


47












 


(2)          
the aggregate face amount of such Drafts;


 


(3)          
the maturity date of such Acceptances;


 


(4)          
whether the Canadian Lenders must purchase or arrange for the purchase of the
Acceptances;


 


(5)          
the Canadian Borrower to whom the advances in respect of such Acceptance are to
be disbursed;


 


(6)          
the Canadian Availability (after giving effect to such Acceptances); and


 


(7)          
such additional information as the Canadian Administrative Agent or any
Canadian Lenders may reasonably from time to time request to be included in
such notices.


 


(ii)          
Upon receipt of a Notice of Drawing the Canadian Administrative Agent shall
promptly notify each Canadian Lender of the contents thereof and of such
Canadian Lender’s ratable share of the Acceptances requested thereunder. The
aggregate face amount of the Drafts to be accepted by a Canadian Lender shall
be determined by the Canadian Administrative Agent by reference to the
respective Canadian Commitments of the Canadian Lenders; provided that, if the
face amount of an Acceptance which would otherwise be accepted by a Canadian
Lender is not Cdn.$100,000, or a whole multiple thereof, the face amount shall
be increased or reduced by the Canadian Administrative Agent, in its sole
discretion, to Cdn.$100,000, or the nearest integral multiple thereof, as
appropriate.


 


(iii)         
On each date upon which Acceptances are to be accepted, the Canadian
Administrative Agent shall advise the Administrative Borrower of the applicable
Discount Rate for each of the Lenders.  Not later than 11:00 a.m., Toronto
time, on such date each Canadian Lender shall, subject to the fulfillment of
the applicable conditions precedent specified in Section 4.02 and
subject to each Non-Acceptance Canadian Lender’s making Acceptance Equivalent
Loans pursuant to paragraph (i) of this Section, (A) on the basis of the
information supplied by the Canadian Administrative Agent, as aforesaid,
complete a Draft or Drafts of the Canadian Borrowers by filling in the amount,
date and maturity date thereof in accordance with the applicable Notice of
Drawing, (B) duly accept such Draft or Drafts, (C) discount such Acceptance or
Acceptances at the applicable Discount Rate, (D) give the Canadian
Administrative Agent facsimile notice of such Canadian Lender’s acceptance of
such Draft or Drafts and confirming the amount paid to the Canadian
Administrative Agent for the account of the Canadian Borrowers and (E) (except
to the extent such Discount Proceeds are being applied to repay maturing
Acceptances in accordance with Section 2.05(e) or Canadian Prime Loans
to be converted in accordance with Section 2.10(f)) remit to the
Canadian Administrative Agent in Canadian Dollars in immediately available
funds an amount equal to the Discount Proceeds less the Acceptance Fee. 
Upon receipt by the Canadian Administrative Agent of such sums from the
Canadian Lenders, the Canadian Administrative Agent shall make the aggregate
amount thereof available to the Canadian Borrowers.


 


48












 


(iv)         
Each extension of credit hereunder through the acceptance of Drafts shall be
made simultaneously and pro rata by the Canadian Lenders in accordance with
their respective Canadian Commitments.


 


(d)          
Sale of Acceptances.  The Canadian Borrowers shall have the right
to sell any Acceptance; provided that unless otherwise specified in the Notice
of Drawing the Canadian Lenders shall purchase or arrange for the purchase of
all of the Acceptances in the market and each Canadian Lender shall (except to
the extent such Discount Proceeds are being applied to repay maturing
Acceptances in accordance with Section 2.05(e) or Canadian Prime Loans
to be converted in accordance with Section 2.10(f)) provide to the
Canadian Administrative Agent the Discount Proceeds for the account of the
Canadian Borrowers.  The Acceptance Fee in respect of such Acceptances
may, at the option of the Canadian Lender, be set off against the discount
proceeds payable by such Canadian Lender hereunder.


 


(e)          
Acceptance Obligation.  The Canadian Borrowers are obligated, and
hereby unconditionally agree, to pay to each Canadian Lender the face amount of
each Acceptance accepted by such Lender in accordance with a Notice of Drawing
pursuant to paragraph (c) on the maturity date thereof, or on such earlier date
as may be required pursuant to provisions of this Agreement. With respect to
each Acceptance which is outstanding hereunder, the Administrative Borrower
shall notify the Canadian Administrative Agent prior to 12:00 noon one Canadian
Business Day prior to the maturity date of such Acceptance (which notice shall
be irrevocable) of the Canadian Borrowers’ intention to issue Acceptances on
such maturity date to provide for the payment of such maturing Acceptance and
shall deliver a Notice of Drawing to the Canadian Administrative Agent or that
the Canadian Borrowers intend to repay the maturing Acceptances on the maturity
date.  Any repayment of an Acceptance must be made at or before 2:00 p.m.
(Toronto time) on the maturity date of such Acceptance.  If the Administrative
Borrower fails to provide such notice to the Canadian Administrative Agent or
the Canadian Borrowers fail to repay the maturing Acceptances, or if a Default
or an Event of Default has occurred and is continuing on such maturity date,
the Canadian Borrowers’ obligations in respect of the maturing Acceptances
shall be deemed to have been converted on the maturity date thereof into a
Canadian Prime Loan in an amount equal to the face amount of the maturing
Acceptances. The Canadian Borrowers waive presentment for payment and any other
defense to payment of any amounts due to a Canadian Lender in respect of any
Acceptances accepted by such Canadian Lender under this Agreement which might
exist solely by reason of those Acceptances being held, at the maturity
thereof, by that Canadian Lender in its own right and the Canadian Borrowers
agree not to claim any days of grace if that Canadian Lender, as holder, sues
the Canadian Borrowers on those Acceptances for payment of the amounts payable
by the Canadian Borrowers thereunder.


 


(f)           
Supply of Drafts and Power of Attorney.  To facilitate availment of
the Borrowings by way of Acceptances, each Canadian Borrower hereby appoints
each Canadian Lender as its attorney to sign and endorse on its behalf (for the
purpose of acceptance and purchase of  Acceptances pursuant to this
Agreement), in handwriting or by facsimile or mechanical signature as and when
deemed necessary by such Canadian


 


49












 


Lender, blank forms of  Acceptances.  In
this respect, it is each Canadian Lender’s responsibility to maintain an
adequate supply of blank forms of  Acceptances for acceptance under this
Agreement.  Each Canadian Borrower recognizes and agrees that all 
Acceptances signed and/or endorsed on its behalf by a Canadian Lender shall
bind such Canadian Borrower as fully and effectually as if signed in the
handwriting of and duly issued by the proper signing officers of such Canadian
Borrower.  Each Canadian Lender is hereby authorized (for the purpose of
acceptance and purchase of  Acceptances pursuant to this Agreement) to
issue such Acceptances endorsed in blank in such face amounts as may be
determined by such Canadian Lender; provided that the aggregate amount thereof
is equal to the aggregate amount of  Acceptances required to be accepted
and purchased by such Canadian Lender in accordance with the applicable Notice
of Drawing.  No Canadian Lender shall be liable for any damage, loss or
other claim arising by reason of any loss or improper use of any such instrument
except the gross negligence or willful misconduct of the Canadian Lender or its
officers, employees, agents or representatives.  On request by the
Administrative Borrower, a Canadian Lender shall cancel all forms of 
Acceptances which have been pre-signed or pre-endorsed by or on behalf of the
relevant Canadian Borrower and which are held by such Canadian Lender and have
not yet been issued in accordance herewith.  Each Canadian Lender further
agrees to retain such records in the manner and/or the statutory periods
provided in the various Canadian provincial or federal statutes and regulations
which apply to such Canadian Lender.  Each Canadian Lender shall maintain
a record with respect to Acceptances held by it in blank hereunder, voided by
it for any reason, accepted and purchased by it hereunder, and cancelled at
their respective maturities.  Each Canadian Lender agrees to provide such
records to a Canadian Borrower at such Canadian Borrower’s expense upon
request.  Drafts drawn by the Canadian Borrowers to be accepted as
Acceptances shall be signed by a duly authorized officer or officers of the
Canadian Borrowers or by their attorney-in-fact including any attorney-in-fact
appointed pursuant to this Section 2.05(f). The Canadian Borrowers
hereby authorize and request each Canadian Lender in accordance with each
Notice of Drawing received from the Canadian Borrowers pursuant to paragraph
(c) to take the measures with respect to a Draft or Drafts of the Canadian
Borrowers then in possession of such Lender specified in paragraph
(c)(iii) of this Section. In case any authorized signatory of any Canadian
Borrower whose signature shall appear on any Draft shall cease to have such
authority before the acceptance of a Draft with respect to such Draft, the obligations
of the Canadian Borrowers hereunder and under such Acceptance shall
nevertheless be valid for all purposes as if such authority had remained in
force until such creation. The Canadian Administrative Agent and each Canadian
Lender shall be fully protected in relying upon any instructions received from
the Canadian Borrowers (orally or otherwise) without any duty to make inquiry
as to the genuineness of such instructions.  The Canadian Administrative
Agent and each Canadian Lender shall be entitled to rely on instructions
received from any person identifying himself (orally or otherwise) as a duly
authorized officer of any Canadian Borrower and shall not be liable for any
errors, omissions, delays or interruptions in the transmission of such
instructions.


 


(g)          
Exculpation.  No Canadian Lender shall be responsible or liable for
its failure to accept a Draft if the cause of such failure is, in whole or in
part, due to the failure of any Canadian Borrower to provide the Drafts or the
power of attorney


 


50












 


described in paragraph (f) above to such Canadian
Lender on a timely basis nor shall any Canadian Lender be liable for any
damage, loss or other claim arising by reason of any loss or improper use of
any such Draft except loss or improper use arising by reason of the gross
negligence or willful misconduct of such Canadian Lender.


 


(h)          
Rights of Canadian Lender as to Acceptances.  Neither the Canadian
Administrative Agent nor any Canadian Lender shall have any responsibility as
to the application of the proceeds by any Canadian Borrower of any discount of
any Acceptances. For greater certainty, each Canadian Lender may, at any time,
purchase Acceptances issued by any Canadian Borrower and may at any time and
from time to time hold, sell, rediscount or otherwise dispose of any or all
Acceptances accepted and/or purchased by it.


 


(i)           
Acceptance Equivalent Loans.  Whenever the Administrative Borrower
delivers a Notice of Drawing to the Canadian Administrative Agent under this Agreement
requesting the Canadian Lenders to accept Drafts, a Canadian Lender which
cannot accept Drafts (a “Non-Acceptance Canadian Lender”) shall, in lieu
of accepting Drafts, make an Acceptance Equivalent Loan. On each date on which
Drafts are to be accepted, subject to the same terms and conditions applicable
to the acceptance of Drafts, any Non-Acceptance Canadian Lender that makes an
Acceptance Equivalent Loan, upon delivery by the Canadian Borrowers of an
executed Discount Note payable to the order of such Non-Acceptance Canadian
Lender, will remit to the Canadian Administrative Agent in immediately
available funds for the account of the Canadian Borrowers the Acceptance
equivalent discount proceeds in respect of the Discount Notes issued by the
Canadian Borrowers to the Non-Acceptance Canadian Lender.  Each
Non-Acceptance Canadian Lender may agree, in lieu of receiving any Discount
Notes, that such Discount Notes may be uncertificated and the applicable
Acceptance Equivalent Loan shall be evidenced by a loan account which such
Non-Acceptance Canadian Lender shall maintain in its name, subject to Section
2.12, and reference to such uncertificated Discount Notes elsewhere in this
Agreement shall be deemed to include reference to the relevant Acceptance Equivalent
Loan or loan account, as applicable.


 


(j)           
Terms Applicable to Discount Notes.  The term “Acceptance” when
used in this Agreement shall be construed to include Discount Notes and all
terms of this Agreement applicable to Acceptances shall apply equally to
Discount Notes evidencing Acceptance Equivalent Loans with such changes as may
in the context be necessary (except that no Discount Note may be sold,
rediscounted or otherwise disposed of by the Non-Acceptance Canadian Lender
making Acceptance Equivalent Loans). For greater certainty:


 


(i)           
a Discount Note shall mature and be due and payable on the same date as the
maturity date for Acceptances specified in the applicable Notice of Drawing;


 


(ii)          
an Acceptance Fee will be payable in respect of a Discount Note and shall be
calculated at the same rate and in the same manner as the Acceptance Fee in
respect of an Acceptance;


 


51












 


(iii)         
a discount applicable to a Discount Note shall be calculated in the same manner
and at the Discount Rate that would be applicable to Acceptances accepted by a
Schedule II or III Lender pursuant to the applicable Notice of Drawing;


 


(iv)         
an Acceptance Equivalent Loan made by a Non-Acceptance Canadian Lender will be
considered to be part of a Non-Acceptance Canadian Lender’s outstanding
Acceptances for all purposes of this Agreement; and


 


(v)          
each Canadian Borrower shall deliver Discount Notes to each Non-Acceptance
Canadian Lender and grants to each Non-Acceptance Canadian Lender a power of
attorney in respect of the completion and execution of Discount Notes, each in
accordance with Section 2.05(f).


 


(k)          
Prepayment of Acceptances and Discount Notes. No Acceptance or Discount
Note may be repaid or prepaid prior to the maturity date of such Acceptance or
Discount Note, except in accordance with the provisions of Article VII.


 


(l)           
Depository Bills and Notes Act. At the option of the Administrative
Borrower and any Canadian Lender, Acceptances and Discount Notes under this
Agreement to be accepted by such Lender may be issued in the form of depository
bills and depository notes, respectively, for deposit with The Canadian
Depository for Securities Limited pursuant to the Depository Bills and Notes
Act (Canada).  All depository bills and depository notes so issued shall
be governed by the Depository Bills and Notes Act (Canada) and the provisions
of this Section 2.05.


 


(m)         
Circumstances Making  Acceptances Unavailable.  If the Canadian
Administrative Agent or any group of Canadian Lenders having 50% or more of the
Canadian Commitments (the “Canadian Required Lenders”) determines in
good faith, which determination shall be final, conclusive and binding upon the
Canadian Borrowers, and notifies the Administrative Borrower that, by reason of
circumstances affecting the money market there is no market for Acceptances or
the demand for Acceptances is insufficient to allow the sale or trading of the
Acceptances created hereunder, then:


 


(i)           
the right of the Canadian Borrowers to request the acceptance and purchase of
Acceptances shall be suspended until the Canadian Administrative Agent or the
Canadian Required Lenders determines that the circumstances causing such
suspension no longer exist and the Canadian Administrative Agent so notifies
the Administrative Borrower; and


 


(ii)          
any Notice of Drawing in respect of an Acceptance which is outstanding shall be
cancelled and such notice shall (at the option of a Canadian Borrower) be
deemed to be a request for a Borrowing of or conversion to a Canadian Prime
Loan in principal amount equal to the Discount Proceeds that would have been
payable in respect of the requested Acceptance less the Acceptance Fee that
would have been payable in respect thereof.


 


The Canadian Administrative Agent shall promptly
notify the Administrative Borrower of the suspension of the Canadian Borrowers’
right to request acceptance and purchase of Acceptances and of the termination
of any such suspension.


 


52












 


SECTION 2.06              
Protective Advances.  (a)  U.S. Protective Advances.


 


(i)           
Subject to the limitations set forth below, the U.S. Administrative Agent is
authorized by the U.S. Borrowers and the U.S. Lenders, from time to time in the
U.S. Administrative Agent’s sole discretion (but shall have absolutely no
obligation to), to make Loans to the U.S. Borrowers, on behalf of all U.S.
Lenders, which the U.S. Administrative Agent, in its Permitted Discretion,
deems necessary or desirable (i) to preserve or protect the Collateral, or any
portion thereof, (ii) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (iii) to pay any other amount
chargeable to or required to be paid by the U.S. Borrowers pursuant to the
terms of this Agreement, including payments of principal, interest, LC
Disbursements, fees, premiums, reimbursable expenses (including costs, fees and
expenses as described in Section 9.04) and other sums payable under the
Loan Documents (any of such Loans are herein referred to as “U.S. Protective
Advances”); provided that no U.S. Protective Advance shall cause the
U.S. Exposure to exceed the aggregate of the U.S. Commitments; provided  further
that, the aggregate amount of U.S. Protective Advances outstanding at any time,
which were made pursuant to clauses (i) and (ii) above, shall not at any time
exceed U.S.$5,000,000.  U.S. Protective Advances may be made even if the
conditions precedent set forth in Section 4.02 have not been satisfied.
The U.S. Protective Advances shall be secured by the Liens in favor of the U.S.
Administrative Agent in and to the Collateral and shall constitute Obligations
hereunder. All U.S. Protective Advances shall be ABR Borrowings.  The U.S.
Administrative Agent’s authorization to make U.S. Protective Advances may be
revoked at any time by the Required Lenders.  Any such revocation must be
in writing and shall become effective prospectively upon the U.S.
Administrative Agent’s receipt thereof.  At any time that there is
sufficient U.S. Availability and the conditions precedent set forth in Section
4.02 have been satisfied, the U.S. Administrative Agent may request the
U.S. Lenders to make a Revolving Loan to repay a U.S. Protective Advance. 
At any other time the U.S. Administrative Agent may require the Lenders to fund
their risk participations described in Section 2.06(a)(ii).


 


(ii)          
Upon the making of a U.S. Protective Advance by the U.S. Administrative Agent
(whether before or after the occurrence of a Default), each U.S. Lender shall
be deemed, without further action by any party hereto, to have unconditionally
and irrevocably purchased from the U.S. Administrative Agent without recourse
or warranty, an undivided interest and participation in such U.S. Protective
Advance in proportion to its Applicable Percentage of the Aggregate
Commitment.  From and after the date, if any, on which any U.S. Lender is
required to fund its participation in any U.S. Protective Advance purchased
hereunder, the U.S. Administrative Agent shall promptly distribute to such U.S.
Lender, such U.S. Lender’s Applicable Percentage of all payments of principal
and interest and all proceeds of Collateral received by the U.S. Administrative
Agent in respect of such U.S. Protective Advance.


 


(b) 
Canadian Protective Advances.


 


(i)           
Subject to the limitations set forth below, the Canadian Administrative Agent
is authorized by the Canadian Borrowers and the Canadian Lenders, from time to
time in the Canadian Administrative Agent’s sole discretion (but shall have
absolutely no obligation to), to make Loans to the Canadian Borrowers, on
behalf of all Canadian Lenders, which the Canadian Administrative Agent, in its
Permitted Discretion, deems necessary or


 


53












 


desirable (i) to preserve
or protect the Collateral, or any portion thereof, (ii) to enhance the
likelihood of, or maximize the amount of, repayment of the Loans and other
Obligations, or (iii) to pay any other amount chargeable to or required to be
paid by the Canadian Borrowers pursuant to the terms of this Agreement,
including payments of principal, interest, Acceptances, LC Disbursements, fees,
premiums, reimbursable expenses (including costs, fees and expenses as
described in Section 9.04) and other sums payable under the Loan
Documents (any of such Loans are herein referred to as “Canadian Protective
Advances”); provided that no such Canadian Protective Advance shall
cause the Canadian Exposure to exceed the aggregate of the Canadian Commitments;
provided  further that, the aggregate amount of Canadian
Protective Advances outstanding at any time, which were made pursuant to
clauses (i) and (ii) above, shall not at any time exceed U.S.$2,500,000. 
Canadian Protective Advances may be made even if the conditions precedent set
forth in Section 4.02 have not been satisfied. The Canadian Protective
Advances shall be secured by the Liens in favor of the Canadian Administrative
Agent in and to the Collateral and shall constitute Obligations hereunder. All Canadian
Protective Advances shall be denominated in Canadian Dollars and shall be
Canadian Prime Borrowings.  The Canadian Administrative Agent’s
authorization to make Canadian Protective Advances may be revoked at any time
by the Required Lenders.  Any such revocation must be in writing and shall
become effective prospectively upon the Canadian Administrative Agent’s receipt
thereof.  At any time that there is sufficient Canadian Availability and
the conditions precedent set forth in Section 4.02 have been satisfied,
the Canadian Administrative Agent may request the Canadian Lenders to make a
Revolving Loan to repay a Canadian Protective Advance.  At any other time
the Canadian Administrative Agent may require the Lenders to fund their risk
participations described in Section 2.06(b)(ii).


 


(ii)          
Upon the making of a Canadian Protective Advance by the Canadian Administrative
Agent (whether before or after the occurrence of a Default), each Canadian
Lender shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the Canadian Administrative
Agent without recourse or warranty, an undivided interest and participation in
such Canadian Protective Advance in proportion to its Applicable Percentage of
the Aggregate Commitment.  From and after the date, if any, on which any
Canadian Lender is required to fund its participation in any Canadian
Protective Advance purchased hereunder, the Canadian Administrative Agent shall
promptly distribute to such Canadian Lender, such Canadian Lender’s Applicable
Percentage of all payments of principal and interest and all proceeds of
Collateral received by the Canadian Administrative Agent in respect of such
Canadian Protective Advance.


 


SECTION 2.07              
Swingline Loans.  (a)  U.S. Swingline Loans.


 


(i)           
The U.S. Administrative Agent, the U.S. Swingline Lender and the U.S. Lenders
agree that in order to facilitate the administration of this Agreement and the
other Loan Documents, promptly after the Administrative Borrower requests an
ABR Borrowing, the U.S. Swingline Lender may elect, in its sole discretion, to
have the terms of this Section 2.07(a)(i) apply to such Borrowing
Request by advancing, on behalf of the U.S. Lenders and in the amount requested,
same day funds to the U.S. Borrowers on the applicable Borrowing date to the
Funding Account (each such Loan made solely by the U.S. Swingline Lender
pursuant to this Section 2.07(a)(i) is referred to in this Agreement as
a “U.S. Swingline Loan”), with settlement among them as to the U.S.
Swingline Loans to take place on a periodic basis as set forth in


 


54












 


Section
2.07(a)(iii). 
Each U.S. Swingline Loan shall be subject to all the terms and conditions
applicable to other ABR Loans funded by the U.S. Lenders, except that all
payments thereon shall be payable to the U.S. Swingline Lender solely for its
own account.  In addition, the U.S. Borrowers hereby authorize the U.S.
Swingline Lender to, and the U.S. Swingline Lender shall, subject to the terms
and conditions set forth herein (but without any further written notice
required), not later than 2:00 p.m., New York time, on each U.S. Business Day,
make available to the U.S. Borrowers by means of a credit to the Funding
Account, the proceeds of a U.S. Swingline Loan to the extent necessary to pay
items to be drawn on any U.S. Controlled Disbursement Account that day (as
determined based on notice from the U.S. Administrative Agent).  The
aggregate amount of U.S. Swingline Loans outstanding at any time shall not
exceed U.S.$10,000,000.  The U.S. Swingline Lender shall not make any U.S.
Swingline Loan if the requested U.S. Swingline Loan exceeds U.S. Availability
(before giving effect to such U.S. Swingline Loan).  U.S. Swingline Loans may
not be made if the U.S. Swingline Lender has been notified by the U.S.
Administrative Agent or the Required Lenders that a Default exists and that
U.S. Swingline Loans may not be made.  All U.S. Swingline Loans shall be
ABR Borrowings.


 


(ii)          
Upon the making of a U.S. Swingline Loan (whether before or after the
occurrence of a Default and regardless of whether a Settlement has been
requested with respect to such U.S. Swingline Loan), each U.S. Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the U.S. Swingline Lender or the U.S. Administrative
Agent, as the case may be, without recourse or warranty, an undivided interest
and participation in such U.S. Swingline Loan in proportion to its Applicable
Percentage of the Revolving Commitment.  The U.S. Swingline Lender or the
U.S. Administrative Agent may, at any time, require the U.S. Lenders to fund
their participations.  From and after the date, if any, on which any U.S.
Lender is required to fund its participation in any U.S. Swingline Loan
purchased hereunder, the U.S. Administrative Agent shall promptly distribute to
such U.S. Lender, such U.S. Lender’s Applicable Percentage of all payments of
principal and interest and all proceeds of Collateral received by the U.S.
Administrative Agent in respect of such Loan.


 


(iii)         
The U.S. Administrative Agent, on behalf of the U.S. Swingline Lender, shall
request settlement (a “U.S. Settlement”) with the U.S. Lenders on at
least a weekly basis or on any date that the U.S. Administrative Agent elects,
by notifying the U.S. Lenders of such requested U.S. Settlement by facsimile,
telephone, or e-mail (and in each of the two later cases, promptly followed by
facsimile) no later than 12:00 p.m., New York time on the date of such
requested U.S. Settlement (the “Settlement Date”).  Each U.S.
Lender (other than the U.S. Swingline Lender, in the case of the U.S. Swingline
Loans) shall transfer the amount of such U.S. Lender’s Applicable Percentage of
the outstanding principal amount of the applicable Loan with respect to which
U.S. Settlement is requested to the U.S. Administrative Agent, to such account
of the U.S. Administrative Agent as the U.S. Administrative Agent may
designate, not later than 3:00 p.m., New York time, on such Settlement
Date.  U.S. Settlements may occur during the existence of a Default and
whether or not the applicable conditions precedent set forth in Section 4.02
have then been satisfied.  Such amounts transferred to the U.S.
Administrative Agent shall be applied against the amounts of the U.S. Swingline
Lender’s U.S. Swingline Loans and, together with U.S. Swingline Lender’s
Applicable Percentage of such U.S. Swingline Loan, shall constitute U.S. Loans
of such U.S. Lenders, respectively.  If any such amount is not transferred
to the U.S. Administrative Agent by any U.S. Lender on such Settlement Date,
the


 


55












 


U.S. Swingline Lender
shall be entitled to recover such amount on demand from such Lender together
with interest thereon as specified in Section 2.09; provided
that, so long as the U.S. Administrative Agent is able to confirm receipt of
such amount on the U.S. Business Day immediately following such Settlement
Date, this sentence shall not apply if the U.S. Administrative Agent is unable
to confirm receipt of such amount on such Settlement Date, but such U.S. Lender
has initiated the transfer of such amount to the U.S. Administrative Agent
prior to 3:00 p.m., New York time, on such Settlement Date.


 


(b) 
Canadian Swingline Loans.


 


(i)           
The Canadian Administrative Agent, the Canadian Swingline Lender and the
Canadian Lenders agree that in order to facilitate the administration of this
Agreement and the other Loan Documents, promptly after the Administrative
Borrower requests an ABR Borrowing or a Canadian Prime Borrowing, the Canadian
Swingline Lender may elect, in its sole discretion, to have the terms of this Section
2.07(b)(i) apply to such Borrowing Request by advancing, on behalf of the
Canadian Lenders and in the amount requested, same day funds to the Canadian
Borrowers on the applicable Borrowing date to the Funding Account (each such
Loan made solely by the Canadian Swingline Lender pursuant to this Section
2.07(b)(i) is referred to in this Agreement as a “Canadian Swingline
Loan”), with settlement among them as to the Canadian Swingline Loans to
take place on a periodic basis as set forth in Section 2.07(b)(iii). 
Each Canadian Swingline Loan shall be subject to all the terms and conditions
applicable to other ABR Loans or Canadian Prime Loans, as applicable, funded by
the Canadian Lenders, except that all payments thereon shall be payable to the
Canadian Swingline Lender solely for its own account.  In addition, the
Canadian Borrowers hereby authorize the Canadian Swingline Lender to, and the
Canadian Swingline Lender shall, subject to the terms and conditions set forth
herein (but without any further written notice required), not later than 2:00
p.m., Toronto time, on each Business Day, make available to the Canadian
Borrowers by means of a credit to the Funding Account, the proceeds of a
Canadian Swingline Loan to the extent necessary to pay items to be drawn on any
Canadian Controlled Disbursement Account that day (as determined based on
notice from the Canadian Administrative Agent).  The aggregate amount of
Canadian Swingline Loans outstanding at any time shall not exceed
U.S.$5,000,000.  The Canadian Swingline Lender shall not make any Canadian
Swingline Loan if the requested Canadian Swingline Loan exceeds Canadian
Availability (before giving effect to such Canadian Swingline Loan). 
Canadian Swingline Loans may not be made if the Canadian Swingline Lender has
been notified by the Canadian Administrative Agent or the Required Lenders that
a Default exists and that Canadian Swingline Loans may not be made.  All
Canadian Swingline Loans shall be ABR Borrowings or Canadian Prime Borrowings,
as applicable.


 


(ii)          
Upon the making of a Canadian Swingline Loan (whether before or after the
occurrence of a Default and regardless of whether a Settlement has been
requested with respect to such Canadian Swingline Loan), each Canadian Lender
shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the Canadian Swingline Lender or
the Canadian Administrative Agent, as the case may be, without recourse or
warranty, an undivided interest and participation in such Canadian Swingline
Loan in proportion to its Applicable Percentage of the Revolving Commitment. 
The Canadian Swingline Lender or the Canadian Administrative Agent may, at any
time, require the Canadian Lenders to fund their participations.  From and
after the date, if any, on which any Canadian Lender is


 


56












 


required to fund its participation
in any Canadian Swingline Loan purchased hereunder, the Canadian Administrative
Agent shall promptly distribute to such Canadian Lender, such Canadian Lender’s
Applicable Percentage of all payments of principal and interest and all
proceeds of Collateral received by the Canadian Administrative Agent in respect
of such Loan.


 


(iii)         
The Canadian Administrative Agent, on behalf of the Canadian Swingline Lender,
shall request settlement (a “Canadian Settlement”) with the Canadian
Lenders on at least a weekly basis or on any date that the Canadian
Administrative Agent elects, by notifying the Canadian Lenders of such
requested Canadian Settlement by facsimile, telephone, or e-mail (and in each
of the two later cases, promptly followed by facsimile) no later than 12:00
p.m., Toronto time on the date of such requested Canadian Settlement (the “Settlement
Date”).  Each Canadian Lender (other than the Canadian Swingline
Lender, in the case of the Canadian Swingline Loans) shall transfer the amount of
such Canadian Lender’s Applicable Percentage of the outstanding principal
amount of the applicable Loan with respect to which Canadian Settlement is
requested to the Canadian Administrative Agent, to such account of the Canadian
Administrative Agent as the Canadian Administrative Agent may designate, not
later than 3:00 p.m., Toronto time, on such Settlement Date.  Canadian
Settlements may occur during the existence of a Default and whether or not the
applicable conditions precedent set forth in Section 4.02 have then been
satisfied.  Such amounts transferred to the Canadian Administrative Agent
shall be applied against the amounts of the Canadian Swingline Lender’s
Canadian Swingline Loans and, together with Canadian Swingline Lender’s
Applicable Percentage of such Canadian Swingline Loan, shall constitute
Canadian Loans of such Canadian Lenders, respectively.  If any such amount
is not transferred to the Canadian Administrative Agent by any Canadian Lender
on such Settlement Date, the Canadian Swingline Lender shall be entitled to
recover such amount on demand from such Lender together with interest thereon
as specified in Section 2.09; provided that, so long as the
Canadian Administrative Agent is able to confirm receipt of such amount on the
Canadian Business Day immediately following such Settlement Date, this sentence
shall not apply if the Canadian Administrative Agent is unable to confirm
receipt of such amount on such Settlement Date, but such Canadian Lender has
initiated the transfer of such amount to the Canadian Administrative Agent
prior to 3:00 p.m., Toronto time, on such Settlement Date.


 


SECTION 2.08              
Letters of Credit.  (a)  General. Subject to the terms
and conditions set forth herein, the Administrative Borrower may request the
issuance of Letters of Credit for the account of the Borrowers, in a form
reasonably acceptable to the U.S. Administrative Agent (in the case of a U.S.
Letter of Credit) or the Canadian Administrative Agent (in the case of a
Canadian Letter of Credit)  and the applicable Issuing Bank, at any time
and from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Administrative Borrower to, or entered into by the
Administrative Borrower with, an Issuing Bank relating to any Letter of Credit,
the terms and conditions of this Agreement shall control.  Each U.S.
Letter of Credit shall be denominated in U.S. Dollars, and each Canadian Letter
of Credit shall be denominated in U.S. Dollars or Canadian Dollars.


 


(b)          
Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or


 


57












 


extension of an outstanding Letter of Credit), the
Administrative Borrower shall hand deliver or facsimile (or transmit by means
of Electronic Transmission, if arrangements for doing so have been approved by
the applicable Issuing Bank) to the applicable Issuing Bank and the applicable
Administrative Agent (prior to 10:00 am, New York time (or, with respect to a
Canadian Letter of Credit, Toronto time), at least three Business Days prior to
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a U.S. Business Day, or in the
case of a Canadian Letter of Credit, a day that is both a Canadian Business Day
and a U.S. Business Day), the date on which such Letter of Credit is to expire
(which shall comply with Section 2.08(c)), the amount of such Letter of
Credit, whether such Letter of Credit is to be denominated in U.S. Dollars or
Canadian Dollars (provided that each U.S. Letter of Credit must be denominated
in U.S. Dollars), the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit. If requested by the applicable Issuing Bank, the
Administrative Borrower also shall submit a letter of credit application on the
applicable Issuing Bank’s standard form in connection with any request for a
Letter of Credit.  Following receipt of such notice and prior to the
issuance of the requested Letter of Credit or the applicable amendment, renewal
or extension, the U.S. Administrative Agent shall calculate (if the Letter of
Credit is a Canadian Letter of Credit denominated in Canadian Dollars) its U.S.
Dollar Equivalent and, after consulting with the other Administrative Agent,
shall notify the Borrowers and the Issuing Banks of the results of the tests
described below after giving effect to (i) the issuance, amendment,
renewal or extension of such Letter of Credit, (ii) the issuance or
expiration of any other Letter of Credit that is to be issued or will expire
prior to the requested date of issuance of such Letter of Credit and
(iii) the borrowing or repayment of any Loans that (based upon notices
delivered to either Administrative Agent by any Borrower) are to be borrowed or
repaid prior to the requested date of issuance of such Letter of Credit. 
A Letter of Credit shall be issued, amended, renewed or extended only if (and
upon issuance, amendment, renewal or extension of each Letter of Credit the
Borrowers shall be deemed to represent and warrant that), after giving effect
to such issuance, amendment, renewal or extension (i) in the case of a Canadian
Letter of Credit, (1) the total Canadian LC Exposure shall not exceed
U.S.$5,000,000, (2) the total Canadian Exposure shall not exceed the total
Canadian Commitments and (3) the total Canadian Exposure shall not exceed the Canadian
Borrowing Base then in effect, (ii) in the case of a U.S. Letter of
Credit, (1) the total U.S. LC Exposure shall not exceed U.S.$30,000,000, (2)
the total U.S. Exposure shall not exceed the total U.S. Commitments and (3) the
total U.S. Exposure shall not exceed the U.S. Borrowing Base then in effect,
(iii) in the case of each Letter of Credit, the sum of the total U.S.
Exposure and the total Canadian Exposure therefor shall not exceed
U.S.$30,000,000 and (iv) such requested Letter of Credit is satisfactory to the
applicable Issuing Bank and the applicable Administrative Agent.


 


(c)          
Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after


 


58












 


such renewal or extension) and (ii) the date that is
five U.S. Business Days or, in the case of a Canadian Letter of Credit, five
Canadian Business Days prior to the Maturity Date.


 


(d)          
Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the applicable Issuing Bank or the applicable Lenders,
the applicable Issuing Bank hereby grants to each U.S.  Lender (in the
case of a U.S. Letter or Credit) or Canadian Lender (in the case of a Canadian
Letter of Credit), and each such Revolving Lender hereby acquires from the
applicable Issuing Bank, a participation in such Letter of Credit equal to such
Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each such  Lender hereby absolutely and unconditionally agrees
to pay to the applicable Administrative Agent, for the account of the
applicable Issuing Bank, such Lender’s Applicable Percentage of each LC
Disbursement made by such Issuing Bank and not reimbursed by the Borrowers on
the date due as provided in Section 2.08(e), or of any reimbursement
payment required to be refunded to the Borrowers for any reason. Each Revolving
Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this subsection in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.


 


(e)          
Reimbursement. If an Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrowers shall reimburse such LC
Disbursement by paying to the applicable Administrative Agent an amount equal
to such LC Disbursement not later than 12:00 noon, New York time (or, in the
case of a Canadian Letter of Credit, Toronto time), on the date that such LC
Disbursement is made, if the Administrative Borrower shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York time (or, in the case of
a Canadian Letter of Credit, Toronto time), on such date, or, if such notice
has not been received by the Administrative Borrower prior to such time on such
date, then not later than 12:00 noon, New York time (or, in the case of a
Canadian Letter of Credit, Toronto time), on (i) the Business Day that the
Administrative Borrower receives such notice, if such notice is received prior
to 10:00 a.m., New York time (or, in the case of a Canadian Letter of Credit,
Toronto time), on the day of receipt, or (ii) the Business Day immediately
following the day that the Administrative Borrower receives such notice, if
such notice is not received prior to such time on the day of receipt; provided
that the Administrative Borrower may, subject to the conditions to borrowing
set forth herein, request in accordance with Section 2.04 or 2.07
that such payment be financed with an ABR Revolving Loan or Swingline Loan (or,
in the case of an LC Disbursement denominated in Canadian Dollars, a Revolving
Borrowing of Canadian Prime Loans or Swingline Loans) in an equivalent amount
and, to the extent so financed, the Borrowers’ obligation to make such payment
shall be discharged and replaced by the resulting ABR Loan or, in the case of
an LC Disbursement denominated in Canadian Dollars, a borrowing of Canadian
Prime Loans, as applicable. If the Borrowers fail to make such payment when
due, the applicable


 


59












 


Administrative Agent shall notify each applicable
Revolving Lender of the applicable LC Disbursement, the payment then due from
the Borrowers in respect thereof and such Lender’s Applicable Percentage
thereof.  Promptly following receipt of such notice, each such Lender
shall pay to the applicable Administrative Agent its Applicable Percentage of
the payment then due from the Borrowers, in the same manner as provided in Section
2.09 with respect to Loans made by such Lender (and Section 2.09
shall apply, mutatis  mutandis, to the payment obligations of the
Revolving Lenders), and the applicable Administrative Agent shall promptly pay
to the applicable Issuing Bank the amounts so received by it from the Revolving
Lenders. Promptly following receipt by the applicable Administrative Agent of
any payment from the Borrowers pursuant to this subsection (e), such
Administrative Agent shall distribute such payment to the applicable Issuing
Bank or, to the extent that Revolving Lenders have made payments pursuant to
this subsection to reimburse the applicable Issuing Bank, then to such Lenders
and the applicable Issuing Bank as their interests may appear. Any payment made
by a Revolving Lender pursuant to this subsection to reimburse the applicable
Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving
Loans, Canadian Prime Loans or a Swingline Loan as contemplated above) shall
not constitute a Loan and shall not relieve the Borrowers of their obligation
to reimburse such LC Disbursement.


 


(f)           
Obligations Absolute. The Borrowers’ obligation to reimburse LC
Disbursements as provided in Section 2.08(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section 2.08(f), constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrowers’ obligations hereunder.  Neither the Administrative Agents, the
Revolving Lenders nor the Issuing Banks, nor any of their Related Parties,
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of an Issuing Bank; provided
that the foregoing shall not be construed to excuse an Issuing Bank from
liability to the Borrowers to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrowers to the extent permitted by applicable law) suffered by the Borrowers
that are caused by such Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof.  The parties hereto expressly agree
that, in the absence of gross negligence or willful misconduct on the part of
an Issuing Bank (as


 


60












 


finally determined by a court of competent
jurisdiction), such Issuing Bank shall be deemed to have exercised care in each
such determination.  In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of a Letter of Credit, an Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and refuse to make payment upon such documents if such
documents are not in strict compliance with the terms of such Letter of Credit.


 


(g)          
Disbursement Procedures. An Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit.  Such Issuing Bank shall promptly notify
the applicable Administrative Agent and the Administrative Borrower by
telephone (confirmed by facsimile) of such demand for payment and whether such
Issuing Bank has made or will make an LC Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve the
Borrowers of their obligation to reimburse the applicable Issuing Bank and the
Revolving Lenders with respect to any such LC Disbursement.


 


(h)          
Interim Interest. If an Issuing Bank, in respect of a Letter of Credit,
shall make any LC Disbursement, then, unless the Borrowers shall reimburse such
LC Disbursement in full on the date such LC Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the Borrowers
reimburse such LC Disbursement, at the rate per annum then applicable to ABR
Revolving Loans or, if such amount is denominated in Canadian Dollars, a
Canadian Prime Loan; provided that, if the Borrowers fail to reimburse
such LC Disbursement when due pursuant to Section 2.08(e), then Section
2.15(e) shall apply. Interest accrued pursuant to this subsection shall be
for the account of the applicable Issuing Bank, except that interest accrued on
and after the date of payment by any Revolving Lender pursuant to Section
2.08(e) to reimburse the applicable Issuing Bank shall be for the account
of such Lender to the extent of such payment.


 


(i)           
Replacement of an Issuing Bank. An Issuing Bank may be replaced at any
time by written agreement (in form and substance satisfactory to the
Administrative Agents and the Administrative Borrower) among the Administrative
Borrower, the Administrative Agents, the replaced Issuing Bank and the
successor Issuing Bank. The Administrative Agent shall notify the Revolving
Lenders of any such replacement of an Issuing Bank.  At the time any such
replacement shall become effective, the Borrowers shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section
2.14(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of the
replaced Issuing Bank under this Agreement with respect to Letters of Credit to
be issued thereafter, and (ii) references herein to the term “Canadian Issuing
Bank” (if the retiring Issuing Bank is a Canadian Issuing Bank) or “U.S.
Issuing Bank” (if the retiring Issuing Bank is a U.S. Issuing Bank) shall be
deemed to refer to such successor or to any previous Issuing Bank, or to such
successor and all previous Issuing Banks, as the context


 


61












 


shall require. After the replacement of an Issuing
Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.


 


(j)           
Cash Collateralization. (i) If any Event of Default shall occur and be
continuing, on the Business Day that the Administrative Borrower receives
notice from either Administrative Agent or the Required Lenders demanding the
deposit of cash collateral pursuant to this paragraph, the U.S. Borrowers shall
deposit in an account in the name of the U.S. Borrowers and under the control
of the U.S. Administrative Agent pursuant to a control agreement in form and
substance satisfactory to the U.S. Administrative Agent (the “U.S. LC
Collateral Account”) an amount in cash, and the Canadian Borrowers shall
deposit in an account in the name of the Canadian Borrowers and under the
control of the Canadian Administrative Agent pursuant to a control agreement in
form and substance satisfactory to the Canadian Administrative Agent (the “Canadian
LC Collateral Account”; the Canadian LC Collateral Account, together with
the U.S. LC Collateral Account, the “LC Collateral Account”) an amount
or amounts in cash (denominated in U.S. Dollars or Canadian Dollars or both, to
match the currency denominations of the outstanding Canadian Letters of Credit
and Acceptances), in each case for the benefit of the applicable Lenders, equal
to the total U.S. LC Exposure, the total Canadian LC Exposure and Acceptance
Exposure, respectively, as of such date plus any accrued and unpaid interest
thereon; provided that the obligation to deposit such cash collateral shall
become effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to any Borrower described in clause (h) or
(i) of Article VII.  Each such deposit shall be held by
the U.S. Administrative Agent or the Canadian Administrative Agent, as
applicable, as collateral for the payment and performance of the obligations of
the relevant Borrowers under this Agreement.  Such Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such accounts.  Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the applicable Administrative Agent and at the applicable
Borrowers’ risk and expense, such deposits shall not bear interest. 
Interest or profits, if any, on such investments shall accumulate in such
accounts.  Moneys in such accounts shall be (i) applied by the
applicable Administrative Agent to reimburse the relevant Issuing Bank for LC
Disbursements for which it has not been reimbursed and (ii), to the extent not
so applied, held for the satisfaction of the reimbursement obligations of the
relevant Borrowers for their LC Exposure at such time, (iii) held for the
satisfaction of outstanding Acceptance Exposure of the Canadian Borrowers or
(iv), if the maturity of the Loans has been accelerated, be applied to satisfy
other obligations of such Borrowers under this Agreement.  If any
Borrowers are required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount, together with any
realized interest or profits on such amount, (to the extent not applied as
aforesaid) shall be returned to such Borrowers within three Business Days after
all Events of Default have been cured or waived.


 


62






 


 










 


(ii)                                 
If, notwithstanding
the provisions of this Section 2.08, any U.S. Letter of Credit is
outstanding on the Maturity Date, then on such date the U.S. Borrowers shall
provide to the U.S. Collateral Agent, for the benefit of the U.S.
Administrative Agent and the U.S. Lenders, with respect to all U.S. LC
Exposure, as the U.S. Administrative Agent in its discretion shall specify,
either (i) a Supporting Letter of Credit (under which the U.S. Issuing Bank is
entitled to draw amounts necessary to reimburse the U.S. Issuing Bank for LC
Disbursements for which it has not been reimbursed and any fees and expenses
associated with such outstanding U.S. Letter of Credit), or (ii) cash, in
immediately available funds, in an amount equal to 105% of the U.S. LC
Shortfall Amount to be held in the U.S. LC Collateral Account.  Such
Supporting Letter of Credit or deposit of cash shall be held by the U.S.
Collateral Agent, for the benefit of the U.S. Administrative Agent and the U.S.
Lenders, as collateral for the payment and performance of the obligations of
the U.S. Borrowers under any such U.S. Letter of Credit remaining
outstanding.  In addition, if, notwithstanding the provisions of this Section
2.08, any Canadian Letter of Credit is outstanding on the Maturity Date,
then on such date the Canadian Borrowers shall provide to the Canadian
Collateral Agent, for the benefit of the Canadian Administrative Agent and the
Canadian Lenders, with respect to all Canadian LC Exposure, as the Canadian Administrative
Agent in its discretion shall specify, either (i) a Supporting Letter of Credit
(under which the Canadian Issuing Bank is entitled to draw amounts necessary to
reimburse the Canadian Issuing Bank for LC Disbursements for which it has not been
reimbursed and any fees and expenses associated with such outstanding Canadian
Letter of Credit), or (ii) cash, in immediately available funds, in an amount
equal to 105% of the Canadian LC Shortfall Amount to be held in the Canadian LC
Collateral Account.  Such Supporting Letter of Credit or deposit of cash
shall be held by the Canadian Collateral Agent, for the benefit of the Canadian
Administrative Agent and the Canadian Lenders, as collateral for the payment
and performance of the obligations of the Canadian Borrowers under any such
Canadian Letter of Credit remaining outstanding.


 


SECTION 2.09                                           
Funding of
Borrowings. 
(a)   Each U.S. Lender shall make each U.S. Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately
available funds by 2:00 p.m., New York City time, to the account of the U.S.
Administrative Agent most recently designated by it for such purpose by notice
to the U.S. Lenders; provided that Swingline Loans shall be made as provided in
Section 2.07. Each Canadian Lender shall make each Canadian Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, Toronto time, to the account of the
Canadian Administrative Agent most recently designated by it for such purpose
by notice to the Canadian Lenders. The applicable Administrative Agent will
make each such Loan available to the relevant Borrowers by promptly crediting
the amounts so received, in like funds, to an account of such Borrowers
maintained with such Administrative Agent in New York City or Toronto, as
applicable, and designated by the Administrative Borrower in the applicable
Borrowing Request; provided that any ABR Loans or Canadian Prime Loans made to
finance the reimbursement of (i) an LC Disbursement as provided in Section 2.08(e)
shall be remitted by the applicable Administrative Agent to the relevant
Issuing Bank and (ii) a Protective Advance shall be retained by the applicable
Administrative Agent.  Notwithstanding the foregoing, (x) Progress Rail
hereby requests that on the Effective Date, the U.S. Lenders make an inital
U.S. Loan to it in the amount of U.S.$103,400,000, and that the proceeds of
such U.S. Loan be made available by transferring such proceeds directly to the
following account at Wachovia Bank, N.A.: Account No, #2062640499761 (Account
Name: Progress Energy, Inc., ABA No.: 053 000 219)


 


63












 


and (y) Progress Metal
hereby requests that on the Effective Date, the U.S. Lenders make an inital
U.S. Loan to it in the amount of U.S.$6,600,000, and that the proceeds of such
U.S. Loan be made available by transferring such proceeds directly to the
following account at Wachovia Bank, N.A.: Account No, #2062640499761 (Account
Name: Progress Energy, Inc., ABA No.: 053 000 219), in each case, in accordance
with a Notice of Borrowing delivered by Progress Rail and Progress Metal,
respectively.


 


(b)                                
Unless the applicable
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to such
Administrative Agent such Lender’s share of such Borrowing, such Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.09(a) and may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount.  In
such event, if a Lender has not in fact made its share of the applicable
Borrowing available to the applicable Administrative Agent (a “Defaulting
Lender”), then the applicable Lender and the U.S. Borrowers or the Canadian
Borrowers, as applicable, severally agree to pay to such Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrowers
to but excluding the date of payment to such Administrative Agent, at
(i) in the case of any U.S. Lender, the Federal Funds Effective Rate or, in
the case of amounts payable to the Canadian Administrative Agent in U.S.
Dollars or Canadian Dollars, the rate determined by the Canadian Administrative
Agent (such determination to be conclusive and binding on such Lender) in
accordance with the Canadian Administrative Agent’s cost of funding the amount
of such payment or (ii) in the case of the Borrowers, the interest rate
applicable to ABR Loans (or, in the case of amounts payable in Canadian
Dollars, the interest rate applicable to Canadian Prime Loans).  If such
Lender pays such amount to the applicable Administrative Agent, then such
amount shall constitute such Lender’s Loan included in such Borrowing. 
The applicable Administrative Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by the Borrowers to such Administrative
Agent for the Defaulting Lender’s benefit, and, in the absence of such transfer
to the Defaulting Lender, such Administrative Agent shall transfer any such
payments to each other non-Defaulting Lender ratably in accordance with their
Applicable Percentage of the Commitments (but only to the extent that such
Defaulting Lender’s Borrowing was funded by the other Lenders) or, if so
directed by the Administrative Borrower and if no Default has occurred and is
continuing (and to the extent such Defaulting Lender’s Borrowing was not funded
by the other Lenders), retain the same to be re-advanced to the Borrowers as if
such Defaulting Lender had made Loans to the Borrowers.  Subject to the
foregoing, the applicable Administrative Agent may hold and, in its Permitted
Discretion, setoff such Defaulting Lender’s funding shortfall against that
Defaulting Lender’s Applicable Percentage of all payments received from the
Borrowers or re-lend to the Borrowers for the account of such Defaulting Lender
the amount of all such payments received and retained by such Administrative
Agent for the account of such Defaulting Lender.  Until a Defaulting
Lender cures its failure to fund its Applicable Percentage of any Borrowing (i)
solely for the purposes of voting or consenting to matters with respect to the
Loan Documents, such Defaulting Lender shall be deemed not to be a “Lender” and
such Defaulting Lender’s Commitment shall be deemed to be zero, (ii) such
Defaulting Lender shall not be entitled to any


 


64












 


portion of the commitment fee, and (iii) the
commitment fee shall accrue in favor of the Lenders which have funded their
respective Applicable Percentages of such requested Borrowing and shall be
allocated among such non-Defaulting Lenders ratably based on their Applicable
Percentage of the Commitments.  This Section 2.09(b) shall remain
effective with respect to such Defaulting Lender until (x) the Obligations
under this Agreement shall have been declared or shall have become immediately
due and payable, (y) the non-Defaulting Lenders, the applicable Administrative
Agent, and the Borrowers shall have waived such Defaulting Lender’s default in
writing, or (z) the Defaulting Lender makes its Applicable Percentage of the
applicable Borrowing and pays to the applicable Administrative Agent all
amounts owing by the Defaulting Lender in respect thereof.  The operation
of this Section 2.09(b) shall not be construed to increase or otherwise
affect the Commitment of any Lender, to relieve or excuse the performance by
such Defaulting Lender or any other Lender of its duties and obligations
hereunder, or to relieve or excuse the performance by the Borrowers of their
duties and obligations hereunder.


 


SECTION 2.10                                           
Interest Elections.  (a)   Each Revolving
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Revolving Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. 
Thereafter, the Borrowers may elect to convert such Borrowing to a different
Type or to continue such Borrowing and, in the case of a Eurodollar Revolving
Borrowing, may elect Interest Periods therefor, all as provided in this Section
2.10.  The Borrowers may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.  This Section 2.10 shall not apply to Swingline
Borrowings or Protective Advances, which may not be converted or continued.


 


(b)                                
To make an election
pursuant to this Section 2.10, the Administrative Borrower shall notify
the applicable Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.04 if the
Borrowers were requesting a Revolving Borrowing of the Class and Type resulting
from such election to be made on the effective date of such election. 
Each such telephonic Interest Election Request shall be irrevocable and shall
be confirmed promptly by hand delivery or facsimile to the applicable Administrative
Agent of a written Interest Election Request in a form approved by the
applicable Administrative Agent and signed by the Administrative Borrower.


 


(c)                                 
Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.03:


 


(i)                                    
the Borrowing to
which such Interest Election Request applies and, if different options are
being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the information to
be specified pursuant to clauses (iii) and (iv) below shall be specified for
each resulting Borrowing);


 


65












 


(ii)                                 
the effective date of
the election made pursuant to such Interest Election Request, which shall be a
Business Day;


 


(iii)                              
whether the resulting
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and


 


(iv)                             
if the resulting
Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period.”


 


If any such Interest
Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then the Borrowers shall be deemed to have selected an
Interest Period of one month’s duration.


 


(d)                                
Promptly following
receipt of an Interest Election Request, the applicable Administrative Agent
shall advise each affected Lender of the details thereof and of such Lender’s
portion of each resulting Borrowing.


 


(e)                                 
If the Administrative
Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein,
at the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing.  Notwithstanding any contrary provision hereof, if a Default
has occurred and is continuing and an Administrative Agent or the Required
Lenders so notifies the Administrative Borrower, then, so long as a Default is
continuing (i) no outstanding Revolving Borrowing may be converted to or
continued as a Eurodollar Borrowing or a Borrowing by way of Acceptances (in
the case of a Canadian Prime Loan), and (ii) unless repaid, each Eurodollar
Revolving Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.


 


(f)                                   
Canadian Prime
Borrowings may only be converted into a Borrowing by way of Acceptances in
accordance with Section 2.05.  This Section 2.10 shall
not be construed to permit any conversion of the currency in which a Borrowing
is denominated.


 


SECTION 2.11                                           
Termination or
Reduction of Commitments.  (a)  Unless previously terminated, the Commitments shall
terminate on the Maturity Date.


 


(b)                                
The Borrowers may at
any time terminate the Commitments upon (i) the payment in full of all
outstanding Loans, together with accrued and unpaid interest thereon, (ii) the
cancellation and return of all outstanding Letters of Credit (or alternatively,
with respect to each such Letter of Credit, the furnishing to each applicable
Administrative Agent of a cash deposit or Supporting Letter of Credit as
required by Section 2.08(j)(ii)), (iii) the payment in full of the
accrued and unpaid fees, including applicable Prepayment Fee (if any) and any
payments required under Section 2.18, and (iv) the payment in full of
all reimbursable expenses and other Obligations together with accrued and
unpaid interest thereon.


 


66












 


(c)                                 
The  U.S.
Borrowers may from time to time reduce the U.S. Commitments upon payment of the
applicable Prepayment Fee (if any); provided that (i) each reduction of
the U.S. Commitments shall be in an amount that is an integral multiple of
U.S.$1,000,000 and not less than U.S.$1,000,000, (ii) the U.S. Borrowers shall
not reduce the U.S. Commitments if, after giving effect to any concurrent
prepayment of the U.S. Revolving Loans in accordance with Section 2.12,
the total U.S. Exposure would exceed the U.S. Borrowing Base then in effect;
and (iii) the U.S. Borrowers shall not reduce the U.S. Commitments unless
the Canadian Borrowers concurrently ratably reduce the Canadian Commitments in
accordance with paragraph (d) below.


 


(d)                                
The Canadian
Borrowers may from time to time reduce the Canadian Commitments upon payment of
the applicable Prepayment Fee (if any); provided that (i) each reduction
of the Canadian Commitments shall be in an amount that is an integral multiple
of U.S.$1,000,000 and not less than U.S.$1,000,000, (ii) the Canadian Borrowers
shall not reduce the Canadian Commitments if, after giving effect to any
concurrent prepayment of the Canadian Revolving Loans in accordance with Section
2.12, the total Canadian Exposure would exceed the Canadian Borrowing Base
then in effect; and (iii) the Canadian Borrowers shall not reduce the
Canadian Commitments unless the U.S. Borrowers concurrently ratably reduce the
U.S. Commitments in accordance with paragraph (c) above.


 


(e)                                 
The Administrative
Borrower shall notify the Administrative Agents of any election to terminate or
reduce the Commitments under Section 2.11(a), (b), (c) or (d)
at least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agents shall advise the affected
Lenders of the contents thereof.  Each notice delivered by the
Administrative Borrower pursuant to this Section 2.11(e) shall be
irrevocable; provided that a notice of termination of the Commitments
delivered by the Administrative Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Administrative Borrower (by notice to the
Administrative Agents on or prior to the specified effective date) if such condition
is not satisfied. Any termination or reduction of the Commitments of either
Class shall be permanent.  Each reduction of the Commitments of either
Class shall be made ratably among the applicable Lenders in accordance with
their respective Commitments of such Class.


 


SECTION 2.12                                           
Repayment of
Loans; Evidence of Debt.  (a)  Each of the U.S. Borrowers hereby unconditionally
promises to pay to the U.S. Administrative Agent for the account of each U.S.
Lender the then unpaid principal amount of each U.S. Revolving Loan on the
Maturity Date.  Each of the Canadian Borrowers hereby unconditionally
promises to pay to the Canadian Administrative Agent for the account of each
Canadian Lender the then unpaid principal amount of each Canadian Revolving
Loan (including the full face amount of all outstanding Acceptances) on the
Maturity Date.  Each of the U.S. Borrowers hereby unconditionally promises
to pay to the U.S. Administrative Agent the then unpaid amount of each U.S.
Protective Advance on the earlier of the Maturity Date and demand by the U.S.
Administrative Agent.  Each of the Canadian Borrowers hereby
unconditionally promises to pay


 


67












 


to the Canadian
Administrative Agent the then unpaid amount of each Canadian Protective Advance
on the earlier of the Maturity Date and demand by the Canadian Administrative
Agent.


 


(b)                                
At all times that
full cash dominion is in effect pursuant to Section 4.4.4 of the U.S. Security Agreement,
each U.S. Business Day, at or before 12:00 noon, New York time, the U.S.
Administrative Agent shall apply all immediately available funds credited to
the U.S. Collection Account first to prepay any U.S. Protective Advances
that may be outstanding, pro rata, second to prepay any U.S. Swingline
Loans that may be outstanding, pro rata, third to prepay the Revolving
Loans made by U.S. Lenders, pro rata, fourth to cash collateralize
outstanding U.S. LC Exposure, pro rata and fifth to prepay any
outstanding Canadian Obligations in the order set forth in Section 2.12(c).


 


(c)                                 
At all times that
full cash dominion is in effect pursuant to Section 4.6(2) of the Canadian
Security Agreement, each Canadian Business Day, at or before 12:00 noon,
Toronto time, the Canadian Administrative Agent shall apply all immediately
available funds credited to the Canadian Collection Account first to
prepay any Canadian Protective Advances that may be outstanding, pro rata, second
to prepay any Canadian Swingline Loans that may be outstanding, pro rata, third
to prepay the Revolving Loans made by Canadian Lenders, pro rata and fourth
to cash collateralize outstanding Canadian LC Exposure and Acceptances, pro
rata.


 


(d)                                
Each Lender shall
maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrowers to such Lender resulting from each
Loan made by such Lender, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.


 


(e)                                 
Each Administrative
Agent shall maintain accounts in which it shall record (i) the amount of each
Loan made hereunder, the Class and Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrowers to each Lender hereunder, and (iii)
the amount of any sum received by such Administrative Agent hereunder for the
account of the Lenders and each Lender’s share thereof.


 


(f)                                   
The entries made in
the accounts maintained pursuant to Section 2.12(d) or (e)
shall be prima  facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or
any Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrowers to repay the Loans in
accordance with the terms of this Agreement.


 


(g)                                
Any Lender may
request that Loans made by it be evidenced by a promissory note.  In such
event, each of the applicable Borrowers shall prepare, execute and deliver to
such Lender a promissory note payable to such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by
the applicable Administrative Agent. Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section


 


68












 


9.05) be represented by one or more
promissory notes in such form payable to the payee named therein (or to such
payee and its registered assigns) except to the extent that any such Lender
subsequently returns any such promissory note for cancellation and requests
that such Loans once again be evidenced as described in Section 2.12(d)
and (e).


 


SECTION 2.13                                           
Prepayment of
Loans. 
(a)  The Borrowers shall have the right at any time and from time to time
to prepay any Borrowing in whole or in part, subject to prior notice in
accordance with Section 2.13(d) and the payment of the amounts required
under Section 2.18.


 


(b)                                
The U.S. Borrowers
shall immediately repay, or provide cash collateral for, the U.S. Revolving
Loans made by U.S. Lenders, U.S. LC Exposure and/or U.S. Swingline Loans if at
any time the total U.S. Exposure of all U.S. Lenders exceeds the lesser of (A)
the U.S. Commitments and (B) the U.S. Borrowing Base then in effect, to the
extent required to eliminate such excess.  The Canadian Borrowers shall
immediately repay, or provide cash collateral for, the Canadian Loans
(including the Acceptance Exposure), Canadian LC Exposure and/or Canadian Swingline
Loans if at any time the total Canadian Exposure of all Canadian Lenders
exceeds the lesser of (A) the Canadian Commitments and (B) the Canadian
Borrowing Base then in effect, to the extent required to eliminate such excess.


 


(i)                                    
Immediately upon
receipt by any U.S. Loan Party or any Canadian Loan Party of the Net Cash
Proceeds of any asset disposition (other than sales of inventory or obsolete or
worn out property in the ordinary course of business), the U.S. Borrowers or
Canadian Borrowers, as applicable, shall prepay the U.S. Obligations or
Canadian Obligations, respectively, in an amount equal to 100% of such Net Cash
Proceeds as set forth in Section 2.13(c).


 


(ii)                                 
If any U.S. Borrower
issues Equity Interests (other than Equity Interests issued to another
Borrower) or any U.S. Loan Party issues Indebtedness (other than Indebtedness
permitted by Sections 6.01(a) through (j) or 6.01(l)) or if any
U.S. Loan Party receives any dividend or distribution from a Person other than
a Loan Party, the U.S. Borrowers shall prepay the U.S. Obligations in an amount
equal to 100% of the Net Cash Proceeds of such issuance or the amount of such
dividend or distribution no later than the Business Day following the date of
receipt of such Net Cash Proceeds or such dividend or distribution as set forth
in Section 2.13(c).  If any Canadian Borrower issues Equity
Interests (other than Equity Interests issued to another Borrower) or any
Canadian Loan Party issues Indebtedness (other than Indebtedness permitted by Sections
6.01(a) through (j)) or 6.01(l)) or if any Canadian Loan Party
receives any dividend or distribution from a Person other than a Loan Party,
the Canadian Borrowers shall prepay the Canadian Obligations in an amount equal
to 100% of the Net Cash Proceeds of such issuance or the amount of such
dividend or distribution no later than the Business Day following the date of
receipt of such Net Cash Proceeds or such dividend or distribution as set forth
in Section 2.13(c).


 


(iii)                              
Any insurance or
condemnation proceeds to be applied to the U.S. Obligations or Canadian
Obligations in accordance with Section 5.09 shall be applied as set
forth in Section 2.13(c).  If the precise amount of insurance or
condemnation proceeds allocable to Inventory as compared to Equipment, fixtures
and real or immovable property is not otherwise


 


69












 


determined, the
allocation and application of those proceeds shall be determined by the
applicable Administrative Agent, in its Permitted Discretion.


 


(iv)                             
Immediately upon
receipt by any U.S. Loan Party of any Extraordinary Receipts, the U.S.
Borrowers shall prepay the U.S. Obligations in an amount equal to 100% of the
Net Cash Proceeds received by such Person in connection with such Extraordinary
Receipts as set forth in Section 2.13(c).  Immediately upon receipt
by any Canadian Loan Party of any Extraordinary Receipts, the Canadian
Borrowers shall prepay the Canadian Obligations in an amount equal to 100% of
the Net Cash Proceeds received by such Person in connection with such
Extraordinary Receipts as set forth in Section 2.13(c).


 


(v)                                
Without in any way
limiting the foregoing, (a) immediately upon receipt by any U.S. Loan Party of
proceeds of any sale of any Collateral, the U.S. Borrowers shall cause such
U.S. Loan Party to deliver such proceeds to the U.S. Administrative Agent, or
deposit such proceeds in a deposit account subject to a control agreement
acceptable to the U.S. Administrative Agent and (b) immediately upon receipt by
any Canadian Loan Party of proceeds of any sale of any Collateral, the Canadian
Borrowers shall cause such Canadian Loan Party to deliver such proceeds to the
Canadian Administrative Agent, or deposit such proceeds in a deposit account
subject to a control agreement acceptable to the Canadian Administrative
Agent.  All of such proceeds not required to be applied as provided in Section
2.13(c) shall be freely available to the Borrowers, except as provided in Section
2.12(b).  Nothing in this Section 2.13(b) shall be construed to
constitute any Administrative Agent’s or any Lender’s consent to any
transaction that is not permitted by other provisions of this Agreement or the
other Loan Documents.


 


(c)                                 
All such amounts
required to be prepaid by the U.S. Borrowers pursuant to Sections
2.13(b)(ii), (iii), (iv) and (v) shall be applied, first
to prepay any U.S. Protective Advances that may be outstanding, second
to prepay the U.S. Loans (including U.S. Swingline Loans) without a
corresponding reduction in the U.S. Commitment and to cash collateralize
outstanding U.S. LC Exposure and third to prepay any outstanding
Canadian Obligations.  All such amounts required to be prepaid by the
Canadian Borrowers pursuant to Sections 2.13(b)(ii), (iii), (iv)
and (v) shall be applied, first to prepay any Canadian Protective
Advances that may be outstanding, and second to prepay the Canadian
Loans (including Canadian Swingline Loans) and cash collateralize outstanding
Acceptance Exposure without a corresponding reduction in the Canadian
Commitment and to cash collateralize outstanding Canadian LC Exposure.


 


(d)                                
The Administrative
Borrower shall notify the applicable Administrative  Agent (and, in the
case of prepayment of a Swingline Loan, the applicable Swingline Lender) by
telephone (confirmed by facsimile) of any prepayment hereunder (i) in the case
of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York
time (or in the case of a prepayment of a Canadian Borrower, Toronto time),
three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York time (or in
the case of a prepayment of a Canadian Borrower, Toronto time), one Business
Day before the date of prepayment, (iii) in the case of prepayment of a
Swingline Loan, not later than 12:00 noon, New York time (or in the case of a
prepayment of a Canadian Borrower, Toronto


 


70












 


time), on the date of prepayment and (iv) in the case
of prepayment of a Canadian Prime Borrowing, not later than 11:00 a.m., Toronto
time, on the date of prepayment.  Each such notice shall be irrevocable
and shall specify the prepayment date and the principal amount of each
Borrowing or portion thereof to be prepaid; provided that, if a notice
of prepayment is given in connection with a conditional notice of termination
of the Commitments as contemplated by Section 2.11, then such notice of
prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.11.  Promptly following receipt of any
such notice relating to a Revolving Borrowing, the applicable Administrative
Agent shall advise the applicable Lenders of the contents thereof.  Each
partial prepayment of any Revolving Borrowing shall be in an amount that would
be permitted in the case of an advance of a Revolving Borrowing of the same
Type as provided in Section 2.03.  Each prepayment of a Revolving
Borrowing shall be applied ratably to the Revolving Loans included in the
prepaid Borrowing.  Prepayments shall be accompanied by accrued interest
to the extent required by Section 2.15.


 


(e)                                 
Acceptances may not
be prepaid.  Each Canadian Borrower may, however, at its option,
exercisable upon not less than one Canadian Business Day’s notice to the
Canadian Administrative Agent, elect to deposit with the Canadian
Administrative Agent Canadian Dollars in immediately available funds to be held
by the Canadian Administrative Agent, pursuant to collateral arrangements
satisfactory to it, for application to the payment of any Borrowing by way of
Acceptances designated by such Canadian Borrower in such notice.  If such
a deposit is made, then such Acceptances shall be deemed no longer outstanding
for purposes of this Agreement; provided that the amount of such deposit
shall be not less than the full face amount of such Borrowing by way of
Acceptances.


 


SECTION 2.14                                           
Fees.  (a)  The U.S. Borrowers
agree to pay to the U.S. Administrative Agent for the account of each U.S.
Lender a commitment fee, which shall accrue at a rate of 0.375% per annum on the
average daily amount of the Available U.S. Commitment of such Lender during the
period from and including the Effective Date to but excluding the date on which
such Lenders’ Revolving Commitments terminate.  The Canadian Borrowers
agree to pay to the Canadian Administrative Agent for the benefit of each
Canadian Lender a commitment fee, which shall accrue at a rate of 0.375% per
annum on the average daily amount of the Available Canadian Commitment of such
Lender during the period from and including the Effective Date to but excluding
the date on which each such Lenders’ Revolving Commitments terminate. 
Accrued commitment fees shall be payable in arrears on the last day of each
calendar quarter and on the date on which the Revolving Commitments terminate,
commencing on the first such date to occur after the date hereof.  All
commitment fees in respect of U.S. Commitments shall be payable in U.S. Dollars
and shall be computed on the basis of the actual number of days elapsed
(including the first day but excluding the last day) in a year of 360 days. All
commitment fees in respect of Canadian Commitments shall be payable in U.S.
Dollars and shall be computed on the basis of the actual number of days elapsed
(including the first day but excluding the last day) in a year of 365 days or
366 days, as the case may be.


 


(b)                                
The U.S. Borrowers
agree to pay to the U.S. Administrative Agent for the account of each U.S.
Lender, and the Canadian Borrowers agree to pay to the Canadian Administrative
Agent for the account of each Canadian Lender, a participation


 


71












 


fee with respect to its participations in Letters of
Credit which shall be payable in the currency in which such Letter of Credit is
denominated and which shall accrue at the same Applicable Rate used to
determine the interest rate applicable to Eurodollar Loans on the average daily
amount of such Lender’s LC Exposure during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Revolving Commitment terminates and the date on which such Revolving Lender
ceases to have any LC Exposure.  Further, the U.S. Borrowers agree to pay
to the U.S. Administrative Agent for the account of each U.S. Issuing Bank, and
the Canadian Borrowers agree to pay to the Canadian Administrative Agent for
the account of each Canadian Issuing Bank, fronting fees, which shall accrue at
the rate of 0.25% per annum on the average daily amount of the total U.S. LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) and Canadian LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of termination
of the Revolving Commitments and the date on which there ceases to be any U.S.
LC Exposure or Canadian LC Exposure, as well as each Issuing Bank’s standard
fees with respect to the issuance, amendment, renewal or extension of any
Letter of Credit or processing of drawings thereunder.  Such fronting fees
shall be payable in U.S. Dollars.  Participation fees and fronting fees
accrued through and including the last day of each calendar quarter shall be
payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all
such fees shall be payable on the date on which the Commitments terminate and
any such fees accruing after the date on which the Commitments terminate shall
be payable on demand.  Any other fees payable to an Issuing Bank pursuant
to this subsection shall be payable within 10 days after demand.  All
participation fees and fronting fees shall be computed on the basis of a year
of 360 days (or, in the case of participation fees and fronting fees payable to
Canadian Lenders, 365 days or 366 days, as the case may be) and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).


 


(c)                                 
The U.S. Borrowers
agree to pay to the U.S. Administrative Agent, for its own account, fees
payable in the amounts and at the times separately agreed upon between the U.S.
Borrowers and the U.S. Administrative Agent. The Canadian Borrowers agree to
pay to the Canadian Administrative Agent, for its own account, fees payable in
the amounts and at the times separately agreed upon between the Canadian
Borrowers and the Canadian Administrative Agent.


 


(d)                                
The Canadian
Borrowers agree to pay to each Canadian Lender a fee (the “Acceptance Fee”)
in advance, at a rate per annum equal to the Applicable Rate, on the date of
acceptance of each Acceptance.  All Acceptance Fees shall be calculated on
the face amount of the Acceptance issued and computed on the basis of the
actual number of days in the term thereof and a year of 365 or 366 days, as the
case may be, and shall be payable in Canadian Dollars.  The Acceptance Fee
shall be in addition to any other fees payable to each Canadian Lender in
connection with the issuance or discounting of such Acceptance.


 


72












 


(e)                                 
All fees payable
hereunder shall be paid on the dates due, in immediately available funds, to
the applicable Administrative Agent (or to the applicable Issuing Bank, in the
case of fees payable to it) for distribution, in the case of commitment fees
and participation fees, to the Lenders entitled thereto.  Fees paid shall
not be refundable under any circumstances.


 


SECTION 2.15                                           
Interest.  (a)  The Loans comprising
each ABR Borrowing (including each U.S. Swingline Loan and each Canadian
Swingline Loan that is an ABR Borrowing) shall bear interest at the Alternate
Base Rate plus the Applicable Rate.


 


(b)                                
The Loans comprising
each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Rate.


 


(c)                                 
The Loans comprising
each Canadian Prime Borrowing (including each Canadian Swingline Loan that is a
Canadian Prime Borrowing) shall bear interest at the Canadian Prime Rate plus
the Applicable Rate.


 


(d)                                
Each U.S. Protective
Advance shall bear interest at the Alternate Base Rate plus the Applicable Rate
for Revolving Loans plus 2% and each Canadian Protective Advance shall bear
interest at the Canadian Prime Rate plus the Applicable Rate for Revolving
Loans plus 2%.


 


(e)                                 
Notwithstanding the
foregoing, during the occurrence and continuance of an Event of Default, (i)
the U.S. Administrative Agent or the Required Lenders may, at their option, by
notice to the Administrative Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 9.03
requiring the consent of “each Lender affected thereby” for reductions in
interest rates), declare that (x) all U.S. Loans shall bear interest at 2% plus
the rate otherwise applicable to such Loans as provided in the preceding
subsections of this Section 2.15, or (y) in the case of any other amount
outstanding hereunder, such amount shall accrue at 2% plus the rate applicable
to such fee or other obligation as provided hereunder and (ii) the Canadian
Administrative Agent or the Required Lenders may, at their option, by notice to
the Administrative Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 9.03 requiring
the consent of “each Lender affected thereby” for reductions in interest
rates), declare that (x) all Canadian Loans shall bear interest at 2% plus the
rate otherwise applicable to such Loans as provided in the preceding
subsections of this Section 2.15, or (y) in the case of any other amount
outstanding hereunder, such amount shall accrue at 2% plus the rate applicable
to such fee or other obligation as provided hereunder.


 


(f)                                   
Accrued interest on
each Loan shall be payable in arrears on each Interest Payment Date for such
Loan and upon termination of the Commitments; provided that (i) interest
accrued pursuant to Section 2.15(e) shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment
of an ABR Revolving Loan prior to the end of the Availability Period), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or


 


73












 


prepayment, and (iii) in the event of any conversion
of any Eurodollar Revolving Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.


 


(g)                                
All interest hereunder
shall be computed on the basis of a year of 360 days, except that interest
computed by reference to the Canadian Prime Rate shall be computed on the basis
of a year of 365 or 366 days, as the case may be, and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate
or Canadian Prime Rate shall be determined by an Administrative Agent, and such
determination shall be conclusive absent manifest error.


 


(h)                                
With respect to
Canadian Loans and fees relating thereto, unless otherwise stated herein,
wherever reference is made to a rate of interest “per annum” or a similar
expression, such interest shall be calculated on the basis of a calendar year
of 365 days or 366 days, as the case may be, and using the nominal rate method
of calculation, and shall not be calculated using the effective rate method of
calculation or on any other basis that gives effect to the principle of deemed
reinvestment of interest.


 


(i)                                    
For the purposes of
the Interest Act (Canada) and disclosure thereunder, whenever interest to be
paid with respect to Canadian Loans or fees relating thereto is to be calculated
on the basis of a year of 360 days or any other period of time that is less
than a calendar year, the yearly rate of interest to which the rate determined
pursuant to such calculation is equivalent is the rate so determined multiplied
by the actual number of days in the calendar year in which the same is to be
ascertained and divided by either 360 or such other period of time, as the case
may be.


 


(j)                                    
If any provision of
this Agreement or of any of the other Loan Documents would obligate any
Canadian Borrower or any other Canadian Loan Party to make any payment of
interest or other amount payable to any Canadian Lender in an amount or
calculated at a rate which would be prohibited by law or would result in a receipt
by such Canadian Lender of interest at a criminal rate (as such terms are
construed under the Criminal Code (Canada)) then, notwithstanding such
provisions, such amount or rate shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by law or so result in a receipt by such
Canadian Lender of interest at a criminal rate, such adjustment to be effected,
to the extent necessary, as follows: (1) firstly, by reducing the amount or
rate of interest required to be paid to such Lender under this Section 2.15,
and (2) thereafter, by reducing any fees, commissions, premiums and other
amounts required to be paid to such Canadian Lender which would constitute
“interest” for purposes of Section 347 of the Criminal Code (Canada). 
Notwithstanding the foregoing, and after giving effect to all adjustments
contemplated thereby, if a Canadian Lender shall have received an amount in
excess of the maximum permitted by that section of the Criminal Code (Canada),
a Canadian Borrower shall be entitled, by notice in writing to such Lender from
the Administrative Borrower, to obtain reimbursement from such Canadian Lender
in an amount equal to such excess and, pending such reimbursement, such amount
shall be deemed to be an amount payable by such Canadian Lender to such


 


74












 


Canadian Borrower.  Any amount or rate of
interest referred to in this Section 2.15 shall be determined in
accordance with generally accepted actuarial practices and principles as an
effective annual rate of interest over the term that the applicable Loan or
Acceptance remains outstanding on the assumption that any charges, fees or
expenses that fall within the meaning of “interest” (as defined in the Criminal
Code (Canada)) shall, if they relate to a specific period of time, be pro-rated
over that period of time and otherwise be pro-rated over the period from the
Effective Date to the Maturity Date and, in the event of a dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries appointed by
Canadian Administrative Agent shall be conclusive for the purposes of such
determination.


 


SECTION 2.16                                           
Alternate Rate of
Interest. 
If prior to the commencement of any Interest Period for a Eurodollar Borrowing:


 


(a)                                 
the applicable
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest
Period; or


 


(b)                                
such Administrative
Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the
LIBO Rate, as applicable, for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period;


 


then such Administrative
Agent shall give notice thereof to the Administrative Borrower and the Lenders
by telephone or facsimile as promptly as practicable thereafter and, until such
Administrative Agent notifies the Administrative Borrower and the Lenders that
the circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing of the
applicable Class shall be ineffective, and (ii) if any Borrowing Request
requests a Eurodollar Revolving Borrowing of the applicable Class, such
Borrowing shall be made as an ABR Borrowing.


 


SECTION 2.17                                           
Increased Costs.  (a)  If any Change in Law
shall:


 


(i)                                    
impose, modify or
deem applicable any reserve, special deposit, deposit insurance or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or any Issuing Bank; or


 


(ii)                                 
impose on any Lender
or any Issuing Bank or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender or any Letter
of Credit or participation therein;


 


and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any
such Loan) or to increase the cost to such Lender or Issuing Bank of
participating in, issuing or maintaining any


 


75












 


Letter of Credit or to
reduce the amount of any sum received or receivable by such Lender or any
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
U.S. Borrowers (if such Lender or Issuing Bank is a U.S. Lender or U.S. Issuing
Bank) or the Canadian Borrowers (if such Lender or Issuing Bank is a Canadian
Lender or Canadian Issuing Bank) will pay to such Lender or Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or Issuing Bank, as the case may be, for such additional costs incurred
or reduction suffered.


 


(b)                                
If any Lender or any
Issuing Bank determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender’s or
Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s
holding company, if any, as a consequence of this Agreement or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by such Issuing Bank, to a level below that which such Lender
or Issuing Bank or such Lender’s or Issuing Bank’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s
holding company with respect to capital adequacy), then from time to time the
U.S. Borrowers (if such Lenders or Issuing Bank is a U.S. Lender or U.S.
Issuing Bank) or Canadian Borrowers (if such Lender or Issuing Bank is a
Canadian Lender or Canadian Issuing Bank) will pay to such Lender or Issuing
Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company
for any such reduction suffered.


 


(c)                                 
A certificate of a
Lender or an Issuing Bank setting forth the amount or amounts necessary to
compensate such Lender or Issuing Bank or its holding company, as the case may
be, as specified in Section 2.17(a) or (b) shall be delivered to
the Administrative Borrower and shall be conclusive absent manifest error. The
U.S. Borrowers or the Canadian Borrowers (as applicable) shall pay such Lender
or Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.


 


(d)                                
Failure or delay on
the part of any Lender or any Issuing Bank to demand compensation pursuant to
this Section 2.17 shall not constitute a waiver of such Lender’s or
Issuing Bank’s right to demand such compensation; provided that neither
the U.S. Borrowers nor the Canadian Borrowers shall be required to compensate a
Lender or Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender or
Issuing Bank, as the case may be, notifies the Administrative Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s or Issuing Bank’s intention to claim compensation therefor; provided
further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 180-day period referred to above shall
be extended to include the period of retroactive effect thereof.


 


SECTION 2.18                                           
Break Funding
Payments. 
In the event of (a) the payment of any principal of any Eurodollar Loan other
than on the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any Eurodollar Loan


 


76












 


other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.13(d) and is revoked in accordance therewith),
or (d) the assignment of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the
Administrative Borrower pursuant to Section 2.21, then, in any such
event, the applicable Borrowers shall compensate each Lender for the loss, cost
and expense attributable to such event.  In the case of a Eurodollar Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of
a comparable amount and period from other banks in the eurodollar market. 
A certificate of any Lender setting forth any amount or amounts that such
Lender is entitled to receive pursuant to this Section 2.18 shall be
delivered to the Administrative Borrower and shall be conclusive absent
manifest error.  The applicable Borrowers shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.


 


SECTION 2.19                                           
Taxes.  (a)  Any and all payments by
or on account of any obligation of any Borrowers or any other Loan Party under
this Agreement or any other Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes; provided that if any
Borrowers or an Administrative Agent shall be required to deduct any
Indemnified Taxes from such payments, then (i) such Borrowers shall increase the
sum payable by an amount equal to the sum of (x) the amount deducted in respect
of such Indemnified Taxes and (y) all Taxes applicable to additional sums
payable under this Section 2.19(a), (ii) such Borrowers and/or the
applicable Administrative Agent shall make such deductions, and (iii) such
Borrowers and/or the applicable Administrative Agent shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.


 


(b)                                
In addition, each of
the Borrowers shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.


 


(c)                                 
Each of the Borrowers
shall indemnify each Administrative Agent, each Lender and each Issuing Bank,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes paid by such Administrative Agent, such Lender or such
Issuing Bank, as the case may be, on or with respect to any payment by or on
account of any obligation of such Borrowers or any other Loan Party under this
Agreement or any other Loan Document (including Indemnified Taxes imposed or
asserted on or attributable to amounts payable under this Section 2.19)
and any reasonable expenses arising therefrom or with respect thereto, whether
or not such Indemnified Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority.  Such indemnification shall be made
on an after-Tax basis, such that the payment of the indemnification shall be
increased by an amount equal to the sum


 


77












 


of (x) the amount deducted in respect of such
Indemnified Taxes, (y) all Taxes applicable to additional sums payable under
this Section 2.19(c) and (z) all reasonable expenses of such
Administrative Agent, Issuing Bank or Lender.


 


(d)                                
As soon as
practicable after any payment of Indemnified Taxes by any Borrowers to a
Governmental Authority, the Administrative Borrower shall deliver to the
applicable Administrative Agent (i) if reasonably available, the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, (ii) a copy of the return reporting such payment or (iii) other
evidence of such payment reasonably satisfactory to such Administrative Agent.


 


(e)                                 
Any Lender that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the relevant Borrowers are located, or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Administrative Borrower (with a copy to the
applicable Administrative Agent), on or prior to the date on which such Lender
becomes a party to this Agreement (and on or before the date that any such
documentation described below expires or becomes obsolete and after the
occurrence of any event requiring a change to such documentation, but only for
so long as such Lender is legally entitled to do so), such properly completed
and executed documentation prescribed by applicable law or reasonably requested
by such Borrowers as will permit such payments to be made without withholding
or at a reduced rate of withholding.


 


(f)                                   
If an Administrative
Agent or a Lender determines, in its sole discretion exercised in good faith,
that it has received a refund, whether in the form of a payment, credit or
offset (but only to the extent such credit or offset is actually utilized), of
any Indemnified Taxes as to which it has been indemnified by any Borrowers or
with respect to which any Borrowers have paid additional amounts pursuant to Section
2.19(a), it shall pay over such refund to such Borrowers (but only to the
extent of indemnity payments made, or additional amounts paid, by such
Borrowers under this Section 2.19 with respect to the Indemnified Taxes
giving rise to such refund), net of all out-of-pocket expenses and Taxes of
such Administrative Agent or such Lender and without interest (other than any
interest paid, credited or allowed as an offset, by the relevant Governmental
Authority with respect to such refund, which interest shall be paid to such
Borrowers); provided, that such Borrowers, upon the request of such
Administrative Agent or such Lender, agree to repay the amount paid over to
such Borrowers (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to such Administrative Agent or such Lender in
the event such Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority.  Nothing in this Section 2.19
shall be construed to require any Administrative Agent, any Lender or any
Issuing Bank to make available its tax returns (or any other information which
it deems confidential) to the Borrowers or any other Person.


 


(g)                                
The obligations of
the Canadian Borrowers under this Section 2.19 shall be limited to
payments arising in connection with the Canadian Obligations.


 


78












 


SECTION 2.20                                           
Payments
Generally; Allocation of Proceeds; Sharing of Set-offs.  (a)  The Borrowers shall
make each payment required to be made by them hereunder (whether of principal,
interest, fees or reimbursement of LC Disbursements, or of amounts payable
under Section 2.17, 2.18 or 2.19, or otherwise) prior to
12:00 noon, New York time, in case of payments to be made to the U.S.
Administrative Agent, the U.S. Issuing Bank or any U.S. Lender, or 12:00 noon,
Toronto time, in case of payments to be made to the Canadian Administrative
Agent, the Canadian Issuing Bank or any Canadian Lender, on the date when due,
in immediately available funds, without set off or counterclaim.  Any
amounts received after such time on any date may, in the discretion of the
Administrative Agents, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon.  All such
payments shall be made to the U.S. Administrative Agent (in the case of
payments for the account of the U.S. Administrative Agent, the U.S. Issuing
Bank or any U.S. Lender) at its offices at General Electric Capital
Corporation, 125 Summer Street, Suite 1230, Boston, MA 02115, Attention: Alan
Garson, or to the Canadian Administrative Agent (in the case of payments for
the account of the Canadian Administrative Agent, the Canadian Issuing Bank or
any Canadian Lender) at c/o General Electric Capital Corporation, 125 Summer
Street, Suite 1230, Boston, MA 02115, Attention: Alan Garson except payments to
be made directly to any Issuing Bank or Swingline Lender as expressly provided
herein and except that payments pursuant to Sections 2.17, 2.18, 2.19
and 9.04 shall be made directly to the Persons entitled thereto and
payments pursuant to the other Loan Documents shall be made to the Persons
specified therein.  Each Administrative Agent and Collateral Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof.  If any
payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for
the period of such extension.  All payments hereunder shall be made in
U.S. Dollars; provided that payments of principal of and interest on Canadian
Prime Loans, LC Disbursements denominated in Canadian Dollars and Acceptance
Obligations, and payments of Acceptance Fees, commitment fees in respect of
Canadian Commitments, fees in respect of Canadian Letters of Credit denominated
in Canadian Dollars and (to the extent invoiced or otherwise claimed in
Canadian Dollars) indemnification and expense reimbursement obligations, shall
in each case be payable in Canadian Dollars.  Solely for purposes of
determining the amount of Loans available for borrowing purposes, checks and
cash or other immediately available funds from collections of items of payment
and proceeds of any Collateral shall be applied in whole or in part against the
Obligations, on the day of receipt, subject to actual collection.


 


(b)                                
Any proceeds of
Collateral received by the U.S. Administrative Agent (i) not constituting either
(A) a specific payment of principal, interest, fees or other sum payable under
the Loan Documents (which shall be applied as specified by the Administrative
Borrower), (B) a mandatory prepayment (which shall be applied in accordance
with Section 2.13), or (C) amounts to be applied from the Collection
Account (which shall be applied in accordance with Section 2.12(b)), or
(ii) after an Event of Default has occurred and is continuing and the U.S.
Administrative Agent so elects or the Required Lenders so direct, such funds
shall be applied ratably first, to pay any fees, indemnities, or expense
reimbursements including amounts then due to the U.S. Administrative Agent and
the U.S. Issuing Bank from the U.S. Borrowers (other than in connection with
Banking Services Obligations or Swap Obligations), second, to pay any


 


79












 


fees or expense reimbursements then due to the Lenders
from the U.S. Borrowers (other than in connection with Banking Services
Obligations or Swap Obligations), third, to pay interest due in respect
of the U.S. Protective Advances, fourth, to pay the principal of the
U.S. Protective Advances, fifth, to pay interest then due and payable on
the U.S. Loans (other than the U.S. Protective Advances) ratably, sixth,
to prepay principal on the U.S. Loans (other than the U.S. Protective Advances)
and unreimbursed LC Disbursements under U.S. Letters of Credit ratably, seventh,
to pay an amount to the U.S. Administrative Agent equal to one hundred five
percent (105%) of the aggregate undrawn face amount of all outstanding U.S.
Letters of Credit and the aggregate amount of any unpaid LC Disbursements under
U.S. Letters of Credit, to be held as cash collateral for such Obligations, eighth,
to payment of any amounts owing by the U.S. Borrowers with respect to Banking
Services Obligations and Swap Obligations, ninth, to the payment of any
other U.S. Obligation due to the U.S. Administrative Agent or any Lender by the
U.S. Borrowers, and tenth, to the payment of Canadian Obligation due to
the Canadian Administrative Agent or any Lender by the Canadian
Borrowers.  Any proceeds of Collateral received by the Canadian
Administrative Agent (i) not constituting either (A) a specific payment of
principal, interest, fees or other sum payable under the Loan Documents (which
shall be applied as specified by the Administrative Borrower), (B) a mandatory
prepayment (which shall be applied in accordance with Section 2.13), or
(C) amounts to be applied from the Collection Account (which shall be applied
in accordance with Section 2.12(b)), or (ii) after an Event of Default
has occurred and is continuing and the Canadian Administrative Agent so elects
or the Required Lenders so direct, such funds shall be applied ratably first,
to pay any fees, indemnities, or expense reimbursements including amounts then
due to the Canadian Administrative Agent and the Canadian Issuing Bank from the
Canadian Borrowers (other than in connection with Banking Services Obligations
or Swap Obligations), second, to pay any fees or expense reimbursements
then due to the Lenders from the Canadian Borrowers (other than in connection
with Banking Services Obligations or Swap Obligations), third, to pay
interest due in respect of the Canadian Protective Advances, fourth, to
pay the principal of the Canadian Protective Advances, fifth, to pay
interest then due and payable on the Canadian Loans (other than the Canadian
Protective Advances) ratably, sixth, to prepay principal on the Canadian
Loans (other than the Canadian Protective Advances), seventh, to prepay
Acceptance Obligations and unreimbursed LC Disbursements under Canadian Letters
of Credit ratably, eighth, to pay an amount to the Canadian
Administrative Agent equal to one hundred five percent (105%) of the aggregate
undrawn face amount of all outstanding Canadian Letters of Credit and the
aggregate amount of any unpaid LC Disbursements under Canadian Letters of
Credit, to be held as cash collateral for such Obligations, ninth, to
payment of any amounts owing by the Canadian Borrowers with respect to Banking
Services Obligations and Swap Obligations, and tenth, to the payment of
any other Canadian Obligation due to the Canadian Administrative Agent or any
Lender by the Canadian Borrowers.  Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by the Administrative
Borrower, or unless a Default is in existence, neither any Administrative Agent
nor any Lender shall apply any payment which it receives to any Eurodollar Loan
of a Class, except (a) on the expiration date of the Interest Period applicable
to any such Eurodollar Loan, or (b) in the event, and only to the extent, that
there are no outstanding ABR Loans of the same Class and, in any event,


 


80












 


the applicable Borrowers shall pay the break funding
payment required in accordance with Section 2.18.  The
Administrative Agents and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments
to any portion of the Obligations owing to such Administrative Agents and
Lenders.


 


(c)                                 
At the election of
the applicable Administrative Agent, all payments of principal, interest, LC
Disbursements, fees, premiums, reimbursable expenses (including, without
limitation, all reimbursement for fees and expenses pursuant to Section 9.04),
and other sums payable under the Loan Documents, may be paid from the proceeds
of Borrowings made hereunder whether made following a request by the
Administrative Borrower pursuant to Section 2.04 or a deemed request as
provided in this Section 2.20 or may be deducted from any deposit
account of the applicable Borrowers under the control of such Administrative
Agent pursuant to a control agreement in form and substance satisfactory to
such Administrative Agent. The U.S. Borrowers hereby irrevocably authorize (i)
the U.S. Administrative Agents to make a Borrowing for the purpose of paying
each payment of principal, interest and fees as it becomes due hereunder or any
other amount due under the Loan Documents and agree that all such amounts
charged shall constitute Loans (including Swingline Loans and Protective
Advances) and that all such Borrowings shall be deemed to have been requested
pursuant to Sections 2.04, 2.06 or 2.07, as applicable,
and (ii) the U.S. Administrative Agent to charge any deposit account of the
U.S. Borrowers maintained with the U.S. Administrative Agent for each payment
of principal, interest and fees as it becomes due hereunder or any other amount
due under the Loan Documents.  The Canadian Borrowers hereby irrevocably
authorize (i) the Canadian Administrative Agent to make a Borrowing for the
purpose of paying each payment of principal, interest and fees as it becomes
due hereunder or any other amount due under the Loan Documents and agrees that
all such amounts charged shall constitute Loans (including Swingline Loans and
Protective Advances) and that all such Borrowings shall be deemed to have been
requested pursuant to Sections 2.04, 2.06 or 2.07, as
applicable, and (ii) the Canadian Administrative Agent to charge any deposit
account of any Borrower maintained with the Canadian Administrative Agent for
each payment of principal, interest and fees as it becomes due hereunder or any
other amount due under the Loan Documents.


 


(d)                                
If any U.S. Lender
shall, by exercising any right of set off or counterclaim or otherwise, obtain
payment in respect of any principal of or interest on any of its Loans or
participations in LC Disbursements resulting in such U.S. Lender receiving
payment of a greater proportion of the aggregate amount of its Loans and
participations in LC Disbursements and accrued interest thereon than the
proportion received by any other U.S. Lender, then the U.S. Lender receiving
such greater proportion shall purchase (for cash at face value) participations
in the Loans and participations in LC Disbursements of other U.S. Lenders to
the extent necessary so that the benefit of all such payments shall be shared
by the U.S. Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Loans and participations
in LC Disbursements; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered,  such participations shall be rescinded and the purchase price
restored to the extent of such


 


81












 


recovery, without interest, and (ii) the provisions of
this subsection shall not be construed to apply to any payment made by the U.S.
Borrowers pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a U.S. Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the U.S.
Borrowers or any Subsidiary or Affiliate thereof (as to which the provisions of
this subsection shall apply).  The U.S. Borrowers consent to the foregoing
and agree, to the extent they may effectively do so under applicable law, that
any Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the U.S. Borrowers rights of set-off and counterclaim with
respect to such participation as fully as if such U.S. Lender were a direct creditor
of the U.S. Borrowers in the amount of such participation.


 


(e)                                 
If any Canadian
Lender shall, by exercising any right of set off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans
or participations in LC Disbursements or Acceptance Obligations resulting in
such Canadian Lender receiving payment of a greater proportion of the aggregate
amount of its Loans and participations in LC Disbursements and Acceptance Obligations
and accrued interest thereon than the proportion received by any other Canadian
Lender, then the Canadian Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Loans and
participations in LC Disbursements and Acceptance Obligations of other Canadian
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Canadian Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Loans and
participations in LC Disbursements and Acceptance Obligations; provided
that (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered,  such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this subsection shall not be
construed to apply to any payment made by the Canadian Borrowers pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Canadian Lender as consideration for the assignment of or sale of
a participation in any of its Loans or participations in LC Disbursements or
Acceptance Obligations to any assignee or participant, other than to the
Canadian Borrowers or any Subsidiary or Affiliate thereof (as to which the
provisions of this subsection shall apply).  The Canadian Borrowers
consent to the foregoing and agree, to the extent they may effectively do so
under applicable law, that any Canadian Lender acquiring a participation
pursuant to the foregoing arrangements may exercise against the Canadian
Borrowers rights of set-off and counterclaim with respect to such participation
as fully as if such Canadian Lender were a direct creditor of the Canadian
Borrowers in the amount of such participation.


 


(f)                                   
Unless the applicable
Administrative Agent shall have received notice from the Administrative
Borrower prior to the date on which any payment is due to such Administrative
Agent for the account of the Lenders or the Issuing Banks hereunder that the
U.S. Borrowers or Canadian Borrowers, as applicable, will not make such
payment, such Administrative Agent may assume that the applicable Borrowers
have made such payment on such date in accordance herewith and may, in reliance
upon


 


82












 


such assumption, distribute to the applicable Lenders
or the applicable Issuing Bank, as the case may be, the amount due.  In
such event, if the applicable Borrowers have not in fact made such payment,
then each of such Lenders or such Issuing Bank, as the case may be, severally
agrees to repay to such Administrative Agent forthwith on demand the amount so
distributed to such Lender or such Issuing Bank with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to such Administrative Agent, at the greater of
the Federal Funds Effective Rate or, in the case of amounts payable in Canadian
Dollars, the Canadian Prime Rate and a rate determined by such Administrative
Agent in accordance with banking industry rules on interbank compensation.


 


(g)                                
If any Lender shall
fail to make any payment required to be made by it pursuant to Section 2.07,
2.08(d) or (e), 2.09(b), 2.20(e) or 9.04(c),
then the applicable Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by such Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid.


 


SECTION 2.21                                           
Mitigation
Obligations; Replacement of Lenders.  If any Lender (other than a Non-Canadian
Lender that becomes a Lender pursuant to an assignment permitted by Section
9.05(b)(ii)(D)) requests compensation under Section 2.17, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
2.19, then:


 


(a)                                 
such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.17 or 2.19, as the case may be, in
the future, and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender (and the
Borrowers hereby agree to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment);


 


(b)                                
the Borrowers may, at
their sole expense and effort, require such Lender or any Defaulting Lender
(such Lender or Defaulting Lender herein, a “Departing Lender”), upon
notice from the Administrative Borrower to the Departing Lender and the
Administrative Agents, to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in Section 9.05), all its
interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrowers shall
have received the prior written consent of the Administrative Agents and the
Issuing Banks, which consent shall not unreasonably be withheld, (ii) the
Departing Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
Acceptance Obligations and Swingline Loans, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and


 


83












 


accrued interest and fees) or the applicable Borrowers
(in the case of all other amounts), and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.17 or
payments required to be made pursuant to Section 2.19, such assignment
will result in a reduction in such compensation or payments.  A Departing
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrowers to require such  assignment and
delegation cease to apply.


 


SECTION 2.22                                           
Indemnity for
Returned Payments. 
If after receipt of any payment which is applied to the payment of all or any
part of the Obligations, an Administrative Agent or any Lender is for any
reason compelled to surrender such payment or proceeds to any Person because
such payment or application of proceeds is invalidated, declared fraudulent,
set aside, determined to be void or voidable as a preference, impermissible
setoff, or a diversion of trust funds, or for any other reason, then the
Obligations or part thereof intended to be satisfied shall be revived and
continued and this Agreement shall continue in full force as if such payment or
proceeds had not been received by such Administrative Agent or such Lender and
the Borrowers shall be liable to pay to such Administrative Agent and the
Lenders, and each Borrower hereby indemnifies such Administrative Agents and
the Lenders and holds the Administrative Agents and the Lenders harmless for
the amount of such payment or proceeds surrendered.  The provisions of
this Section 2.22 shall be and remain effective notwithstanding any
contrary action which may have been taken by an Administrative Agent or any
Lender in reliance upon such payment or application of proceeds, and any such
contrary action so taken shall be without prejudice to the Administrative
Agents’ and the Lenders’ rights under this Agreement and shall be deemed to
have been conditioned upon such payment or application of proceeds having
become final and irrevocable.  The provisions of this Section 2.22
shall survive the termination of this Agreement.


 


SECTION 2.23                                           
Money of Account,
etc.  This
is an international loan transaction in which the specification of U.S. Dollars
or Canadian Dollars is of the essence, and U.S. Dollars or Canadian Dollars, as
specified herein, shall be the currency of account and of payment in all
events. The payment obligations of the Borrowers and the other Loan Parties
shall not be discharged by an amount paid in another currency, whether pursuant
to a judgment or otherwise, to the extent that the amount so paid on prompt
conversion to U.S. Dollars or, as the case may be, Canadian Dollars under
normal banking procedures shall not yield the amount of U.S. Dollars or
Canadian Dollars, as the case may be, due hereunder. In the event that any
payment made in a currency other than U.S. Dollars or Canadian Dollars, as the
case may be, whether pursuant to a judgment or otherwise, upon conversion shall
not yield such required amount of U.S. Dollars or Canadian Dollars, the
applicable Lenders shall be entitled to demand immediate payment of, and shall
have a separate cause of action for, the U.S. Dollar or Canadian Dollar
deficiency.


 


SECTION 2.24                                           
Currency
Fluctuations, etc. 
(a)  Not later than 1:00 p.m., New York City time, on each
Calculation Date, the U.S. Administrative Agent shall determine the Exchange
Rate as of such Calculation Date. Except as otherwise provided in Section 2.11
and Section 2.25, the Exchange Rate so determined shall become
effective on the first U.S. Business Day immediately following the relevant
Calculation Date (a “Reset Date”) and shall remain effective until the
next succeeding Reset Date.


 


84












 


(b)                                
Not later than 5:00
p.m., New York City time, on each Reset Date, the U.S. Administrative Agent
shall consult with the Canadian Administrative Agent and the Administrative
Agents shall determine the total Canadian Exposure (both in U.S. Dollars and in
Canadian Dollars) and the total U.S. Exposure.


 


(c)                                 
If, on any Reset
Date, the total Canadian Exposure exceeds the total Canadian Commitments, then
(i) the Canadian Administrative Agent shall give notice thereof to the
Canadian Borrowers and the Canadian Lenders and (ii) within two Canadian
Business Days thereafter, the Canadian Borrowers shall repay or prepay Canadian
Loans in accordance with this Agreement in an aggregate principal amount such
that, after giving effect thereto, the total Canadian Exposure (expressed in
Canadian Dollars) shall not exceed the total Canadian Commitments.


 


(d)                                
To the extent the
repayments and prepayments referenced in paragraph (c) do not result in a total
Canadian Exposure (expressed in Canadian Dollars) that is less than or equal to
the total Canadian Commitments, then the Borrowers shall provide cash
collateral in accordance with Section 2.08(j) to the extent required
to obtain such result.


 


ARTICLE III


 


Representations and Warranties


 


The
Borrowers represent and warrant to the Administrative Agents, the Lenders and
the Issuing Banks that:


 


SECTION 3.01                                           
Organization; Powers.  Each of the Loan Parties and each
of its Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect, is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required.


 


SECTION 3.02                                           
Authorization;
Enforceability. 
The Transactions are within each Loan Party’s corporate powers and have been
duly authorized by all necessary corporate and, if required, stockholder
action.  The Loan Documents to which each Loan Party is a party have been
duly executed and delivered by such Loan Party and constitute a legal, valid
and binding obligation of such Loan Party, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in
equity or at law.


 


SECTION 3.03                                           
Governmental
Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental
Authority, except such as have been obtained or made and are in full force and
effect and except any filings of the Mortgages or any of the foregoing which
are immaterial in


 


85












 


nature and except for
filings necessary to perfect Liens created under the Loan Documents, as
contemplated by Section 3.17, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of any
Loan Party or any order of any Governmental Authority, (c) will not violate or
result in a default under any material indenture, agreement or other instrument
binding upon any Loan Party or its assets, or give rise to a right thereunder
to require any payment to be made by any Loan Party, except as set forth on Schedule
3.03 solely with respect to the consummation of the transactions
contemplated by the Merger Agreement, and (d) will not result in the creation
or imposition of any Lien on any asset of any Loan Party except Liens created
under the Loan Documents.


 


SECTION 3.04                                           
Financial
Condition; No Material Adverse Change.  (a)  The Pro Forma Information (including
the notes thereto), copies of which have heretofore been furnished to each
Lender, has been prepared giving effect (as if such events had occurred on such
date) to (i) consummation of the Transactions, (ii) the Loans and other
extensions of credit hereunder to be made on the Effective Date and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection with
the foregoing.  The Pro Forma Information has been prepared based on good
faith estimates and assumptions believed to be reasonable at the time made, it
being recognized by the Lenders that such information as to future events are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ materially from the projected
results.


 


(b)                                
The Parent has
heretofore furnished to the Lenders (i) audited combined balance sheets of
Progress Rail and Progress Metal and their Subsidiaries as of each of November
30, 2002, 2003 and 2004 and the notes thereto and the related combined
statements of operations, shareholders’ equity and cash flows of Progress Rail
and Progress Metal and their Subsidiaries for the years then ended and (ii)
unaudited combined balance sheets of Progress Rail and Progress Metal and their
Subsidiaries as of each of February 29, 2004, May 31, 2004, August 31, 2004 and
November 20, 2004 and the related combined statements of operations,
shareholders’ equity and cash flows of Progress Rail and Progress Metal and their
Subsidiaries for the periods then ended.  Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of Progress Rail and Progress Metal and their
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above.


 


(c)                                 
Since November 30,
2004, there has been no change in the business, assets, operations or
condition, financial or otherwise, of Progress Rail and the Loan Parties, taken
as a whole, which could reasonably be expected to have a Material Adverse
Effect.


 


SECTION 3.05                                           
Intellectual
Property. 
Each Loan Party owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property necessary to the Loan
Parties’ business, a materially correct and complete list of which, as of the
Effective Date and after giving effect to the consummation of the Transactions,
is set forth on Schedule 3.05, and the use thereof by the Loan Parties
does not infringe in any material respect upon the rights of any other Person,
and, with the exception of third party rights that are the subject of a
trademark


 


86












 


coexistence agreement,
the Loan Parties either (i) own the entire right, title and interest thereto or
(ii) hold such interest pursuant to a valid, subsisting and enforceable
license.


 


SECTION 3.06                                           
Litigation.  (a)  Except as disclosed on Schedule
3.06, there are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of
any Loan Party, threatened against or affecting the Loan Parties (i) as to
which there is a reasonable possibility of an adverse determination and that,
if adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.


 


(b)                                
Since the date of
this Agreement, there has been no change in the status of the Disclosed Matters
that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.


 


SECTION 3.07                                           
Compliance with
Laws.  Each
Loan Party is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.  No Default has occurred
and is continuing.


 


SECTION 3.08                                           
Investment and
Holding Company Status.  No Loan Party nor any of its Subsidiaries is (a) an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940, as amended or (b) a “holding company” as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935, as amended.


 


SECTION 3.09                                           
Taxes.  Except as disclosed on Schedule
3.09, each Loan Party and its Subsidiaries has timely filed or caused to be
filed all federal and other material Tax returns and reports required to have
been filed by it and has paid or caused to be paid all Taxes required to have
been paid by it, except (x) Taxes that are being contested in good faith by
appropriate proceedings and for which the applicable Loan Party or Subsidiary
has set aside on its books adequate reserves and (y) Taxes the non-payment of
which, in the aggregate, is not reasonably expected to have a Material Adverse
Effect.  Except as disclosed on Schedule 3.09, no Tax liens have
been filed and no material claims have been asserted in writing with respect to
any such Taxes.


 


SECTION 3.10                                           
ERISA.  (a)  No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events for which liability is reasonably expected to occur,
could reasonably be expected to result in a Material Adverse Effect.  The
present value of all accumulated benefit obligations under each Plan (based on
the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by an amount that could reasonably
be expected to result in a Material Adverse Effect the fair market value of the
assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by an
amount that could reasonably be expected to result in a Material Adverse Effect
the fair market value of the assets of all such underfunded Plans.


 


87












 


(b)                                
No Non-U.S. Plan has
incurred any unfunded liability which could reasonably be expected to give rise
to a Material Adverse Effect.


 


(c)                                 
Except as required by
applicable law, or which could not reasonably be expected to give rise to a
Material Adverse Effect, neither the Borrowers nor any Subsidiary thereof
maintains, sponsors or contributes to any plan, policy or arrangement that
provides medical benefits to retirees or their beneficiaries.


 


SECTION 3.11                                           
Disclosure.  The Borrowers have disclosed to
the Lenders all agreements, instruments and corporate or other restrictions to
which they are subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.  Neither the Information Memorandum nor any of the other
reports, financial statements, certificates or other information furnished by
or on behalf of the Borrowers to any Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected
financial information, the Borrowers represent only that such projected
statements are based on good faith estimates and assumptions believed to be
reasonable at the time made, it being recognized by the Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results.


 


SECTION 3.12                                           
Material
Agreements. 
Schedule 3.12 attached hereto contains a correct and complete list, as
of the Effective Date, of the following contracts, agreements, or arrangements
to which the Loan Parties are a party (the “Contracts”):


 


(a)                                 
notes, mortgages,
indentures, loan or credit agreements, security agreements each of which
secures Indebtedness, and other agreements and instruments reflecting
obligations for borrowed money or other monetary Indebtedness or otherwise
relating to the borrowing of money by, or the extension of credit to the Loan
Parties, in each case creating an actual or potential obligation of the Loan
Parties of not less than U.S.$1,000,000, or commitments to enter into any such
agreements or commitments;


 


(b)                                
management,
consulting and employment agreements and written agreements, commitments,
representations, promises or communications to enter into the same other than
as previously approved by Parent where such agreement is terminable upon not
more than sixty (60) days’ prior notice without further Liability of the Loan
Parties thereunder;


 


(c)                                 
(i) with respect to
real or immovable property, option agreements, purchase and sale agreements,
lease agreements or other agreements involving the Mortgaged Properties, and
(ii) with respect to equipment, machinery, personal or movable property or
other assets, tangible or intangible, option agreements, purchase and sale
agreements, lease agreements or other agreements involving amounts payable by
or to the Loan Parties of U.S.$1,000,000 or more;


 


88












 


(d)                                
agreements and
purchase orders for the purchase or sale of goods, services, supplies or
capital assets that have continuing obligations to perform and (i) have terms
of more than one year, are subject to automatic renewal or are indefinite and
(ii) involved an annual payment of more than U.S.$2,500,000 during at least one
of the last three fiscal years or, to the knowledge of the Loan Parties, would
reasonably be expected to involve the payment of more than U.S.$2,500,000
during any fiscal year in the future;


 


(e)                                 
partnership, joint
venture, stockholders’ or other similar agreements with any Person;


 


(f)                                   
contracts or
agreements between or among the Loan Parties, on the one hand, and any current
or former director, officer or Affiliate of the Loan Parties, on the other
hand, with respect to the business as conducted by the Loan Parties on the date
of execution of this Agreement except for contracts and agreements between the
Loan Parties;


 


(g)                                
outstanding
guarantees, subordination agreements, indemnity agreements and other similar
types of agreements, whether or not entered into in the ordinary course of
business, which any Loan Party is or may become liable for or obligated to
discharge, or any asset of any Loan Party is or may become subject to the
satisfaction of, any Indebtedness, obligation, performance or undertaking of
any other Person, except for (i) indemnification agreements contained in any of
the instruments listed in the schedules hereto or any other customary indemnity
provisions included in agreements for the purchase or sale of goods, services
or supplies and (ii) any of the foregoing in which, in each case, the aggregate
obligation of any Loan Party thereunder is less than U.S.$1,000,000;


 


(h)                                
contracts, orders,
decrees or judgments preventing or restricting the Loan Parties from carrying
on any business activity or competing with any Person or prohibiting or
limiting disclosure of confidential or proprietary information;


 


(i)                                    
agreements, contracts
or commitments relating to the acquisition by any Loan Party of the outstanding
capital stock or equity interest of any business enterprise or the disposition
of any assets or properties of any Loan Party (excluding dispositions of real
or immovable property) within the last five fiscal years;


 


(j)                                    
agreements, contracts
or commitments with independent contractors, distributors, dealers,
manufacturers’ representatives or sales agencies that involved the payment of
commissions during at least one of the last three fiscal years of more than
U.S.$1,000,000 or, to the knowledge of the Loan Parties, would reasonably be
expected to involve the payment of more than U.S.$1,000,000 during any fiscal
year in the future;


 


(k)                                 
all contracts that
(i) limit or contain restrictions on the ability of any Loan Party to declare
or pay dividends on, to make any other distribution in respect of or to issue
or purchase, redeem or otherwise acquire its capital stock, to incur


 


89












 


Indebtedness, to incur or suffer to exist any Lien, to
purchase or sell any assets or properties, to change the lines of business in
which it participates or engages or to engage in any Business Combination, or
(ii) require any Loan Party to maintain specified financial ratios or levels of
net worth or other indicia of financial condition;


 


(l)                                    
all agreements,
contracts or commitments to which a Governmental Authority is a party under
which any obligations are still outstanding and that involved the payment
during at least one of the last three fiscal years of more than U.S.$1,000,000
or, to the knowledge of the Loan Parties, would reasonably be expected to
involve the payment of more than U.S.$1,000,000 during any fiscal year in the
future;


 


(m)                              
contracts,
commitments or obligations not made in the ordinary course of business and
having unexpired terms in excess of one year or requiring aggregate future
payments or receipts in excess of U.S.$1,000,000 or otherwise material to the
business or operations of any Loan Party; and


 


(n)                                
all Plans,
Multiemployer Plans and Non-U.S. Plans.


 


Except
as disclosed in Schedule 3.12, there is not under (i) any material
contract to which any Borrower is a party or (ii) any instrument or agreement
governing Material Indebtedness any existing material breach or material
default (or event or condition, which after notice or lapse of time, or both,
would constitute a material breach or material default) by any Loan Party with
respect thereto.


 


SECTION 3.13                                           
Solvency.  (a)  Immediately after the
consummation of the Transactions and immediately following the making of each
Borrowing and the issuance of each Letter of Credit, if any, and after giving
effect to the application of the proceeds of such Borrowing or such issuance of
a Letter of Credit, (1) with respect to any U.S. Loan Party, (i) the fair value
of the assets of each Loan Party, at a fair valuation, will exceed its debts
and liabilities, subordinated, contingent or otherwise; (ii) the present fair
saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) each Loan Party will be
able to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured; and (iv) each Loan
Party will not have unreasonably small capital with which to conduct the
businesses in which it is engaged as such businesses are now conducted and are
proposed to be conducted after the date hereof and (2) with respect to any
Canadian Loan Party, (i) the property of such Person is sufficient, if disposed
of at a fairly conducted sale under legal process, to enable payment of all its
obligations, due and accruing due, (ii) the property of such Person is, at a
fair valuation, greater than the total amount of liabilities, including
contingent liabilities, of such Person; (iii) such Person has not ceased paying
its current obligations in the ordinary course of business as they generally
become due; and (iv) such Person is not for any reason unable to meet its
obligations as they generally become due.


 


(b)                                
No Loan Party intends
to, or will permit any of its Subsidiaries to, and believes that it or any of
its Subsidiaries will, incur debts beyond its ability to pay such debts as they
mature, taking into account the timing of and amounts of cash to be


 


90












 


received by it or any such Subsidiary and the timing
of the amounts of cash to be payable on or in respect of its Indebtedness or
the Indebtedness of any such Subsidiary.


 


SECTION 3.14                                           
Reportable
Transaction. 
The Borrowers do not intend to treat the Borrowings or issuances of Letters of
Credit and related Transactions as being a “reportable transaction” (within the
meaning of Treasury Regulation Section 1.6011-4).  In the event any
Borrower determines to take any action inconsistent with such intention, it
will promptly notify the Administrative Agents thereof.


 


SECTION 3.15                                           
Capitalization and
Subsidiaries. 
As of the Effective Date, Schedule 3.15 sets forth (a) a correct and
complete list of the name and relationship to the Parent of each and all of the
Parent’s Subsidiaries, (b) a true and complete listing of each class of each
Loan Party’s authorized Equity Interests, of which all of such issued shares
are validly issued, outstanding, fully paid and non-assessable, and owned
beneficially and of record by the Persons identified on Schedule 3.15,
and (c) the type of entity of each Loan Party and each of its
Subsidiaries.  All of the issued and outstanding Equity Interests owned by
any Loan Party has been (to the extent such concepts are relevant with respect
to such ownership interests) duly authorized and issued and is fully paid and
non assessable.


 


SECTION 3.16                                           
Common Enterprise.  The successful operation and
condition of each of the Loan Parties is dependent on the continued successful
performance of the functions of the group of the Loan Parties as a whole and
the successful operation of each of the Loan Parties affects the successful
performance and operation of each other Loan Party.  Each Loan Party
expects to derive benefit (and its board of directors or other governing body
has determined that it may reasonably be expected to derive benefit), directly
or indirectly, from (i) successful operations of each of the other Loan
Parties, and (ii) the credit extended by the Lenders to the Borrowers
hereunder, both in their separate capacities and as members of the group of
companies.  Each Loan Party has determined that execution, delivery, and
performance of this Agreement and any other Loan Documents to be executed by
such Loan Party is within its purpose, will be of direct and indirect benefit
to such Loan Party, and is in its best interest.


 


SECTION 3.17                                           
Security Interest
in Collateral. 
The provisions of this Agreement and the other Loan Documents will, when
executed and delivered, create legal and valid Liens on all the Collateral in
favor of the Collateral Agents, for the benefit of the Collateral Agents and
the Secured Parties, and (upon the filing of UCC-1 financing statements in the
jurisdictions listed on Schedule 3.17, the filing, recording or
registering of financing statements or analogous documents under the PPSA or
other applicable personal property security laws in the jurisdictions listed on
Schedule 3.17, the recording of the Mortgages in the offices listed on Schedule
3.17, the filing of the Railcar Security Agreement with the Surface
Transportation Board and the Canadian Railcar Security Agreement under the
Canada Transportation Act (Canada), the filing of the Patent Security Agreement
and Trademark Security Agreement (as such terms are defined in the U.S.
Security Agreement) with the U.S. Patent and Trademark Office and the filing of
the Copyright Security Agreement (as such term is defined in the U.S. Security
Agreement) with the United States Copyright Office) such Liens constitute
perfected and continuing Liens on the Collateral, securing the Obligations,
enforceable against the applicable Loan Party and all third parties, and having
priority over all other Liens on the Collateral except for (a) Permitted
Encumbrances, to the extent any such Permitted


 


91












 


Encumbrances would have
priority over the Liens in favor of the Collateral Agents pursuant to any
applicable law or to the extent otherwise expressly permitted hereunder, and
(b) Liens perfected only by possession (including possession of any certificate
of title) to the extent the Collateral Agents have not obtained or do not
maintain possession of such Collateral.


 


SECTION 3.18                                           
Labor Matters.  As of the Effective Date and
after giving effect to the consummation of the Transactions (a) except as set
forth on Schedule 3.18, there is no collective bargaining agreement or
other material labor contract covering employees of any Borrower, (b) to the
knowledge of the Loan Parties, no union or other labor organization is seeking
to organize, or to be recognized as, a collective bargaining unit of employees
of any Borrower or for any similar purpose, and (c) there is no pending or (to
the best of the Borrowers’ knowledge) threatened, strike, work stoppage,
material unfair labor practice claim, or other material labor dispute against
or affecting the Borrowers or their employees.


 


SECTION 3.19                                           
Affiliate
Transactions. 
Except as set forth on Schedule 3.19, as of the Effective Date and after
giving effect to the consummation of the Transactions, there are no existing or
proposed material agreements, arrangements, understandings, or transactions
between any Loan Party and any Affiliates (other than Subsidiaries) of any Loan
Party or any members of their respective immediate families.


 


SECTION 3.20                                           
Acquisition
Documentation. 
The Borrowers have delivered to each Administrative Agent true, complete and
correct copies of the Acquisition Documentation (including all schedules,
exhibits, annexes, amendments, supplements, modifications and all other
documents delivered pursuant thereto or in connection therewith).  The
Acquisition Documentation as originally executed and delivered by the parties
thereto has not been amended, waived, supplemented or modified in any material
respect without the consent of each Administrative Agent.  On the
Effective Date and after giving effect to the consummation of the Transactions,
none of the Loan Parties or any other party to any of the Acquisition
Documentation is in default in the performance of or compliance with any
provisions under the Acquisition Documentation.  The Progress Rail
Acquisition is being consummated contemporaneously with the initial Borrowing
hereunder in accordance with the terms of the Acquisition Documentation and
applicable law.


 


SECTION 3.21                                           
Senior Unsecured
Debt Documents; Equity Documents.  The Borrowers have delivered to each
Administrative Agent true, complete and correct copies of the Senior Unsecured
Debt Documents (including all schedules, exhibits and annexes thereto). 
The Borrowers have delivered to each Administrative Agent true, complete and
correct copies of the Commitment Letter dated as of February 17, 2005 by One
Equity Partners LLC in favor of Parent Holdco (including all schedules,
exhibits and annexes thereto).


 


SECTION 3.22                                           
Broker’s and
Transaction Fees. 
No Loan Party has any obligation to any Person in respect of any finder’s,
broker’s or investment banker’s fees in connection with the Transactions,
except for the payment of a transaction fee of U.S.$4,000,000 to One Equity Partners
LLC.


 


SECTION 3.23                                           
Title; Real
Property. 
(a)  Each Loan Party has good and marketable title to, or valid leasehold
interests in, all real or immovable property and good title to all


 


92












 


personal or movable
property, in each case that is purported to be owned or leased by it, including
those reflected on the most recent financial statements delivered by the Loan
Parties or purported to have been acquired by any Loan Party after the date of
such financial statements (except as sold or otherwise disposed of since such
date as permitted by this Agreement), and none of such properties and assets is
subject to any Lien, except Liens permitted under Section 6.02. 
The Loan Parties have received all deeds, assignments, waivers, consents,
non-disturbance and recognition or similar agreements, bills of sale and other
documents in respect of, and have duly effected all recordings, filings and
other actions necessary to establish, protect and perfect, the Loan Parties’
right, title and interest in and to all such property that is included in the
U.S. Borrowing Base or the Canadian Borrowing Base, in each case except where
not necessary or useful to the operation of its business as currently
conducted.


 


(b)                                
Set forth on Schedule
3.23 is a complete and accurate list of all real or immovable property
owned, leased, licensed or otherwise used in the operations of the business of
each Loan Party and showing the current street address (including, where
applicable, county, state and other relevant jurisdictions), record owner (if
owned) or leasehold interest holder and, (if leased) lessee or other user
thereof.  Each of such leases and subleases is valid and enforceable in
accordance with its terms (except as such enforceability may be subject to or
limited by bankruptcy, insolency, reorganization or other similar laws) and is
in full force and effect, and to each Loan Party’s knowledge and except as set
forth on Schedule 3.03 solely with respect to transactions contemplated
by the Merger Agreement, no default by any party to any material lease or
material sublease exists.


 


(c)                                 
Except as set forth
on Schedule 3.23, as of the Effective Date, no Loan Party owns or holds,
or is obligated under, subject to or a party to, any lease, option, right of
first refusal or other right (contractual or otherwise) to purchase, acquire,
sell, assign, dispose of or lease any Mortgaged Property or any material real
or immovable property of such Loan Party.


 


(d)                                
No portion of any
real or immovable property of any Loan Party has suffered any material damage
by fire or other casualty loss that has not heretofore been completely repaired
and restored to substantially its original condition other than losses covered
by insurance the proceeds of which are, or will be, applied toward the
restoration of such property (if permitted hereunder) or which would not
otherwise be expected to have a Material Adverse Effect.  As of the
Effective Date, except as set forth on Schedule 3.23, no portion of any
Mortgaged Property is located in a special flood hazard area as designated by
any federal Governmental Authority.  To the knowledge of each Loan Party,
no portion of any real or immovable property of any Loan Party (not including
any Mortgaged Property) is located in a special flood hazard area as designated
by any federal Governmental Authority, except where such location of any real
or immovable property, individually, or together with any other real or
immovable property of any Loan Party, in a special flood hazard area could not
reasonably be expected to have a Material Adverse Effect.


 


(e)                                 
All permits required
to have been issued or appropriate to enable all real or immovable property of
the Loan Parties to be lawfully occupied and used for


 


93












 


all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force and effect,
other than those that, in the aggregate, would not have a Material Adverse
Effect.


 


(f)                                   
No Loan Party has
received any written notice, or has any knowledge, of any pending or threatened
condemnation proceeding affecting any real or immovable property of the Loan
Parties or any part thereof, except those that, in the aggregate, would not
have a Material Adverse Effect.


 


(g)                                
Each real or
immovable property owned, leased or otherwise used in the operation of business
of any Loan Party is in condition and repair consistent with prudent industry
practice in the business of such Loan Party as currently conducted, suitable
for its intended purposes and the operation of the business of the applicable Loan
Party thereon, and there exist no material defects in the same.


 


SECTION 3.24                                           
Environment.  Except as set forth on Schedule
3.24:  (a)  The operations of each Loan Party are and have been
for the past four years in compliance with all applicable Environmental Laws,
other than (i) any past non-compliance for which there are no remaining
obligations or liabilities, and (ii) non-compliances that, in the aggregate,
would not have a reasonable likelihood of resulting in a Material Adverse
Effect.


 


(b)                                
No Lien in favor of
any Governmental Authority securing, in whole or in part, Environmental
Liabilities is attached to any property of any Loan Party and, to the knowledge
of any Loan Party, no facts, circumstances or conditions exist that could
reasonably be expected to result in any such Lien attaching to any such
property.


 


(c)                                 
No Loan Party has
caused or suffered to occur a Release of Hazardous Materials on, at, in, under,
above, to, or from any real or immovable property of any Loan Party and each
such real or immovable property is free of contamination by any Hazardous
Materials except for such Release or contamination that could not reasonably be
expected to result, in the aggregate, in a Material Adverse Effect.


 


(d)                                
No Loan Party, or to
its knowledge, any corporate predecessor, (i) is or has been engaged in
operations, or (ii) knows of any facts, circumstances or conditions, including
receipt of any information request or notice of potential responsibility under
CERCLA or similar Environmental Laws, that, in the aggregate, would have a
reasonable likelihood of resulting in Material Environmental Liabilities, except
as could not reasonably be expected to result, in the aggregate, in a Material
Adverse Effect.


 


(e)                                 
Each Loan Party has
made available to each Administrative Agent copies of the environmental
reports, reviews and audits and other documents pertaining to actual or
potential Environmental Liabilities set forth on Schedule 3.24.


 


94






 










 


ARTICLE IV


 


Conditions


 


SECTION 4.01                                           
Effective Date.  The obligations of the Lenders to
make Loans and of the Issuing Banks to issue Letters of Credit hereunder shall
not become effective until the date on which each of the following conditions
is satisfied (or waived in accordance with Section 9.03):


 


(a)                                 
The 
Administrative Agents (or their counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agents (which
may include facsimile transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.


 


(b)                                
The Administrative
Agents shall have received duly executed copies of the Loan Documents and such
other certificates, documents, instruments and agreements as the Administrative
Agents shall reasonably request in connection with the transactions
contemplated by this Agreement and the other Loan Documents, including written
opinions of the Loan Parties’ counsel, addressed to the Administrative Agents,
the Issuing Banks and the Lenders in form and substance acceptable to the
Administrative Agents, ChaseLincoln and their respective counsel, and each item
listed in the Closing Checklist, each in form and substance reasonably
satisfactory to the Administrative Agents and ChaseLincoln.


 


(c)                                 
The Administrative
Agents shall have received evidence satisfactory to the Administrative Agents
that, upon the filing and recording of instruments delivered by each Borrower,
the Administrative Agents for the benefit of the Secured Parties shall have a
valid and perfected first priority security interest and hypothec in the
Collateral (except as may be agreed to by the Administrative Agents), including
copies of UCC and other applicable personal property Lien search reports and
all effective financing statements listed therein, in each case as may be
reasonably required by the Administrative Agents, all certificates, instruments
and other documents representing all Securities (as defined in the UCC) being
pledged pursuant to the Collateral Documents and, as the case may be, updated
powers or endorsements executed in blank by a duly authorized officer with
power to transfer such Securities and all control agreements that, in the
reasonable judgment of the Administrative Agents, shall be required for
perfection of any deposit account of any Loan Party, each duly executed by the
Loan Party maintaining such account and the applicable financial institutions,
securities intermediaries and commodity intermediaries with respect thereto.


 


(d)                                
The Administrative
Agents and ChaseLincoln shall be reasonably satisfied in form and substance
with all material agreements, instruments and documents implemented or executed
in connection with the Acquisition Documentation, including, without limitation,
the formation, corporate structure and capital structure of the Borrowers and
their Subsidiaries.  The Acquisition Documentation and other documents
referenced in this clause (c) shall not be materially altered, amended or
otherwise supplemented or modified in a manner materially adverse to the
Lenders or any material


 


95












 


condition therein waived without the prior written
consent of each Administrative Agent.  The Progress Rail Acquisition shall
have been consummated in accordance with the terms of the Acquisition
Documentation and the other documents and instruments referred to above, and in
compliance with applicable law and regulatory approvals.


 


(e)                                 
All legal (including
tax implications) and regulatory matters, including, but not limited to
compliance with applicable requirements of Regulations U, T and X of the Board
of Governors of the Federal Reserve System, shall be satisfactory to the
Administrative Agents and the Lenders.


 


(f)                                   
After giving effect
to all Borrowings to be made on the Effective Date and the issuance of any
Letters of Credit on the Effective Date and payment of all fees and expenses
due hereunder, and with all of the Loan Parties’ indebtedness, liabilities, and
obligations current, the Borrowers’ Availability shall not be less than
U.S.$75,000,000.


 


(g)                                
Each Administrative
Agent shall have received all fees and other amounts due and payable on or
prior to the Effective Date, including, to the extent invoiced, reimbursement
or payment of all out of pocket expenses required to be reimbursed or paid by
the Borrowers hereunder.


 


(h)                                
The Borrowers shall
have delivered to each Administrative Agent a notice setting forth the deposit
accounts of the Borrowers (the “Funding Accounts”) to which such
Administrative Agent is authorized by the Borrowers to transfer the proceeds of
any Borrowings requested or authorized pursuant to this Agreement.


 


(i)                                    
The Parent shall have
received proceeds of at least U.S.$100,000,000 in consideration of the Equity
Funding and Progress Rail and Progress Metal shall have received
U.S.$200,000,000 in consideration of Senior Unsecured Debt Funding, each upon
terms and conditions satisfactory to the Administrative Agents and the
Lenders.  The capital structure and shareholder, management or similar
agreements with respect to the Borrowers and their Subsidiaries, and all
documentation relating to the Sponsor Group’s contributions, shall be
satisfactory to the Administrative Agents and ChaseLincoln.


 


(j)                                    
The Administrative
Agents and ChaseLincoln shall be reasonably satisfied with the form of (i) the
audited combined balance sheets of Progress Rail and Progress Metal and their
Subsidiaries as of each of November 30, 2002, 2003 and 2004 and the notes
thereto and the related combined statements of operations, shareholders’ equity
and cash flows of Progress Rail and Progress Metal and their Subsidiaries for
the years then ended and (ii) the unaudited combined balance sheets of Progress
Rail and Progress Metal and their Subsidiaries as of each of February 29, 2004,
May 31, 2004, August 31, 2004 and November 20, 2004 and the related combined
statements of operations, shareholders’ equity and cash flows of Progress Rail
and Progress Metal and their Subsidiaries for the periods then ended.


 


96












 


(k)                                 
The Administrative
Agents and ChaseLincoln shall be reasonably satisfied with the form of monthly
pro forma consolidated profit and loss statements, balance sheets and cash flow
projections (including detailed capital expenditures) for the first full year
after the Effective Date for the Parent and its Subsidiaries, and on an annual
basis thereafter for the next seven years (the “Pro Forma Information”),
and such Pro Forma Information, taken as a whole, shall not be inconsistent in
a material and adverse manner with any pro forma information or projections
delivered to the Administrative Agents prior to February 19, 2005.  The
Pro Forma Information shall have been prepared based upon good faith estimates
and assumptions believed by management of the Sponsor Group and the Borrowers
to be reasonable at the time made and shall contain adequate text explaining
the significant assumptions on which they were based.


 


(l)                                    
The Administrative
Agents and ChaseLincoln or its Affiliates shall have conducted a field examination
of the Borrowers’ and Progress Rail’s assets, liabilities, cash management
systems, books and records, and the results of such field examination shall be
reasonably satisfactory to the Administrative Agents and ChaseLincoln in all
respects.


 


(m)                              
The Borrowers shall
have delivered to the Administrative Agents evidence of insurance with respect
to the Loan Parties customary for similarly situated companies, including
reasonably satisfactory endorsements naming the Administrative Agents as
mortgagee, loss payee and additional insured on all such policies.


 


(n)                                
The Borrowers shall
have delivered to the Administrative Agents a solvency certificate, in form and
substance reasonably satisfactory to the Administrative Agents and
ChaseLincoln, together with such other evidence of solvency reasonably
requested by the Administrative Agents or ChaseLincoln, confirming the solvency
of each Borrower after giving effect to the Transactions.


 


(o)                                
The Administrative
Agents shall have received appraisals conducted on certain inventory,
machinery, equipment and the Mortgaged Properties of the Loan Parties, and the
results of such appraisals shall be satisfactory to the Administrative Agents
and ChaseLincoln in all respects.


 


(p)                                
The Loan Parties
shall have delivered such other documents as the Administrative Agents, the
Issuing Banks, any Lender or their respective counsel may have reasonably requested.


 


The Administrative Agents
shall notify the Borrowers and the Lenders of the Effective Date, and such
notice shall be conclusive and binding.  Notwithstanding the foregoing,
the obligations of the Lenders to make Loans and of the Issuing Banks to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 9.03)
at or prior to 3:00 p.m., New York time, on March 31, 2005 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).


 


SECTION 4.02                                           
Each Credit Event.  The obligation of each Lender to
make a Loan on the occasion of any Borrowing (including by way of acceptance
and purchase of Acceptances),


 


97












 


and of the Issuing Banks
to issue, amend, renew or extend any Letter of Credit, is subject to the
satisfaction of the following conditions:


 


(a)                                 
The representations
and warranties of the Borrowers set forth in this Agreement shall be true and
correct on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable.


 


(b)                                
At the time of and
immediately after giving effect to such Borrowing or the issuance, amendment,
renewal or extension of such Letter of Credit, as applicable, no Default shall
have occurred and be continuing.


 


(c)                                 
After giving effect
to any Borrowing or the issuance of any Letter of Credit, Availability is not
less than zero.


 


(d)                                
Such Borrowing and
the issuance, amendment, renewal or extension of such Letter of Credit
constitute permitted Indebtedness under the Senior Unsecured Debt Documents.


 


Each Borrowing and each
issuance, amendment, renewal or extension of a Letter of Credit shall be deemed
to constitute a representation and warranty by the Borrowers on the date
thereof as to the matters specified in Sections 4.02(a), (b), (c)
and (d).


 


ARTICLE V


 


Affirmative Covenants


 


Until
the Commitments have expired or been terminated and the principal of and
interest on each Loan, all Acceptance Exposure and all fees payable hereunder
shall have been paid in full, there are no Acceptances outstanding and all
Letters of Credit shall have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrowers jointly and severally covenant and
agree with the Administrative Agents, the Lenders and the Issuing Banks that:


 


SECTION 5.01                                           
Financial
Statements; Borrowing Base and Other Information.  The Borrowers will furnish to each
Administrative Agent and each Lender:


 


(a)                                 
within 90 days after
the end of each fiscal year of the Parent its audited consolidated balance
sheet and related statements of operations, stockholders’ equity and cash flows
as of the end of and for such year, together with unaudited business segment
reporting to the extent required by GAAP and the U.S. Securities and Exchange
Commission, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by independent public accountants of
recognized national standing (without a “going concern” qualification,
paragraph of emphasis or explanatory note or any like qualification,
explanation or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of


 


98












 


operations of the Parent and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, accompanied by any management letter prepared by said accountants;


 


(b)                                
within 45 days after
the end of each of the first three Fiscal Quarters of the Parent other than the
first Fiscal Quarter after the Effective Date, and within 75 days after the end
of the first Fiscal Quarter of the Parent after the Effective Date, its
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such Fiscal Quarter and the then
elapsed portion of the fiscal year, together with unaudited business segment
reporting to the extent required by GAAP and the U.S. Securities and Exchange
Commission, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Parent and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;


 


(c)                                 
within 30 days after
the end of each fiscal month of the Parent, its unaudited consolidated balance
sheet and related statements of operations, stockholders’ equity and cash flows
as of the end of and for such fiscal month and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Parent and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;


 


(d)                                
concurrently with any
delivery of financial statements under clause (a), (b) or (c) above, a
certificate of a Financial Officer of the Administrative Borrower in
substantially the form of Exhibit C (i) certifying, in the case of the
financial statements delivered under clause (b) or (c), as presenting fairly in
all material respects the financial condition and results of operations of the
Parent and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments
and the absence of footnotes, (ii) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (iii) setting forth
reasonably detailed calculations demonstrating compliance with Section
6.04(i), Section 6.06, Section 6.09, Section 6.10 and Section
6.11, and (iv) stating whether any change in GAAP or in the application
thereof has occurred since the date of the audited financial statements
referred to in Section 3.04 which affects the financial statements
accompanying such certificate and, if any such change has occurred, specifying
the effect of such change on the financial statements accompanying such
certificate;


 


(e)                                 
concurrently with any
delivery of financial statements under clause (a) above, a certificate of the
accounting firm that reported on such financial statements


 


99












 


stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);


 


(f)                                   
as soon as available,
but in any event not more than 45 days prior to the end of each fiscal year of
the Parent, but not less than 15 days prior to the end of such fiscal year, a
copy of the financial plan and forecast (including a projected consolidated and
consolidating balance sheet, income statement and funds flow statement) of the
Parent for each month of the immediately succeeding fiscal year of the Parent
(the “Projections”) in form reasonably satisfactory to the
Administrative Agents;


 


(g)                                
as soon as available
but in any event (1) for the period commencing on the Effective Date and ending
on September 24, 2005, within fifteen days
of the end of each calendar month and at such other times as may be reasonably
requested by the Administrative Agents and (2) thereafter, within ten days of
the end of each calendar month and at such other times as may be reasonably
requested by the Administrative Agents, in each case as of the period then
ended, a Borrowing Base Certificate and supporting information in connection
therewith, provided that if on any date the Borrowers’ Availability is
less than U.S.$35,000,000, thereafter, the Borrowers will be required to
furnish a Borrowing Base Certificate and supporting information in connection
therewith to each Administrative Agent and each Lender as soon as available but
in any event within ten days of
the end of each calendar week, and at such other times as may be requested by
the Administrative Agents, as of the period then ended;


 


(h)                                
as soon as available
but in any event (1) for the period commencing on the Effective Date and ending
on September 24, 2005, within thirty days
of the end of each calendar month and at such other times as may be requested
by the Administrative Agents and (2) thereafter, within ten days of the end of
each calendar month and at such other times as may be requested by the
Administrative Agents, in each case as of the period then ended:


 


(i)                                    
a detailed aging of
the Borrowers’ Accounts (1) including all invoices aged by invoice date and (2)
reconciled to the Borrowing Base Certificate delivered as of such date prepared
in a manner reasonably acceptable to the Administrative Agents, together with a
summary specifying the name, address, and balance due for each Account Debtor;


 


(ii)                                 
a schedule detailing
the Borrowers’ Inventory, in form satisfactory to the Administrative Agents,
(1) by location (showing Inventory in transit, any Inventory located with a
third party under any consignment, bailee arrangement, or warehouse agreement),
by class (raw material, work-in-process and finished goods), by product type,
and by volume on hand, which Inventory shall be valued at the lower of cost
(determined on a first-in, first-out basis) or market and adjusted for U.S.
Reserves and Canadian Reserves as the Administrative Agents have previously
indicated to the Borrowers are deemed by the Administrative Agents to be
appropriate in their Permitted Discretion, (2) including a report of any
variances or other results of Inventory counts performed by the Borrowers since
the last Inventory schedule (including information regarding sales or other
reductions, additions, returns, credits issued by


 


100












 


Borrowers and complaints
and claims made against the Borrowers), and (3) reconciled to the Borrowing
Base Certificate delivered as of such date;


 


(iii)                              
a worksheet of
calculations prepared by the Borrowers to determine Eligible Accounts and
Eligible Inventory, such worksheets detailing the Accounts and Inventory
excluded from Eligible Accounts and Eligible Inventory and the reason for such
exclusion;


 


(iv)                             
a reconciliation of
the Borrowers’ Accounts and Inventory between the amounts shown in the
Borrowers’ general ledger and financial statements and the reports delivered
pursuant to clauses (i) and (ii) above;


 


(v)                                
a reconciliation of
the loan balance per the Borrowers’ general ledger to the loan balance under
this Agreement; and


 


(vi)                             
a schedule detailing
the obligations of each Borrower and each of the Borrowers’ Subsidiaries in
respect of any Swap Agreement (for purposes of this subsection, the
“obligations” of any Borrower or any Subsidiary in respect of any Swap
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that such Borrower or such Subsidiary would be required
to pay if such Swap Agreement were terminated at such time);


 


(i)                                    
as soon as available
but in any event within ten days
of the end of each calendar month and at such other times as may be requested
by the Administrative Agents, as of the month then ended, a schedule and aging
of the Borrowers’ accounts payable;


 


(j)                                    
promptly upon the
reasonable request of either Administrative Agent:


 


(i)                                    
copies of invoices in
connection with the invoices issued by the Borrowers in connection with any
Accounts, credit memos, shipping and delivery documents, and other information
related thereto;


 


(ii)                                 
copies of purchase
orders, invoices, and shipping and delivery documents in connection with any
Inventory or Equipment purchased by any Loan Party; and


 


(iii)                              
a schedule detailing
the balance of all intercompany accounts of the Loan Parties;


 


(k)                                 
At any time after
Availability falls below U.S.$35,000,000, as soon as available but in any event
within three days of the end of
each calendar week and at such other times as may be requested by the
Administrative Agents, as of the period then ended, the Borrowers’ sales
journal, cash receipts journal (identifying trade and non-trade cash receipts)
and debit memo/credit memo journal;


 


101












 


(l)                                    
as soon as possible
and in any event within twenty days
of filing thereof, copies of all tax returns filed by any Loan Party with the
U.S. Internal Revenue Service;


 


(m)                              
as soon as possible
and in any event within two-hundred and seventy days after the close of the
fiscal year of the Parent, a statement of the unfunded liabilities of each
Plan, certified as correct by an actuary enrolled under ERISA;


 


(n)                                
within thirty days of the first Business Day of each
March and September, a certificate of good standing for each Loan Party from
the appropriate governmental officer in its jurisdiction of incorporation,
formation, or organization;


 


(o)                                
promptly after the
same become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by any Borrower or any Subsidiary with the
Securities and Exchange Commission, or any Governmental Authority succeeding to
any or all of the functions of said Commission, or with any national securities
exchange, or distributed by any Borrower to its shareholders generally, as the
case may be; and


 


(p)                                
promptly following
any request therefor, such other information regarding the operations, business
affairs and financial condition of any Borrower or any Subsidiary, or
compliance with the terms of this Agreement as the Administrative Agents or any
Lender may reasonably request, including, without limitation, a customer list
for the Loan Parties and their Subsidiaries, with the name, mailing address and
phone number of each customer.


 


SECTION 5.02                                           
Notices of
Material Events. 
The Borrowers will furnish to each Administrative Agent and each Lender prompt
written notice of the following:


 


(a)                                 
the occurrence of any
Default;


 


(b)                                
the assertion by the
holder of any Equity Interests of any Loan Party or the holder of any
Indebtedness of any Loan Party in excess of U.S.$5,000,000 that any default
exists with respect thereto or that any Loan Party is not in compliance
therewith;


 


(c)                                 
receipt of any notice
of any governmental investigation or any litigation commenced or threatened
against any Loan Party that (i) seeks damages in excess of U.S.$5,000,000, (ii)
seeks injunctive relief, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets, (iv) alleges criminal misconduct by any Loan Party,
(v) alleges the violation of any law regarding, or seeks remedies in connection
with, any Environmental Laws; or (vi) involves any product recall;


 


(d)                                
any Lien (other than
Permitted Encumbrances) securing a claim or claims in excess of U.S.$250,000 in
the aggregate made or asserted against any of the Collateral of which any Loan
Party is aware;


 


102












 


(e)                                 
commencement of any
proceedings contesting any tax, fee, assessment, or other governmental charge
in excess of U.S.$5,000,000;


 


(f)                                   
the opening of any
new deposit account by any Loan Party with any bank or other financial
institution;


 


(g)                                
any loss, damage, or
destruction to the Collateral in the amount of U.S.$5,000,000 or more, whether
or not covered by insurance;


 


(h)                                
any and all default
notices sent or received under or with respect to (i) any leased location or
(ii) public warehouse where Collateral is located (which shall be delivered
within five Business Days after receipt thereof), unless the applicable Loan
Party has cured such default;


 


(i)                                    
all material
amendments to any material real estate lease, together with a copy of each such
amendment;


 


(j)                                    
immediately after
becoming aware of any pending or threatened strike, work stoppage, unfair labor
practice claim, or other labor dispute affecting any Borrower or any of their
Subsidiaries in a manner which could reasonably be expected to have a Material
Adverse Effect;


 


(k)                                 
the fact that a Loan
Party has entered into a Swap Agreement or an amendment to a Swap Agreement,
together with copies (unless a Lender is a party thereto) of all agreements
evidencing such Swap Agreement or amendments thereto (which shall be delivered
within two Business Days);


 


(l)                                    
the occurrence of any
ERISA Event or underfunding of any Non-U.S. Plan that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect; and


 


(m)                              
(i) (A) the
occurrence of unpermitted Releases of Hazardous Material of which any Loan Party
is aware, (B) the receipt by any Loan Party of any notice of violation of or
potential liability or similar notice under, or the existence of any condition
that could reasonably be expected to result in violations of or liabilities under, any Environmental Law
or (C) the commencement of, or any material change to, any action,
investigation, suit, proceeding, claim, demand, dispute alleging a violation of
or liability under any Environmental Law, that, for each of clauses (A),
(B) and (C) (and, in the case of clause (C), if
adversely determined), in the aggregate for each such clause, could reasonably
be expected to result in Environmental Liabilities in excess of U.S.$250,000;


 


(ii)                                 
the receipt by any
Loan Party of notification (A) that any property of any Loan Party is
subject to any Lien in favor of any Governmental Authority securing, in whole
or in part, Environmental Liabilities in excess of U.S.$250,000 or (B) that any
Governmental Authority is seeking such a Lien; and


 


103












 


(iii)                              
any acquisition of
Securities (as defined in the UCC), other real or immovable property or any
other property, any proposed leasing of property or any other action by any
Loan Party, in each case the consequences of which, in the aggregate, have a
reasonable likelihood of resulting in Environmental Liabilities in excess of
U.S.$250,000; and


 


(n)                                
any other development
that results in, or could reasonably be expected to result in, a Material
Adverse Effect.


 


Each
notice delivered under this Section 5.02 shall be accompanied by a
statement of a Financial Officer or other executive officer of the
Administrative Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.


 


SECTION 5.03                                           
Existence; Conduct
of Business. 
Each Borrower will, and will cause each other Loan Party to, (a) do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business, and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect, provided that the foregoing shall not
prohibit (i) any merger, consolidation, liquidation or dissolution permitted
under Section 6.03 or (ii) any amendment to any organizational document
or Material Agreement of any Loan Party so long as such amendment does not
adversely adversely impact the Borrowers’ ability to satisfy the Obligations or
otherwise adversely affect the Lenders, and (b) carry on and conduct its
business in substantially the same manner and in substantially the same fields
of enterprise as it is presently conducted.


 


SECTION 5.04                                           
Payment of
Obligations. 
Each Borrower will, and will cause each other Loan Party to, pay or discharge
when due all Material Indebtedness and all other material liabilities and
obligations, including taxes, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) such Loan
Party has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, (c) such liabilities would not result in aggregate
liabilities in excess of U.S.$5,000,000 and (d) none of the Collateral becomes
subject to forfeiture or loss as a result of the contest.


 


SECTION 5.05                                           
Maintenance of
Properties and Intellectual Property Rights.  Each Borrower will, and will cause each other
Loan Party to, (a) keep and maintain all property material to the conduct of
its business in condition sufficient for the ordinary operations of such Loan
Party, and (b) obtain and maintain in effect at all times all material
franchises, governmental authorizations, intellectual property rights, licenses
and permits, which are necessary for it to own its property or conduct its
business as conducted on the date of this Agreement.


 


SECTION 5.06                                           
Books and Records;
Inspection Rights. 
Each Borrower will, and will cause each other Loan Party to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities.  Each
Borrower will, and will cause each other Loan Party to, permit any
representatives designated by any Administrative Agent or any Lender, upon
reasonable prior notice, to visit and


 


104












 


inspect its properties,
to examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested.  The
Borrowers acknowledge, and upon the request of any Administrative Agent will
cause each other Loan Party to acknowledge, that the Administrative Agents,
after exercising their rights of inspection, may prepare and distribute to the
Lenders certain Reports pertaining to the Loan Parties’ assets for internal use
by the Administrative Agents and the Lenders.


 


SECTION 5.07                                           
Compliance with
Laws.  Each
Borrower will, and will cause each other Loan Party to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.


 


SECTION 5.08                                           
Use of Proceeds and
Letters of Credit. 
The proceeds of the Loans will be used only (i) to finance a portion of the
consideration for the Progress Rail Acquisition, (ii) to pay fees and expenses
in connection with the Transactions, (iii) for working capital needs and general
corporate purposes of the Borrowers and the other Loan Parties and (iv) to
finance Acquisitions permitted by Section 6.04.  No part of the
proceeds of any Loan will be used, whether directly or indirectly, (i) for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X, or (ii) to make any Acquisition, except as
expressly permitted pursuant to the terms hereof.  Letters of Credit will
be issued only to support the working capital needs and general corporate
purposes of the Borrowers and the other Loan Parties.


 


SECTION 5.09                                           
Insurance.  Each Borrower will, and will
cause each other Loan Party and each subsidiary of a Loan Party to, maintain
with financially sound and reputable carriers having a financial strength
rating of at least A VII by A.M. Best Company insurance against: (i) loss or
damage by fire and loss in transit; (ii) theft, burglary, pilferage, larceny,
embezzlement, and other criminal activities; (iii) business interruption; (iv)
general liability; and (v) and such other hazards, as is customary in the
business of such Person.  All such insurance shall be in amounts, cover
such assets and be under policies reasonably acceptable to the Administrative Agents
in their Permitted Discretion.  All policies covering the casualty of the
Collateral are to be made payable to the Administrative Agents for the benefit
of the Secured Parties, as its interests may appear, in case of loss, under a
standard non-contributory “lender” or “secured party” clause and are to contain
such other provisions as the Administrative Agents may reasonably require to
fully protect the Secured Parties’ interest in the Collateral and to any
payments to be made under such policies.  All certificates of insurance
are to be delivered to the Administrative Agents, with the loss payable and
additional insured endorsement in favor of the Administrative Agents, and shall
provide for not less than 30 days’ prior written notice to the Administrative
Agents of the exercise of any right of cancellation and that any loss payable
thereunder shall be payable notwithstanding any act or negligence of any Loan
Party or any Secured Party which might, absent such agreement, result in a
forfeiture of all or a part of such insurance payment.  The Borrowers will
not, and will not permit any other Loan Party to, use or permit any property to
be used in any manner which would be reasonably likely to render inapplicable
any insurance coverage.  The Borrowers will cause any insurance or
condemnation proceeds received by any Loan Party to be immediately forwarded to
the Administrative Agents and the Administrative Agents will apply any such
proceeds to the reduction of the Obligations


 


105












 


in accordance with Section
2.13(b)(v) and Section 2.13(c).  Original policies or
certificates thereof reasonably satisfactory to the Administrative Agents
evidencing such insurance shall be delivered to the Administrative Agents at
least 30 days prior to the expiration of the existing or preceding policies.


 


SECTION 5.10                                           
Appraisals.  At any time that any
Administrative Agent requests, each Borrower will, and will cause each other
Loan Party to, at the sole expense of the Loan Parties, provide such
Administrative Agent with appraisals or updates thereof of their Inventory,
equipment and real or immovable property from an appraiser selected and engaged
by such Administrative Agent, and prepared on a basis satisfactory to such
Administrative Agent, such appraisals and updates to include, without
limitation, information required by applicable law and regulations; provided,
however, (i) if no Default shall have occurred and be continuing, only
one such Inventory appraisal or update per calendar year shall be conducted,
(ii) if no Default shall have occurred and be continuing and Availability has
fallen below U.S.$35,000,000, only one such equipment appraisal or update or
real or immovable property appraisal or update per calendar year shall be
conducted (it being agreed that such appraisals will cover properties at
multiple locations) and (iii) if no Default shall have occurred and be
continuing and Availability has not fallen below U.S.$35,000,000, only one such
equipment appraisal or update or real or immovable property appraisal or update
per calendar year shall be conducted and any such appraisal or update shall be
conducted at the expense of such Administrative Agent (it being agreed that
such appraisals will cover properties at multiple locations); provided, further,
that any Administrative Agent may require Inventory appraisals or updates more
frequently at its own expense.


 


SECTION 5.11                                           
Additional
Collateral; Further Assurances.  (a)  The Borrowers will, unless the
Required Lenders otherwise consent, cause each subsidiary of any Loan Party
(excluding any Non-U.S. Subsidiary) formed or acquired after the date of this
Agreement in accordance with the terms of this Agreement to become a Borrower by
executing this Agreement through a joinder agreement in form and substance
reasonably satisfactory to the Administrative Agents  (the “Joinder
Agreement”).  Upon execution and delivery thereof, each such Person
(i) shall automatically become a Borrower hereunder and thereupon shall have
all of the rights, benefits, duties, and obligations in such capacity under the
Loan Documents, and (ii) will grant Liens to the Collateral Agents, for the
benefit of the Collateral Agents and the Secured Parties, in any property of
such Borrower which constitutes Collateral.


 


(b)                                
Each Borrower will,
and will cause each other Loan Party to cause (i) (x) (a) 100% of the issued
and outstanding Equity Interests of each of its U.S. Subsidiaries other than
DAPCO Rail Services, LLC and (b) 60% of the issued and outstanding Equity
Interests of DAPCO Rail Services, LLC to be subject at all times to a first
priority, perfected Lien (subject to Permitted Encumbrances) in favor of the
Collateral Agents pursuant to the terms and conditions of the Loan Documents or
other security documents as the Administrative Agents shall reasonably request,
and (y) 65% of the issued and outstanding Equity Interests entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the
issued and outstanding Equity Interests not entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Non-U.S. Subsidiary
directly owned by any U.S. Borrower or any U.S. Subsidiary to be subject at all
times to a first priority, perfected Lien (subject to Permitted


 


106












 


Encumbrances) in favor of the U.S. Collateral Agent
pursuant to the terms and conditions of the Loan Documents or other security
documents as the U.S. Administrative Agent shall reasonably request; provided
that if, as a result of a change in applicable law after the date hereof, a
pledge of a greater percentage than 65% of the issued and outstanding Equity
Interests entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) could not reasonably be expected to cause (1) undistributed
earnings of such Non-U.S. Subsidiary (as determined for U.S. federal income tax
purposes) to be treated as a deemed dividend to such Non-U.S. Subsidiary’s U.S.
parent or (2) other material adverse tax consequences, then the Borrowers will
take steps to cause such greater percentage to be subject to a first priority,
perfected Lien (subject to Permitted Encumbrances) in favor of the Collateral
Agents, and (ii) 100% of the issued and outstanding Equity Interests in each
Non-U.S. Subsidiary directly owned by any Borrower or any other Loan Party to
be subject at all times to a first priority, perfected Lien (subject to
Permitted Encumbrances) in favor of the Canadian Collateral Agent to secure the
Canadian Obligations pursuant to the terms and conditions of the Loan Documents
or other security documents as the Canadian Administrative Agent shall
reasonably request.


 


(c)                                 
Without limiting the
foregoing, each Borrower will, and will cause each other Loan Party and each
subsidiary of a Loan Party which is required to become a Loan Party pursuant to
the terms of this Agreement to, execute and deliver, or cause to be executed
and delivered, to each Administrative Agent such documents and agreements, and
will take or cause to be taken such actions as such Administrative Agent may,
from time to time, reasonably request to carry out the terms and conditions of
this Agreement and the other Loan Documents, including but not limited to all
items of the type required by Section 4.01 (as applicable).


 


SECTION
5.12                                           
Post-Closing
Obligations. 
The Loan Parties shall comply with each requirement set forth in the
Post-Closing Letter on or before the date referred to in the Post-Closing
Letter with respect to such requirement.


 


ARTICLE VI


 


Negative Covenants


 


Until
the Commitments have expired or terminated and the principal of and interest on
each Loan and Acceptance Exposure and all fees payable hereunder have been paid
in full, there are no Acceptances outstanding and all Letters of Credit have
expired or terminated and all LC Disbursements shall have been reimbursed, the
Borrowers jointly and severally covenant and agree with the Administrative
Agents, the Collateral Agents, the Issuing Banks and the Lenders that:


 


SECTION 6.01                                           
Indebtedness.  The Borrowers will not, and will
not permit any other Loan Party to, create, incur or suffer to exist any
Indebtedness, except:


 


(a)                                 
the Obligations;


 


107












 


(b)                                
Indebtedness existing
on the date hereof and set forth on Schedule 6.01 and extensions,
renewals and replacements of any such Indebtedness in accordance with clause
(g) hereof;


 


(c)                                 
Indebtedness in
respect of the 7.75% Senior Unsecured Notes due 2012 issued pursuant to the
Senior Unsecured Debt Documents;


 


(d)                                
Indebtedness of any
Loan Party (other than the Parent) to any other Loan Party (other than the
Parent) or a Non-U.S. Subsidiary, provided that:


 


(i)                                    
the applicable Loan
Parties and Non-U.S. Subsidiaries shall have executed on the Effective Date a
demand note to evidence any such intercompany Indebtedness owing at any time by
any applicable Loan Party to another applicable Loan Party or Non-U.S.
Subsidiary, which demand notes shall be in form and substance reasonably satisfactory
to the Administrative Agents and shall be pledged and delivered to the
Collateral Agents pursuant to the Security Agreements as additional collateral
security for the Obligations;


 


(ii)                                 
each Loan Party shall
record all intercompany transactions on its books and records in a manner
reasonably satisfactory to the Administrative Agents; and


 


(iii)                              
the obligations of
the Loan Parties under any such Intercompany Notes shall be subordinated to the
Obligations hereunder in accordance with Section 9.20.


 


(e)                                 
Guarantees by a Loan
Party (other than the Parent) of Indebtedness of any other Loan Party (other
than the Parent) if the primary obligation is expressly permitted elsewhere in
this Section 6.01;


 


(f)                                   
Indebtedness of any
Loan Party (other than the Parent) incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the acquisition of
any such assets or secured by a Lien on any such assets prior to the
acquisition thereof, and extensions, renewals and replacements of any such
Indebtedness in accordance with clause (g) hereof; provided that (i)
such Indebtedness is incurred prior to or within 120 days after such
acquisition or the completion of such construction or improvement, and (ii) the
aggregate principal amount of Indebtedness permitted by this clause (f) shall
not exceed U.S.$10,000,000 at any time outstanding;


 


(g)                                
Indebtedness which
represents an extension, refinancing, or renewal of any of the Indebtedness
described in clauses (b), (c), (f), (k) and (m)
hereof; provided that, (i) the principal amount or interest rate of such
Indebtedness is not increased, (ii) any Liens securing such Indebtedness are
not extended to any additional property of any Loan Party, (iii) such
extension, refinancing or renewal does not result in a shortening of the
average weighted maturity of the Indebtedness so extended, refinanced or
renewed, (iv) the terms of any such extension, refinancing, or renewal are not
less favorable to the obligor thereunder than the original terms of such Indebtedness
and (v) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must include
subordination terms and conditions that


 


108












 


are at least as favorable to the Administrative Agents
and the Lenders as those that were applicable to the refinanced, renewed, or
extended Indebtedness;


 


(h)                                
Indebtedness
consisting of reimbursement or indemnification obligations incurred in the
ordinary course of business in favor of any Person providing worker’s
compensation, health, disability or other employee benefits or property,
casualty or liability insurance to any of the Loan Parties (including
obligations in respect of letters of credit obtained in the ordinary course of
business for the benefit of any such Person);


 


(i)                                    
Indebtedness of any
Loan Party in respect of performance bonds, bid bonds, appeal bonds, surety
bonds, self-insurance obligations and similar obligations and trade-related
letters of credit, in each case provided in the ordinary course of business,
including those to secure health, safety, and environmental obligations;


 


(j)                                    
Indebtedness in
respect of deposits or advances received in the ordinary course of business in
connection with the sale of goods and services;


 


(k)                                 
unsecured
Indebtedness that is subordinated to the Obligations in a manner satisfactory
to the Administrative Agents and the proceeds of which are used concurrently to
finance the consideration for Permitted Acquisitions or the making of
Restricted Payments permitted under Section 6.06; provided that (i)
the maturity date of such Indebtedness is no sooner than twelve months after
the Maturity Date, (ii) the terms of such Indebtedness do not require any
scheduled amortization, sinking fund or other payments (other than scheduled
payments of interest) prior to the maturity date of such Indebtedness, (iii)
the Fixed Charge Coverage Ratio, as of the last day of the Fiscal Quarter ended
immediately prior to the date of incurrence of such Indebtedness and after
giving pro forma effect to the incurrence of such Indebtedness, is at least
1.15 to 1.00 and (iv) the Borrowers’ Average 20-Day Availability is not less
than U.S.$50,000,000 and the Borrowers’ Availability as of the date of the
incurrence of such Indebtedness is not less than U.S.$50,000,000;


 


(l)                                    
Swap Obligations to
the extent permitted under Section 6.05; and


 


(m)                              
other unsecured
Indebtedness in an aggregate principal amount not exceeding U.S.$5,000,000 at
any time outstanding.


 


SECTION 6.02                                           
Liens.  The Borrowers will not, and will
not permit any other Loan Party to, create, incur, assume or permit to exist
any Lien on any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues (including accounts receivable) or rights
in respect of any thereof, except:


 


(a)                                 
Permitted
Encumbrances;


 


(b)                                
the filing of
financing statements or the equivalent thereof in any applicable jurisdiction
solely as a precautionary measure in connection with operating leases or
consignment of goods;


 


109












 


(c)                                 
leases or subleases
of assets or properties of a Loan Party, in each case entered into in the
ordinary course of such Loan Party’s business so long as such leases do not,
individually or in the aggregate (i) interfere in any material respect with the
ordinary conduct or business of such Loan Party and (ii) materially impair the
use or the value of the property or assets subject thereto;


 


(d)                                
Liens on assets
acquired in a Permitted Acquisition after the Effective Date existing at the
time of acquisition thereof by a Loan Party; provided that such Liens
were not incurred in connection with, or in contemplation of, such acquisition
and do not extend to any assets of such Loan Party other than the specific
assets so acquired;


 


(e)                                 
any Lien on any
property or asset of any Loan Party existing on the date hereof and set forth
in Schedule 6.02; provided that (i) such Lien shall not apply to
any other property or asset of such Loan Party, and (ii) such Lien shall secure
only those obligations which it secures on the date hereof and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;


 


(f)                                   
Liens on fixed or
capital assets acquired, constructed or improved by a Loan Party; provided
that (i) such security interests secure Indebtedness permitted by clause (f) of
Section 6.01, (ii) such security interests and the Indebtedness secured
thereby are incurred prior to or within 120 days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness secured
thereby does not exceed the cost of acquiring, constructing or improving such
fixed or capital assets, and (iv) such security interests shall not apply to
any other property or assets of such Loan Party; and


 


(g)                                
other Liens not of a
type set forth in clauses (a) through (f) above incurred in the ordinary course
of business of any Loan Party that do not in the aggregate exceed
U.S.$5,000,000; provided that no such Lien shall secure Indebtedness for
borrowed money or any Swap Obligation.


 


Notwithstanding the
foregoing, none of the Liens permitted pursuant to this Section 6.02
(other than any Lien junior to the Lien of the Collateral Agents described in
clause (a) (but only to the extent not yet due), (b) (to the extent securing
obligations that are not overdue), (c) or (e) in the definition of Permitted
Encumbrances) may at any time attach to any Loan Party’s (1) Accounts and (2)
Inventory.


 


SECTION 6.03                                           
Fundamental
Changes; Asset Sales. 
(a)  The Borrowers will not, and will not permit any other Loan Party to,
merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it or liquidate or dissolve, or amend or
terminate its articles of incorporation, charter, certificate of formation,
by-laws, operating, management or partnership agreement or other organizational
document, except that, if at the time thereof and immediately after giving
effect thereto no Event of Default shall have occurred and be continuing (i)
any U.S. Borrower may merge into any other U.S. Borrower, (ii) any Canadian
Borrower may merge into any other Canadian Borrower, (iii) any U.S. Loan Party
(other than any U.S. Borrower) may merge into (1) any U.S. Borrower in a
transaction in which


 


110












 


the U.S. Borrower is the
surviving corporation or (2) any other U.S. Loan Party (other than any U.S.
Borrower) and (iv) any Canadian Loan Party (other than any Canadian Borrower)
may merge into (1) any Canadian Borrower in a transaction in which the Canadian
Borrower is the surviving corporation or (2) any other Canadian Loan Party
(other than any Canadian Borrower); provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Section 6.04.


 


(b)                                
The Borrowers will
not, and will not permit any other Loan Party to, sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) any of its
assets, or all or substantially all of the stock of any of its Subsidiaries (in
each case, whether now owned or hereafter acquired), except that (i) any Loan
Party (other than the Parent) may sell, transfer, lease or otherwise dispose of
(1) its assets to any Loan Party (other than the Parent), if at the time
thereof and immediately after giving effect thereto no Event of Default shall
have occurred and be continuing, (2) Inventory in the ordinary course of
business, (3) equipment that is obsolete or no longer useful in its business; provided
that (x) the Administrative Borrower shall provide prompt written notice to the
Administrative Agents of any equipment that is sold, transferred, leased or
otherwise disposed of, (y) upon such sale, transfer, lease or other disposal,
such equipment shall not constitute Eligible Equipment and (z) such Loan Party
complies with the mandatory prepayment provisions in Section 2.13, and
(4) other assets having a book value not exceeding U.S.$2,500,000 in the aggregate in any fiscal year, if at
the time thereof and immediately after giving effect thereto no Event of
Default shall have occurred and be continuing; and (ii) if at the time thereof
and immediately after giving effect thereto no Event of Default shall have
occurred and be continuing, any Loan Party (other than the Parent) may sell,
transfer, lease or otherwise dispose of its assets (other than Equity Interests
in a Subsidiary); provided that (1) not less than 80% of the
consideration for such sale, transfer, lease or disposal is paid in cash, (2)
such Loan Party receives fair value for the assets so sold, transfered, leased
or otherwise disposed of, (3) the aggregate book value of all assets sold,
transferred or otherwise disposed of in reliance upon this clause (b)(ii)
during any Fiscal Year shall not exceed an amount equal to the lesser of (x)
ten percent (10%) of the Parent’s Consolidated Net Tangible Assets as of the
commencement of such Fiscal Year and (y) Fifty Million U.S. Dollars
(U.S.$50,000,000) and (4) if the assets which are the subject of such sale,
transfer, lease or disposal exceed U.S.$25,000,000, the Fixed Charge Coverage
Ratio, as of the last day of the Fiscal Quarter ended immediately prior to the
date of such sale, transfer, lease or disposal and after giving pro forma
effect to such sale, transfer, lease or disposal, is at least 1.15 to
1.00.  The Net Cash Proceeds of any sale or disposition permitted pursuant
to this Section 6.03(b) (other than pursuant to clause (i)(2) of this Section
6.03(b)) shall be delivered to the Administrative Agents as required by Sections
2.13(b) and (c) and applied to the Obligations as set forth therein.


 


(c)                                 
The Borrowers will
not, and will not permit any other Loan Party to, engage in any business other
than businesses of the type conducted by the Borrowers and their Subsidiaries
on the date of execution of this Agreement and businesses reasonably related thereto.


 


111












 


SECTION 6.04                                           
Investments,
Loans, Advances, Guarantees and Acquisitions.  The Borrowers will not, and will not permit
any other Loan Party to, purchase, hold or acquire (including pursuant to any merger
or amalgamation with any Person that was not a Loan Party and a wholly owned
Subsidiary prior to such merger or amalgamation) any capital stock, evidences
of indebtedness or other securities (including any option, warrant or other
right to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any
other Person constituting a business unit (whether through purchase of assets,
merger, amalgamation or otherwise), except:


 


(a)                                 
Permitted
Investments, subject to control agreements in favor of the Collateral Agents
for the benefit of the Secured Parties or otherwise subject to a perfected
security interest in favor of the Collateral Agents for the benefit of the
Secured Parties;


 


(b)                                
investments by any
Loan Party existing on the date hereof in the Equity Interests of its
Subsidiaries;


 


(c)                                 
loans or advances
made by a Loan Party (other than the Parent) to any other Loan Party (other
than the Parent) permitted by Section 6.01;


 


(d)                                
investments in a
wholly-owned Non-U.S. Subsidiary that is not a Loan Party by any Borrower, provided
that the aggregate amount of all investments made under this clause (d) shall
not exceed U.S.$5,000,000;


 


(e)                                 
Guarantees
constituting Indebtedness permitted by Section 6.01;


 


(f)                                   
other investments in
existence on the date of this Agreement and described in Schedule 6.04;


 


(g)                                
loans or advances
made by a Loan Party (other than the Parent) to its employees on an arms-length
basis in the ordinary course of business consistent with past practices for
travel and entertainment expenses, relocation costs and similar purposes up to
a maximum of U.S.$50,000 to any employee and up to a maximum of U.S.$500,000 in
the aggregate at any one time outstanding;


 


(h)                                
subject to Sections
4.4.2 and 4.4.5 of the Security Agreement, notes payable, or stock
or other securities issued by Account Debtors to a Loan Party pursuant to
negotiated agreements with respect to settlement of such Account Debtor’s
Accounts in the ordinary course of business, consistent with past practices;


 


(i)                                    
investments incurred
in order to consummate Acquisitions otherwise permitted herein; provided
that (i) the Fixed Charge Coverage Ratio, as of the last day of the Fiscal
Quarter ended immediately prior to the date of consummation of such Acquisition
and after giving pro forma effect to such Acquisition, is at least 1.15 to
1.00, (ii) the Borrowers’ Average 20-Day Availability is not less than
U.S.$50,000,000, and after giving effect to such Acquisition, the Borrowers
shall have a minimum pro


 


112












 


forma Availability as of the date of consummation of
such Acquisition (after giving effect to the funding of all Revolving Loans and
the issuance of all Letters of Credit to be funded or issued as of such date)
of not less than U.S.$50,000,000, (iii) the Borrowers shall have obtained the
prior, effective written consent or approval to such Acquisition of the board
of directors or equivalent governing body of the Person being acquired or whose
assets are being acquired, (iv) the Person or business which is the subject of
such Acquisition is in the same or similar line of business as the Borrowers,
(v) all governmental and material third-party approvals necessary in connection
with such Acquisition shall have been obtained and be in full force and effect,
(vi) if acquiring a Person, such Person becomes a wholly owned Subsidiary of a
Borrower and a Loan Party, (vii) the Administrative Agents shall be reasonably
satisfied with the form and substance of the purchase or acquisition agreement
executed in connection with such Acquisition and with all other material
agreements, instruments and documents implementing such Acquisition or executed
in connection therewith and such Acquisition shall be consummated in accordance
with the terms of such documents and in compliance with applicable law and
regulatory approvals, (viii) no Default or Event of Default shall have occurred
and be continuing or would result therefrom and all representations and
warranties contained in this Agreement shall be true and correct in all material
respects on the date of the consummation of such Acquisition, and (ix) on or
before the date of consummation of such Acquisition, the Administrative Agents
shall have received (A) all documents required by the provisions of Section
5.11 with respect to any Person purchased or formed in connection with such
Acquisition and which will become a Subsidiary of a Borrower and (B) if
requested by the Administrative Agents, a certificate from the Administrative
Borrower executed by an Authorized Officer of the Administrative Borrower
certifying to the Administrative Agents and the Lenders as to the matters set
forth in the foregoing clauses (i) through (viii) (each such acquisition, a “Permitted
Acquisition” and collectively, “Permitted Acquisitions”);


 


(j)                                    
investments in joint
ventures not to exceed U.S.$5,000,000 in the aggregate outstanding at any one
time; provided that (i) no investment may be made during the continuance
of a Default or an Event of Default and (ii) no investment may be made unless
the Borrowers’ Average 20-Day Availability is not less than U.S.$50,000,000 and
the Borrowers’ Availability as of the date of the making of such investment is
not less than U.S.$50,000,000; and


 


(k)                                 
Swap Agreements
otherwise permitted under Section 6.05; and


 


(l)                                    
non-cash
consideration received in connection with the sale, transfer, lease or disposal
of any asset in compliance with Section 6.03(b).


 


SECTION 6.05                                           
Swap Agreements.  The Borrowers will not, and will
not permit any other Loan Party to, enter into any Swap Agreement, except (a)
Swap Agreements entered into to hedge or mitigate risks to which any Loan Party
has actual exposure (other than those in respect of Equity Interests of any
Loan Party), and (b) Swap Agreements entered into in order to effectively cap
or collar interest rates with respect to any interest-bearing liability of the
Loan Party or to exchange interest rates (from fixed to floating rates, from
one floating rate to another floating rate or otherwise) with respect to any
interest-bearing investment of the Loan Party.


 


113












 


SECTION 6.06                                           
Restricted
Payments. 
The Borrowers will not, and will not permit any other Loan Party or any
Subsidiary of any Loan Party to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except:


 


(a)                                 
any Loan Party may
declare and pay dividends with respect to its Equity Interests payable solely
in additional shares of its common stock,


 


(b)                                
so long as no Default
or Event of Default shall have occurred and be continuing, Subsidiaries of the
Loan Parties may declare and pay dividends ratably with respect to their Equity
Interests to any other Loan Party,


 


(c)                                 
so long as no Default
or Event of Default shall have occurred and be continuing and the Borrowers’
Average 20-Day Availability is not less than U.S.$35,000,000 and the Borrowers’
Availability as of the date of the making of such Restricted Payment is not
less than U.S.$35,000,000, each Borrower may declare and pay dividends or make distributions,
directly or indirectly, to Parent Holdco to be used by Parent Holdco to make
(i) payments pursuant to the [Management
Services Agreement] upon the
Effective Date in an aggregate amount not to exceed U.S.$4,000,000 and (ii)
additional payments pursuant to the [Management
Services Agreement] not to exceed
U.S.$2,000,000 and reimbursement of related expenses in an amount not to exceed
$500,000, in each case in any calendar year, commencing with calendar year
2006;


 


(d)                                
so long as no Default
or Event of Default shall have occurred and be continuing, each Borrower may
make payments, directly or indirectly, to Parent Holdco in an amount not to
exceed U.S.$500,000 in any Fiscal Year in order to allow Parent Holdco to fund
general corporate and overhead expenses (including salaries and other
compensation of employees) incurred by Parent Holdco in the ordinary course of
its business as a holding company for the Borrowers;


 


(e)                                 
so long as no payment
default, bankruptcy or insolvency default, or Event of Default shall have
occurred and be continuing, each Borrower may make distributions or payments,
directly or indirectly, to (i) Parent Holdco or any Borrower to be used by
Parent Holdco or such Borrower to pay franchise taxes and other fees required
to maintain Parent Holdco’s or such Borrower’s corporate existence, and (ii)
another Borrower or to Parent Holdco under a Tax Sharing Agreement and (iii)
another Borrower or Parent Holdco to be used to pay taxes (including estimated
taxes) directly attributable to (or arising as a result of) such other
Borrower’s or Parent Holdco’s being required to include in its income for tax
purposes income of the Borrower making the payment or a Subsidiary of such
Borrower; and


 


(f)                                   
so long as no Default
or Event of Default shall have occurred and be continuing, the Borrowers may
make cash Restricted Payments to Parent Holdco other than those described in
clauses (c) through (e) above in an aggregate amount not to exceed
U.S.$5,000,000, so long as (i) the Borrowers’ Average 20-Day Availability is
not less than U.S.$50,000,000 and (ii) after giving effect to such Restricted
Payments, the Borrowers shall have a minimum pro forma Availability as of the
date of consummation of such Restricted Payments (after giving effect to the
funding of all Revolving Loans


 


114












 


and the issuance of all Letters of Credit to be funded
or issued as of such date) of not less than U.S.$50,000,000.


 


SECTION 6.07                                           
Transactions with
Affiliates. 
The Borrowers will not, and will not permit any other Loan Party to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to the Loan
Party than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among a Loan Party (other than the Parent)
and another Loan Party (other than the Parent) that is a wholly owned
Subsidiary of a Loan Party not involving any other Affiliate, (c) any
Restricted Payment permitted by Section 6.06 (including distributions or
payments pursuant to any Tax Sharing Agreement that are permitted by Section
6.06) and (d) absent the continuation of any payment default, bankruptcy or
insolvency default, or Event of Default, the entering into or amending of any
agreement or arrangement that provides for payments permitted under Section
6.06(e).


 


SECTION 6.08                                           
Restrictive
Agreements. 
The Borrowers will not, and will not permit any other Loan Party to, directly
or indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of such Loan Party or any of its Subsidiaries to create, incur or
permit to exist any Lien upon any of its property or assets, or (b) the ability
of any Subsidiary of a Loan Party to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or
advances to the Borrowers or any other Subsidiary of any Borrower or to
Guarantee Indebtedness of the Borrowers or any other Subsidiary of any
Borrower; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement or the Senior
Unsecured Debt Documents, (ii) the foregoing shall not apply to restrictions
and conditions existing on the date hereof identified on Schedule 6.08
(but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (iv) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any
agreement relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness, and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases restricting the assignment thereof.


 


SECTION 6.09                                           
Prepayment of
Indebtedness; Subordinated Indebtedness.  The Borrowers will not, and will not permit
any Loan Party to, directly or indirectly, purchase, redeem, defease or prepay
any principal of, premium, if any, interest or other amount payable in respect
of any Indebtedness, including without limitation Indebtedness issued under the
Senior Unsecured Debt Documents, prior to its scheduled maturity, other than
(i) the Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if
the asset securing such Indebtedness has been sold or otherwise disposed of in
accordance with Section 6.03; (iii) Indebtedness permitted by Section
6.01(b), (c), (f), (k) and (m), in each case
upon any refinancing thereof in accordance with Section 6.01(g); (iv) so
long as no default or Event of Default shall have occurred and be continuing,
Indebtedness permitted by Section 6.01(d) or Section 6.01(l), (v)
optional


 


115












 


redemptions, and
mandatory prepayments with the proceeds of asset sales and other Extraordinary
Receipts, of Indebtedness permitted by Section 6.01(c), so long as no
Default or Event of Default shall have occurred and be continuing and after
giving effect to such redemptions or mandatory prepayments, the Borrowers shall
have a minimum pro forma Availability as of the date of consummation of such
redemptions or prepayments (after giving effect to the funding of all Revolving
Loans and the issuance of all Letters of Credit to be funded or issued as of
such date) of not less than U.S.$50,000,000.


 


No
Loan Party shall make any amendment or modification to the indenture, note or
other agreement evidencing or governing any Subordinated Indebtedness, or
directly or indirectly voluntarily prepay, defease or in substance defease,
purchase, redeem, retire or otherwise acquire, any Subordinated Indebtedness.


 


SECTION 6.10                                           
Capital
Expenditures. 
The Borrowers will not, and will not permit any Loan Party to, expend, or be
committed to expend, in excess of U.S.$25,000,000 for Capital Expenditures
during any fiscal year in the aggregate for the Borrowers and the other Loan
Parties, except to the extent actually reimbursed for such Capital Expenditures
in cash pursuant to indemnification or reimbursement provisions of the
Acquisition Documentation.


 


SECTION 6.11                   
Financial
Covenants.


 


The
Borrowers will not permit the Fixed Charge Coverage Ratio as of the last day of
any Fiscal Quarter to be less than 1.15 to 1.00; provided, however, that (i)
the Borrowers shall only be required to comply with this Section 6.11 if an
Availability Event (as defined below) occurs and (ii) if an Availability Event
occurs, the Fixed Charge Coverage Ratio shall be tested (x) as of the last day
of the most recent Fiscal Quarter for which financial statements are available
(the “Base Quarter”) and (y) as of the last day of each Fiscal Quarter
following the Base Quarter.  For purposes of this Section 6.11, an
“Availability Event” shall be deemed to have occurred if Borrowers shall have
Availability of less than U.S.$35,000,000 for any consecutive five (5) Business
Days.


 


SECTION 6.12                                           
Activities of
Parent.  The
Parent will not engage in any trade or business, or own any assets (other than
the Equity Interests of the other Borrowers, any assets related to the payment
of taxes and amounts that it received or is entitled to receive pursuant to Section
6.06(e)) or incur any Indebtedness (other than its obligations under the
Loan Documents and the Senior Unsecured Debt Documents).


 


SECTION 6.13                                           
Hazardous
Materials. 
No Loan Party shall cause or suffer to exist any release of any Hazardous
Material on, at, in, under, above, to or from any real or immovable property
owned, leased, subleased or otherwise operated or occupied by any Loan Party
that would violate any Environmental Law, form the basis for any Environmental
Liabilities or otherwise adversely affect the value or marketability of any
real or immovable property owned, leased, subleased or otherwise operated or
occupied by any Loan Party or any other property, other than such violations,
Environmental Liabilities and effects that would not, in the aggregate, have a
Material Adverse Effect.


 


116












 


SECTION 6.14                                           
Amendment or
Modification of Acquisition Documentation.  No Loan Party shall make amend or modify the
Acquisition Documentation in any material respect without the consent of the
Administrative Agents, which consent shall not be unreasonably withheld or
delayed.


 


ARTICLE VII


 


Events of Default


 


If any
of the following events (“Events of Default”) shall occur:


 


(a)                                 
the Borrowers shall
fail to pay any principal of any Loan or any reimbursement obligation in
respect of any LC Disbursement, when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment
thereof or otherwise;


 


(b)                                
the Borrowers shall
fail to pay any interest on any Loan or any fee or other amount payable under
this Agreement, within three Business Days after the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment thereof
or otherwise;


 


(c)                                 
any representation or
warranty made or deemed made by or on behalf of any Loan Party or any
Subsidiary of any Loan Party in or in connection with this Agreement or any
Loan Document or any amendment or modification thereof or waiver thereunder, or
in any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have
been materially incorrect when made or deemed made;


 


(d)                                
any Loan Party shall
fail to observe or perform any covenant, condition or agreement contained in Section
5.01, 5.02(a), 5.03 (with respect to a Loan Party’s
existence), 5.08 or in Article VI;


 


(e)                                 
any Loan Party shall
fail to observe or perform any covenant, condition or agreement contained in
this Agreement (other than those which constitute a default under another
clause of this Article VII), and such failure shall continue unremedied
for a period of (i) 15 days after the earlier of such breach or written notice
thereof from an Administrative Agent (which notice will be given at the request
of any Lender) if such breach relates to terms or provisions of Section 5.02
(other than Section 5.02(a)), 5.03 through 5.07, 5.09
and 5.10 of this Agreement or (ii) 30 days after the earlier of such
breach or written notice thereof from an Administrative Agent (which notice will
be given at the request of any Lender) if such breach relates to terms or
provisions of any other section of this Agreement;


 


117












 


(f)                                   
any Loan Party or any
Subsidiary shall fail to make any payment (whether of principal or interest and
regardless of amount) in respect of any Material Indebtedness, when and as the
same shall become due and payable;


 


(g)                                
any event or
condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided
that this clause (f) shall not apply to secured Indebtedness that becomes due
as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;


 


(h)                                
an involuntary
proceeding shall be commenced or an involuntary petition shall be filed seeking
(i) liquidation, reorganization or other relief in respect of a Loan Party or
its debts, or of a substantial part of its assets, under any U.S. or Canadian
federal, state, provincial or foreign bankruptcy, insolvency, reorganization,
adjustment of debt, receivership or similar law now or hereafter in effect or
(ii) the appointment of a receiver, receiver and manager, interim receiver,
trustee, custodian, sequestrator, conservator or similar official for any Loan
Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed or unstayed for 60
consecutive days or an order or decree approving or ordering any of the
foregoing shall be entered;


 


(i)                                    
any Loan Party shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any U.S. or Canadian federal,
state, provincial or foreign bankruptcy, insolvency, reorganization, adjustment
of debt, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, receiver and manager, interim
receiver, trustee, custodian, sequestrator, conservator or similar official for
such Loan Party or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;


 


(j)                                    
any Loan Party shall
become unable, admit in writing its inability or fail generally to pay its
debts as they become due;


 


(k)                                 
one or more judgments
for the payment of money in an aggregate amount in excess of U.S.$5,000,000
shall be rendered against any Loan Party and the same shall remain undischarged
for a period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of any Loan Party to enforce any such
judgment or any Loan Party shall fail within 30 days to discharge one or more
non-monetary judgments or orders which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, which judgments or
orders, in any such


 


118












 


case, are not stayed on appeal or otherwise being appropriately
contested in good faith by proper proceedings diligently pursued;


 


(l)                                    
(i) a Lien shall have
arisen, or in the reasonable opinion of the Required Lenders, may reasonably be
expected to arise, under the terms of ERISA or the Code with respect to any
Plan, or (ii) an ERISA Event or unfunded liability arising under a Non-U.S.
Plan shall have occurred that, in the reasonable opinion of the Required
Lenders, when taken together with all other ERISA Events and unfunded Non-U.S.
Plan liabilities that have occurred, could reasonably be expected to result in
a Material Adverse Effect;


 


(m)                              
a Change in Control
shall occur;


 


(n)                                
the occurrence of any
“default”, as defined in any Loan Document (other than this Agreement) or the
breach of any of the terms or provisions of any Loan Document (other than this
Agreement), which default or breach continues beyond any period of grace
therein provided;


 


(o)                                
any Collateral
Document shall for any reason fail to create a valid and perfected first
priority security interest in any Collateral purported to be covered thereby,
except as permitted by the terms of any Collateral Document or this Agreement,
or any Collateral Document shall fail to remain in full force or effect or any
action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document, or any Loan Party shall fail to
comply with any of the terms or provisions of any Collateral Document;


 


(p)                                
any material
provision of any Loan Document for any reason ceases to be valid, binding and
enforceable in accordance with its terms (or any Loan Party shall challenge the
enforceability of any Loan Document or shall assert in writing, or engage in
any action or inaction based on any such assertion, that any provision of any
of the Loan Documents has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms);


 


(q)                                
any Loan Party is
criminally indicted or convicted under any law that may reasonably be expected
to lead to a forfeiture of any property of such Loan Party having a fair market
value in excess of U.S.$5,000,000; or


 


(s)                                 
the subordination
provisions of any agreement or instrument governing any Subordinated
Indebtedness are for any reason revoked or invalidated, or otherwise cease to
be in full force and effect, any Person contests in any manner the validity or
enforceability thereof, of the Indebtedness hereunder is for any reason
subordinated or does not have the priority contemplated by the Loan Documents
or such subordination provisions;


 


then, and in every such
event (other than an event with respect to the any Borrower described in clause
(h) or (i) of this Article VII), and at any time thereafter during the
continuance of such event, the Administrative Agents may, and at the request of
the Required Lenders shall, by notice to the Administrative Borrower, take
either or both of the following actions, at the same or different times: 
(i) terminate the Commitments, and thereupon the Commitments shall terminate


 


119












 


immediately, and (ii)
declare the Loans and Acceptance Exposure then outstanding to be due and
payable in whole (or in part, in which case any principal not so declared to be
due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and all fees and other obligations of
the Borrowers accrued hereunder, shall become due and payable immediately,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrowers; and in case of any event with respect to
any Borrower described in clause (h) or (i) of this Article VII, the
Commitments shall automatically terminate and the principal of the Loans and
Acceptance Exposure then outstanding, together with accrued interest thereon
and all fees and other obligations of the Borrowers accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Borrowers.  Upon the occurrence and the continuance of an Event of
Default, the Administrative Agents may, and at the request of the Required
Lenders shall, increase the rate of interest applicable to the Loans and other
Obligations as set forth in this Agreement and exercise any rights and remedies
provided to the Administrative Agents under the Loan Documents or at law or
equity, including all remedies provided under the UCC; provided that the
Canadian Administrative Agent may, at the request of a Canadian Lender, require
that Canadian Borrowers deposit forthwith on demand with the Canadian
Administrative Agent for the benefit of the Canadian Lenders cash or cash
equivalents acceptable to the Canadian Lenders in an amount equal to the
aggregate face amount of all outstanding Acceptance Exposure, for the Canadian
Borrowers’ account.


 


ARTICLE VIII


 


The Administrative Agents


 


Each
of the Lenders and the Issuing Banks hereby irrevocably appoints each of the
Administrative Agents as its agent and authorizes each Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
such Administrative Agent by the terms of the Loan Documents, together with
such actions and powers as are reasonably incidental thereto.


 


Each financial
institution serving as an Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not an Administrative Agent, and such
financial institution and its Affiliates may accept deposits from, lend money
to and generally engage in any kind of business with the Loan Parties or any
Subsidiary of a Loan Party or other Affiliate thereof as if it were not an
Administrative Agent hereunder.


 


No
Administrative Agent shall have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) an Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether an Event of Default
has occurred and is continuing, (b) an Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated by the Loan
Documents that such


 


120












 


Administrative Agent is
required to exercise in writing as directed by the applicable Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.03), and (c) except as
expressly set forth in the Loan Documents, such Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to any Loan Party or any of its Subsidiaries that is
communicated to or obtained by the financial institution serving as an
Administrative Agent or any of its Affiliates in any capacity.  An
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.03) or in the absence of its own
gross negligence or willful misconduct.  An Administrative Agent shall be
deemed not to have knowledge of any Event of Default unless and until written
notice thereof is given to such Administrative Agent by the Administrative
Borrower or a Lender, and an Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or in
connection with any Loan Document, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
any Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV, the Closing
Checklist or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to such Administrative Agent.


 


Each
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon.  Each Administrative Agent may consult with legal counsel
(who may be counsel for the Borrowers), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.


 


Each
Administrative Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by such
Administrative Agent.  Each Administrative Agent and any such sub-agent
may perform any and all its duties and exercise its rights and powers through
their respective Related Parties.  The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as an Administrative
Agent.


 


Subject
to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, an Administrative Agent may resign at any time by
notifying the Lenders, the other Administrative Agent, the Issuing Banks and
the Administrative Borrower.  Upon any such resignation, the applicable
Required Lenders shall have the right, in consultation with the Administrative
Borrower, to appoint a successor.  If no successor shall have been so


 


121












 


appointed by such
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Banks, appoint a successor Administrative Agent which shall be a commercial
bank or an Affiliate of any such commercial bank.  Upon the acceptance of
its appointment as Administrative Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder.  The fees payable by the Borrowers to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrowers and such successor.  After
an Administrative Agent’s resignation hereunder, the provisions of this Article
VIII and Section 9.04 shall continue in effect for the benefit of
such retiring Administrative Agent, its sub agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent.


 


Each
Lender acknowledges that it has, independently and without reliance upon either
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon either Administrative Agent or
any other Lender and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document
or related agreement or any document furnished hereunder or thereunder.


 


No
Administrative Agent shall have any obligation to any of the Lenders to ensure
that the Collateral exists, is owned by the Loan Parties, is cared for,
protected or insured, is unencumbered by others, or that the Liens granted to
the Collateral Agents therein have been properly, sufficiently or lawfully
created, perfected, protected or enforced, or that such Liens are entitled to
any particular priority, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, each Administrative
Agent may act in any manner it may deem appropriate, in its sole discretion
given such Administrative Agent’s own interest in the Collateral in its
capacity as one of the Lenders and that no Administrative Agent shall have any
other duty or liability whatsoever to any Lender as to any of the foregoing.


 


Each
Lender hereby appoints each other Lender as its agent for the purpose of
perfecting Liens, for the benefit of the Collateral Agents and the Secured Parties,
in assets which, in accordance with Article 9 of the UCC or any other
applicable law can be perfected only by possession.  Should any Lender
(other than a Collateral Agent) obtain possession of any such Collateral, such
Lender shall notify the Collateral Agents thereof, and, promptly upon a
Collateral Agent’s request therefor shall deliver such Collateral to such
Collateral Agent or otherwise deal with such Collateral in accordance with such
Collateral Agent’s instructions.


 


Each
Lender hereby agrees that (a) it is deemed to have requested that the
Administrative Agents furnish such Lender, promptly after it becomes available,
a copy of each Report prepared by or on behalf of the Administrative Agents or
JPMorgan Chase Bank, N.A. or its Affiliates; (b) none of the Administrative
Agents or JPMorgan Chase Bank, N.A. or its Affiliates (i) makes any
representation or warranty, express or implied, as to the completeness or
accuracy of any Report


 


122












 


or any of the information
contained therein or any inaccuracy or omission contained in or relating to a
Report, or (ii) shall be liable for any information contained in any Report;
(c) the Reports are not comprehensive audits or examinations, and that the
Administrative Agents, JPMorgan Chase Bank, N.A. or its Affiliates or any other
party performing any audit or examination will inspect only specific
information regarding the Loan Parties and will rely significantly upon the
Loan Parties’ books and records, as well as on representations of the Loan Parties’
personnel and that none of the Administrative Agents or JPMorgan Chase Bank,
N.A. or its Affiliates undertakes any obligation to update, correct or
supplement the Reports; (d) it will keep all Reports confidential and strictly
for its internal use, not share the Report with any Loan Party and not
distribute any Report to any other Person except as otherwise permitted
pursuant to this Agreement; and (e) without limiting the generality of any
other indemnification provision contained in this Agreement, it will pay and
protect, and indemnify, defend, and hold the Administrative Agents, JPMorgan
Chase Bank, N.A. and its Affiliates and any such other Person preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including reasonable attorney fees)
incurred by the Administrative Agents, JPMorgan Chase Bank, N.A. and its
Affiliates and any such other Person preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.


 


J.P.
Morgan Securities Inc., in its capacities as Syndication Agent and Sole
Bookrunner and Sole Lead Arranger hereunder, shall not have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such.


 


For
greater certainty, and without limiting the powers of the Administrative Agents
or any other Person acting as an agent, attorney-in-fact or mandatary for the
Administrative Agents under this Agreement or under any of the other Loan
Documents, each Canadian Lender, hereby (a) irrevocably constitutes, to the
extent necessary, the Canadian Administrative Agent as the holder of an
irrevocable power of attorney (fondé de pouvoir within the meaning of Article
2692 of the Civil Code of Québec) for the purposes of holding any Liens,
including hypothecs, granted or to be granted by any Canadian Borrower or any
Canadian Loan Party on movable or immovable property pursuant to the laws of
the Province of Quebec to secure obligations of any Canadian Borrower or any
Canadian Loan Party under any bond issued by any Canadian Borrower or any
Canadian Loan Party; and (b) appoints and agrees that the Canadian
Administrative Agent, acting as agent for the Canadian Lenders, may act as the
bondholder and mandatary with respect to any bond that may be issued and
pledged from time to time for the benefit of the Canadian Lenders.


 


The
said constitution of the fondé de pouvoir (within the meaning of Article 2692
of the Civil Code of Quebec) as the holder of such irrevocable power of
attorney and of the Canadian Administrative Agent as bondholder and mandatary
with respect to any bond that may be issued and pledged from time to time for
the benefit of the Canadian Lenders shall be deemed to have been ratified and
confirmed by any Assignee by the execution of an Assignment and Assumption;


 


Notwithstanding
the provisions of Section 32 of An Act respecting the special powers of legal
persons (Quebec), the Canadian Administrative Agent may purchase, acquire and
be the holder of any bond issued by any Canadian Borrower or any Canadian Loan
Party.  Each


 


123












 


Canadian Borrower and
Canadian Loan Party hereby acknowledges that any such bond shall constitute a
title of indebtedness, as such term is used in Article 2692 of the Civil Code
of Quebec.


 


The
Canadian Administrative Agent herein appointed as fondé de pouvoir shall have
the same rights, powers and immunities as the Agents as stipulated in this Article
XIII, which shall apply mutatis mutandis.  Without limitation, the
provisions of this Article XIII shall apply mutatis mutandis to the
resignation and appointment of a successor to the Canadian Administrative Agent
acting as fondé de pouvoir.


 


ARTICLE IX


 


Miscellaneous


 


SECTION 9.01                                           
Notices.  (a)  Except in the case of
notices and other communications expressly permitted to be given by telephone
(and subject to Section 9.01(b)), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
facsimile, as follows:


 


(i)                                    
if to any Loan Party,
to the Administrative Borrower at:


 


P.O. Box 1037


Albertville, Alabama  35950


Attention: Chief Executive Officer


Facsimile No: (256) 840-2782


 


with a copy to:


 


One Equity Partners LLC


1 Bank One Plaza


21 South Clark Street


14th Floor


Chicago, Illinois  60670-0610


Attention:  Thomas J. Kichler


Facsimile No:  (312) 336-4140


 


(ii)                                 
if to the U.S.
Administrative Agent or the U.S. Swingline Lender, to General Electric Capital
Corporation at:


 


125 Summer Street


Suite 1230


Boston, Massachusetts 02115


Attention: Alan Garson


Facsimile No: (617) 507-8107


 


124












 


(iii)                              
if to the Canadian
Issuing Bank, to JPMorgan Chase Bank, N.A., Toronto Branch at:


 


161 Bay Street


Suite 4240


Toronto, Ontario, Canada


5MJ 2S1


Attention: John P. Freeman and Dan Howat


Facsimile No: (416) 846-0920


 


(iv)                             
if to the Canadian
Administrative Agent or the Canadian Swingline Lender, to GE Canada Finance
Holding Company at:


 


General Electric Capital Corporation


125 Summer Street


Suite 1230


Boston, Massachusetts 02115


Attention: Alan Garson


Facsimile No: (617) 507-8107


 


(v)                                
if to the U.S.
Issuing Bank, to JPMorgan Chase Bank, N.A. at:


 


120 South LaSalle Street


8th Floor


Chicago, Illinois  60603


Attention: John P. Freeman


Facsimile No: (312) 661-6929


 


(vi)                             
if to any other
Lender, to it at its address or facsimile number set forth in its
Administrative Questionnaire.


 


All such notices and
other communications (i) sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when
received, or (ii) sent by facsimile shall be deemed to have been given when
sent, provided that if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the
next Business Day for the recipient.


 


(b)                                
Any party hereto may
change its address or facsimile number for notices and other communications
hereunder by notice to the other parties hereto.


 


(c)                                 
All Electronic
Transmissions of notices, demands, requests and other communications shall be
effective and be deemed received (i) if delivered by posting to an E-System or
other Intranet or extranet-based website, prior to 5:00 p.m., New York City
time, on the date of such posting and (ii) if delivered by any other Electronic
Transmission, prior to 5:00 p.m., New York City time, on the date of transmission
thereof.


 


125






 










 


SECTION 9.02              
Electronic Transmissions.  (a)  Authorization. 
Each of the Administrative Agents and its Related Persons is authorized to
transmit, post or otherwise make or communicate, in its sole discretion (but
shall not be required to do so), Electronic Transmissions in connection with
any Loan Document and the transactions contemplated therein; provided, however,
that no notice to any Loan Party shall be made by posting to an Internet or
extranet-based site or other equivalent service but may be made by e-mail or
E-Fax.  Each of Parent, the Administrative Borrower and each Secured Party
hereby acknowledges and agrees, and each of Parent and the Administrative
Borrower shall cause each other Loan Party to acknowledge and agree, that the
use of Electronic Transmissions is not necessarily secure and that there are
risks associated with such use, including, without limitation, risks of
interception, disclosure and abuse and each indicates it assumes and accepts
such risks by hereby authorizing each Administrative Agent and its Related
Persons to transmit Electronic Transmissions.


 


(b)          
Signatures.  No Electronic Transmission shall be denied legal
effect merely because it is made electronically.  Electronic Transmissions
that are not readily capable of bearing either a signature or a reproduction of
a signature may be signed, and shall be deemed signed, by attaching to, or
logically associating with such Electronic Transmission, an E-Signature, upon
which each Secured Party and Loan Party may rely and assume the authenticity
thereof.  Each Electronic Transmission containing a signature, a
reproduction of a signature or an E-Signature shall, for all intents and
purposes, have the same effect and weight as a signed paper original. 
Each E-Signature shall be deemed sufficient to satisfy any requirement for a
“signature” and each Electronic Transmission shall be deemed sufficient to
satisfy any requirement for a “writing”, in each case including pursuant to any
Loan Document, the UCC, the Federal Uniform Electronic Transactions Act, the
Electronic Signatures in Global and National Commerce Act and any substantive
or procedural law governing such subject matter.  Each party or
beneficiary hereto agrees not to contest the validity or enforceability of an
Electronic Transmission or E-Signature under the provisions of any applicable
law requiring certain documents to be in writing or signed; provided, however,
that nothing herein shall limit such party’s or beneficiary’s right to contest
whether an Electronic Transmission or E-Signature has been altered after
transmission.


 


(c)          
Separate Agreements.  All uses of an E-System shall be governed by
and subject to, in addition to this Section 9.02, separate terms
and conditions posted or referenced in such E-System and related agreements,
documents or other instruments executed by Secured Parties and Loan Parties in
connection with such use.


 


(d)          
Limitation of Liability.  All E-Systems and Electronic
Transmissions shall be provided “as is” and “as available”.  None of
Administrative Agents or any of their Related Persons warrants the accuracy,
adequacy or completeness of any E-Systems or Electronic Transmission and
disclaims all liability for errors or omissions therein.  No warranty of
any kind is made by an Administrative Agent or any of its Related Persons in
connection with any E-Systems or Electronic Communication, including any
warranty of merchantability, fitness for a particular purpose, non-infringement
of third party rights or freedom from viruses or other code defects.  Each of Parent, the Administrative
Borrower and each Secured Party (other than the Administrative Agents) agrees
(and each of Parent and the Administrative Borrower shall


 


126












 


cause each other Loan Party to agree) that the
Administrative Agents have no responsibility for maintaining or providing any
equipment, software, services or any testing required in connection with all
Electronic Transmissions or otherwise required for any E-System.


 


SECTION 9.03              
Waivers; Amendments.  (a)  No failure or delay by any
Administrative Agent, Issuing Bank or Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies of the Administrative Agents, the
Issuing Banks and the Lenders hereunder and under any other Loan Document are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any provision of any Loan Document or
consent to any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be permitted by Section 9.03(b), and
then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given.  Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Event of Default, regardless of whether the any
Administrative Agent, Lender or Issuing Bank may have had notice or knowledge
of such Event of Default at the time.


 


(b)          
Neither this Agreement nor any other Loan Document nor any provision hereof or
thereof may be waived, amended or modified except (i) in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
the Borrowers and the Required Lenders, or (ii) in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by the
Administrative Agents and the Loan Party or Loan Parties that are parties thereto,
with the consent of the Required Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the written
consent of such Lender (provided that the Administrative Agents may make
Protective Advances as set forth in Section 2.06), (ii) reduce or
forgive the principal amount of any Loan or LC Disbursement owing to any Lender
or reduce the rate of interest thereon, or reduce or forgive any interest or
fees payable hereunder, without the written consent of such Lender, (iii)
postpone the maturity of any Loan owing to any Lender, or any scheduled date of
payment of the principal amount of any Loan or LC Disbursement owing to any
Lender, or any date for the payment of any interest, fees or other Obligations
payable hereunder, or reduce the amount of, waive or excuse any such payment,
or postpone the scheduled date of expiration of any Commitment of any Lender,
without the written consent of such Lender; provided  further that
the Aggregate Commitments hereunder may not be increased except with the
consent of each Lender, (iv) change Section 2.20(b), (d) or (e),
Section 2.07(a)(iii) or (b)(iii), Section 2.13(c) or Section
2.12(b) in a manner that would alter the manner in which payments are
shared, without the written consent of each Lender, (v) increase the advance
rates or components of the U.S. Borrowing Base or Canadian Borrowing Base if
such increase would increase Availability or include additional categories of
Collateral set forth in the definition of U.S. Borrowing Base or Canadian
Borrowing Base if such inclusion would increase Availability, in each case
without the written consent of each Lender, (vi) increase the limit on U.S.
Protective Advances and Canadian Protective Advances set forth in Section


 


127












 


2.06(a) and (b), without the written
consent of each Lender, (vii) change any of the provisions of this Section
9.03(b) or the definition of “Required Lenders” or any other provision of
any Loan Document specifying the number or percentage of Lenders (or Lenders of
any Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender, (viii) except as provided in Section 9.03(d) or (e)
or in any Collateral Document, release all or substantially all of the
Collateral, without the written consent of each Lender; provided  further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agents, the Issuing Banks or the Swingline Lenders
hereunder without the prior written consent of the Administrative Agents, the
Issuing Banks or the Swingline Lenders, as the case may be, or (ix)
contractually subordinate any of the Liens granted to a Collateral Agent
without the consent of each Lender, provided, however, this subparagraph (ix)
shall not apply to a subordination of the the Liens granted to a Collateral
Agent if such subordination arises pursuant to the granting of liens or
superpriority claims pursuant to section 364 of title 11 of the United States
Code (the “Bankruptcy Code”) or any other provision of the Bankruptcy Code.


 


(c)          
An Administrative Agent may (i) amend the Commitment Schedule to reflect
assignments entered into pursuant to Section 9.05, (ii) waive payment of
the fee required under Section 9.05(b)(ii)(C) and (iii) upon the request
of the Syndication Agent or the lead arranger, implement any Flex-Pricing
Provisions contained in any separate letter agreement with respect to fees
payable to ChaseLincoln or any commitment letter delivered in connection with
the transaction which is the subject of this Agreement without obtaining the
consent of any other party to this Agreement.


 


(d)          
The Lenders hereby irrevocably authorize the Administrative Agents, at their
option and in its sole discretion, to cause the Collateral Agents to release
any Liens granted to a Collateral Agent by the Loan Parties on any Collateral
(i) upon the termination of the Aggregate Commitment, payment and satisfaction
in full in cash of all Obligations (other than Unliquidated  Obligations),
and the cash collateralization of all Unliquidated Obligations in a manner
satisfactory to each affected Lender, (ii) constituting property being sold or
disposed of if the Loan Party disposing of such property certifies to the
Administrative Agents that the sale or disposition is made in compliance with
the terms of this Agreement (and the Administrative Agents may rely
conclusively on any such certificate, without further inquiry), (iii) constituting
property in which no Loan Party has at any time during the term of this
Agreement owned any interest, (iv) constituting property leased to a Loan Party
under a lease which has expired or been terminated in a transaction permitted
under this Agreement, (v) owned by or leased to any Loan Party which is subject
to a purchase money security interest or which is a Capital Lease Obligation,
in either case, entered into by such Loan Party pursuant to Section 6.01,
or (vi) as required to effect any sale or other disposition of such Collateral
in connection with any exercise of remedies of the Administrative Agents and
the Lenders pursuant to Article VII.  Upon request by the
Administrative Agents at any time, the Lenders will confirm in writing the Administrative
Agents’ authority to cause the Collateral Agents to release any Liens upon
particular types or items of Collateral pursuant to this Section 9.03. 
Except as provided in the next preceding sentence, the Administrative Agents
will not cause the Collateral Agents to release any Liens on


 


128












 


Collateral without the prior written authorization of
the Required Lenders or if required by Section 9.03(b)(vii), all the
Lenders; provided that, the Administrative Agents may in their Permitted
Discretion, cause the Collateral Agents release their Liens on Collateral
valued in the aggregate not in excess of U.S.$5,000,000 during any calendar
year without the prior written authorization of the Required Lenders.


 


(e)          
Upon receipt by the Administrative Agents of any authorization required
pursuant to Section 9.03(d) from the Required Lenders of the
Administrative Agents’ authority to cause the release of any Liens upon
particular types or items of Collateral, and upon at least five Business Days
prior written request by the Loan Parties, the Administrative Agents shall (and
are hereby irrevocably authorized by the Lenders to) execute such documents as
may be necessary to evidence the release of the Collateral Agents’ Liens upon
such Collateral; provided that (i) no Administrative Agent shall be
required to execute any such document on terms which, in such Administrative
Agent’s opinion, would expose such Administrative Agent to liability or create
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of the Loan Parties in respect of)
all interests retained by the Loan Parties, including the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.


 


(f)           
If, in connection with any proposed amendment, waiver or consent 
requiring the consent of “each Lender” or “each Lender affected thereby,” the
consent of the Required Lenders is obtained, but the consent of other necessary
Lenders is not obtained (any such Lender whose consent is necessary but not
obtained being referred to herein as a “Non-Consenting Lender”), then,
so long as an Administrative Agent is not a Non-Consenting Lender, the
Borrowers may elect to replace a Non-Consenting Lender as a Lender party to
this Agreement, provided that, concurrently with such replacement, (i)
another bank or other entity which is reasonably satisfactory to the Borrowers
and the Administrative Agents shall agree, as of such date, to purchase for
cash the Loans, Acceptance Obligations and other Obligations due to the
Non-Consenting Lender pursuant to an Assignment and Assumption and to become a
Lender for all purposes under this Agreement and to assume all obligations of
the Non-Consenting Lender to be terminated as of such date and to comply with
the requirements of Section 9.05(b), and (ii) the Borrowers shall pay to
such Non-Consenting Lender in same day funds on the day of such replacement (1)
all interest, fees and other amounts then accrued but unpaid to such
Non-Consenting Lender by the Borrowers hereunder to and including the date of
termination, including without limitation payments due to such Non-Consenting
Lender under Sections 2.17 and 2.19, and (2) an amount, if any,
equal to the payment which would have been due to such Lender on the day of
such replacement under Section 2.18 had the Loans and Acceptance
Obligations of such Non-Consenting Lender been prepaid on such date rather than
sold to the replacement Lender.


 


SECTION 9.04              
Expenses; Indemnity; Damage Waiver.  (a)  U.S. Expenses. 
(i) The U.S. Borrowers shall pay all reasonable, documented out of pocket
expenses incurred by the Administrative Agents, the Collateral Agents and the
Syndication Agent and their respective Affiliates, including the reasonable
fees, charges and disbursements of counsel for the Administrative Agents, the
Collateral Agents and the Syndication Agent, in connection with the


 


129












 


syndication and
distribution (including, without limitation, via the internet or through a
service such as Intralinks) of the credit facilities provided for herein, the
preparation and administration of the Loan Documents or any amendments,
modifications or waivers of the provisions of the Loan Documents (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii)
the U.S. Borrowers shall pay all reasonable out-of-pocket expenses incurred by
the U.S. Issuing Bank in connection with the issuance, amendment, renewal or
extension of any U.S. Letter of Credit or any demand for payment thereunder,
(iii) the U.S. Borrowers shall pay all reasonable out-of-pocket expenses
incurred by the Canadian Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Canadian Letter of Credit or any demand
for payment thereunder to the extent not paid by the Canadian Borrowers and
(iv) the U.S. Borrowers shall pay all out-of-pocket expenses incurred by the
Administrative Agents, the Collateral Agents, the Syndication Agent, the
Issuing Banks or any Lender, including the fees, charges and disbursements of
any counsel for the Administrative Agents, the Collateral Agents, the
Syndication Agent, the Issuing Banks or any Lender, in connection with the
enforcement, collection or protection of its rights in connection with the Loan
Documents, including its rights under this Section 9.04, or in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit; provided
however that such obligation shall be subject to the limitations set forth in Section
5.10.  Expenses being reimbursed by the U.S. Borrowers under this Section
9.04(a) include, without limiting the generality of the foregoing, costs
and expenses incurred in connection with:


 


(i)           
appraisals of all or any portion of the Collateral (including travel, lodging,
meals and other out of pocket expenses of the appraisers);


 


(ii)          
field examinations and the preparation of Reports at either an Administrative
Agent’s then customary charge (such charge is currently U.S.$1,000 per day (or
portion thereof) for each Person employed by such Administrative Agent with
respect to each field examination) or at the fee charged by a third party
retained by such Administrative Agent, plus in each case travel, lodging, meals
and other out of pocket expenses;


 


(iii)         
lien and title searches and title insurance; provided that none of the
Administrative Agents, the Collateral Agents, the Syndication Agent, the
Issuing Banks or any Lender shall be entitled to reimbursement for title
insurance with respect to the Mortgaged Properties unless such title insurance
is obtained in connection with the initial inclusion of the Mortgaged
Properties in the Borrowing Base or is obtained with the consent of the
Administrative Borrower;


 


(iv)         
taxes, fees and other charges for recording the Mortgages, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Collateral Agents’ Liens;


 


(v)          
sums paid or incurred to take any action required of any Loan Party under the
Loan Documents that such Loan Party fails to pay or take; and


 


130












 


(vi)         
costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining the accounts and lock boxes,
and costs and expenses of preserving and protecting the Collateral.


 


All of the foregoing
costs and expenses may be charged to the U.S. Borrowers as Revolving Loans or
to another deposit account, all as described in Section 2.20(c).


 


(b) 
Canadian Expenses.  Solely to the extent any of the following
relate to the Canadian sub-facility, (i) the Canadian Borrowers shall pay all
reasonable, documented out of pocket expenses incurred by the Administrative
Agents, the Collateral Agents and the Syndication Agent and their respective
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agents, the Collateral Agents and the Syndication Agent,
in connection with the syndication and distribution (including, without
limitation, via the internet or through a service such as Intralinks) of the
credit facilities provided for herein, the preparation and administration of
the Loan Documents or any amendments, modifications or waivers of the
provisions of the Loan Documents (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) the Canadian Borrowers shall pay
all reasonable out-of-pocket expenses incurred by the Canadian Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Canadian
Letter of Credit or any demand for payment thereunder and (iii) the Canadian
Borrowers shall pay all out-of-pocket expenses incurred by the Administrative
Agents, the Collateral Agents, the Syndication Agent, the Issuing Banks or any
Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agents, the Collateral Agents, the Syndication Agent, the
Issuing Banks or any Lender, in connection with the enforcement, collection or
protection of its rights in connection with the Loan Documents, including its
rights under this Section 9.04, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit; provided however that such obligation shall
be subject to the limitations set forth in Section 5.10.  Expenses
being reimbursed by the Canadian Borrowers under this Section 9.04(b)
include, without limiting the generality of the foregoing, costs and expenses
incurred in connection with (but only to the extent that such items relate to
the Canadian sub-facility):


 


(i)           
appraisals of all or any portion of the Collateral (including travel, lodging,
meals and other out of pocket expenses of the appraisers);


 


(ii)          
field examinations and the preparation of Reports at either an Administrative
Agent’s then customary charge (such charge is currently U.S.$1,000 per day (or
portion thereof) for each Person employed by such Administrative Agent with
respect to each field examination) or at the fee charged by a third party
retained by such Administrative Agent, plus in each case travel, lodging, meals
and other out of pocket expenses;


 


(iii)         
lien and title searches and title insurance; provided that none of the
Administrative Agents, the Collateral Agents, the Syndication Agent, the
Issuing Banks or any Lender shall be entitled to reimbursement for title
insurance with respect to the Mortgaged Properties unless such title insurance
is obtained in connection with the initial inclusion of the Mortgaged
Properties in the Borrowing Base or is obtained with the consent of the
Administrative Borrower;


 


131












 


(iv)         
taxes, fees and other charges for recording the Mortgages, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Collateral Agents’ Liens;


 


(v)          
sums paid or incurred to take any action required of any Loan Party under the
Loan Documents that such Loan Party fails to pay or take; and


 


(vi)         
costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining the accounts and lock boxes,
and costs and expenses of preserving and protecting the Collateral.


 


All of the foregoing
costs and expenses may be charged to the Canadian Borrowers as Revolving Loans
or to another deposit account, all as described in Section 2.20(c).


 


(c)          
U.S. Indemnities.  The U.S. Borrowers shall indemnify the
Administrative Agents, the Collateral Agents, the Syndication Agent, the
Issuing Banks and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, on an after-Tax basis, any and all losses,
claims, damages, penalties, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of the Loan Documents or any agreement
or instrument contemplated thereby, the performance by the parties hereto of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of
Credit or the use of the proceeds therefrom (including any refusal by any Issuing
Bank to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrowers
or any of their Subsidiaries, or any Environmental Liability related in any way
to the Borrowers or any of their Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, penalties, liabilities or related expenses
resulted from the gross negligence or willful misconduct of such Indemnitee.


 


(d)          
Canadian Indemnities.  The Canadian Borrowers shall indemnify the
Administrative Agents, the Collateral Agents, the Syndication Agent, the
Issuing Banks and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, on an after-Tax basis, any and all losses,
claims, damages, penalties, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of the Loan Documents or any agreement
or instrument contemplated thereby, the performance by the parties hereto of


 


132












 


their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by any Issuing Bank to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by the Borrowers or any of their Subsidiaries, or any
Environmental Liability related in any way to the Borrowers or any of their
Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is
a party thereto; provided that (i) such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
penalties, liabilities or related expenses resulted from the gross negligence
or willful misconduct of such Indemnitee and (ii) such indemnity shall be
available only to the extent that such losses, claims, damages, penalties,
liabilities or related expenses relate to the Canadian sub-facility.


 


(e)          
To the extent that (i) the U.S. Borrowers fail to pay any amount required to be
paid by them to the U.S. Administrative Agent, the U.S. Issuing Bank or the
U.S. Swingline Lender under Section 9.04(a), (b), (c) or (d)
or (ii) the U.S. Administrative Agent conducts an appraisal or update at its
own expense pursuant to Section 5.10, each U.S. Lender severally agrees
to pay to such U.S. Administrative Agent, such U.S. Issuing Bank or such U.S.
Swingline Lender, as the case may be, such U.S. Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, penalty, liability or
related expense, as the case may be, was incurred by or asserted against such
U.S. Administrative Agent, U.S. Issuing Bank or U.S. Swingline Lender in its
capacity as such.


 


(f)           
To the extent that (i) the Canadian Borrowers fail to pay any amount required
to be paid by them to the Canadian Administrative Agent, the Canadian Issuing
Bank or the Canadian Swingline Lender under Section 9.04(a), (b),
(c) or (d) or (ii) the Canadian Administrative Agent conducts an
appraisal or update at its own expense pursuant to Section 5.10, each
Canadian Lender severally agrees to pay to such Canadian Administrative Agent,
such Canadian Issuing Bank or such Canadian Swingline Lender, as the case may
be, such Canadian Lender’s Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, penalty, liability or related expense, as the
case may be, was incurred by or asserted against such Canadian Administrative
Agent, Canadian Issuing Bank or Canadian Swingline Lender in its capacity as
such.


 


(g)          
The relationship between any Loan Party on the one hand and the Lenders, the
Issuing Banks and the Administrative Agents on the other hand shall be solely
that of debtor and creditor.  Neither any Administrative Agent, any
Issuing Bank nor any Lender (i) shall have any fiduciary responsibilities to
any Loan Party, or (ii)


 


133












 


undertakes any responsibility to any Loan Party to
review or inform such Loan Party of any matter in connection with any phase of
any Loan Party’s business or operations.  To the extent permitted by
applicable law, no Loan Party shall assert, and each hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.


 


(h)          
All amounts due under this Section shall be payable promptly after written
demand therefor.


 


(i)           
In no event shall any Indemnitee be liable on any theory of liability for any
special, indirect, consequential or punitive damages (including any loss of
profits, business or anticipated savings).


 


SECTION 9.05              
Successors and Assigns.  (a)  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
an Issuing Bank that issues any Letter of Credit), except that (i) the
Borrowers may not assign or otherwise transfer any of their  rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrowers without such consent shall be
null and void), and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section.  Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in Section 9.05(c))
and, to the extent expressly contemplated hereby, the Related Parties of each
of the Administrative Agents, the Issuing Banks and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.


 


(b)          
(i)  Subject to the conditions set forth in Section 9.05(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld or delayed) of:


 


(A)         
the Administrative Borrower, provided that no consent of the
Administrative Borrower shall be required for an assignment to a Lender, an
Affiliate of a Lender, an Approved Fund, or in connection with any merger,
consolidation, sale, transfer or other disposition of all or any substantial
portion of the business or loan portfolio of the assigning Lender or, if a
Default has occurred and is continuing, any other assignee;


 


(B)          
the applicable Administrative Agent, provided that the consent of such
Administrative Agent will not be necessary for assignments among Lenders or
Affiliates of Lenders or in connection with any merger, consolidation, sale,


 


134












 


transfer or other
disposition of all or any substantial portion of the business or loan portfolio
of the assigning Lender; and


 


(C)          
the applicable Issuing Bank.


 


(ii)          
Assignments shall be subject to the following additional conditions:


 


(A)         
except in the case of an assignment to a Lender or an Affiliate of a Lender or
an assignment of the entire remaining amount of the assigning Lender’s
Commitment or Loans of any Class, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
applicable Administrative Agent) shall not be less than U.S.$5,000,000 unless
each of the Administrative Borrower and the such Administrative Agent otherwise
consent, provided that no such consent of the Administrative Borrower
shall be required if an Event of Default has occurred and is continuing;


 


(B)          
after giving effect to any partial assignment, the assignor’s Commitments and
Revolving Credit Exposure shall not be less than U.S.$1,000,000;


 


(C)          
each partial assignment shall be made as an assignment of a proportionate part
of all the assigning Lender’s rights and obligations under this Agreement;


 


(D)         
unless a Default or Event of Default has occurred and is continuing, no
Canadian Lender may assign its interest hereunder, in whole or in part, to a
Person that is a Non-Canadian Lender;


 


(E)          
the parties to each assignment shall execute and deliver to the applicable
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of U.S.$3,500, in the case of fees payable to the U.S.
Administrative Agent, or Cdn.$4,500, in the case of fees payable to the
Canadian Administrative Agent; and


 


(F)          
the assignee, if it shall not be a Lender, shall deliver to the applicable
Administrative Agent an Administrative Questionnaire.


 


For
the purposes of this Section 9.05(b), the term “Approved Fund”
has the following meaning:


 


“Approved
Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.


 


135












 


(iii)         
Subject to acceptance and recording thereof pursuant to Section 9.05(b)(iv),
from and after the effective date specified in each Assignment and Assumption
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections
2.16, 2.17, 2.18 and 9.04).  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 9.05 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 9.05(c).


 


(iv)         
The Canadian Administrative Agent shall furnish to the U.S. Administrative
Agent a copy of each Assignment and Assumption with respect to a Canadian
Commitment.  The U.S. Administrative Agent, acting for this purpose as an
agent of the Borrowers, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of and interest owing on, the Loans and LC Disbursements owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). 
The entries in the Register shall be conclusive, and the Borrowers, the
Administrative Agents, the Issuing Banks and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as the
absolute owner of any Obligations held by such Person, as included in the
Register, for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be available for inspection by the
Administrative Borrower, the Issuing Banks and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.


 


(v)          
Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in Section 9.05(b) and any
written consent to such assignment required by Section 9.05(b), the
applicable Administrative Agent shall accept such Assignment and Assumption and
record the information contained therein in the Register; provided that
if either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.07, 2.08(d)
or (e), 2.09(b), 2.20(d) or 9.04(c), the
Administrative Agents shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until
such payment shall have been made in full, together with all accrued interest
thereon.  No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.


 


(c)          
(i)  Any Lender may, without the consent of the Borrowers, the
Administrative Agents, the Collateral Agents, the Issuing Banks or the
Swingline Lenders, sell participations to one or more banks or other entities
(a “Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such


 


136












 


Lender’s obligations under this Agreement shall remain
unchanged, (B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and (C) the Borrowers, the
Administrative Agents, the Issuing Banks and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement.  Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 9.03(b) that affects
such Participant.  Subject to Section 9.05(c)(ii), the Borrowers
agree that each Participant shall be entitled to the benefits of Sections
2.17, 2.18 and 2.19 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to Section 9.05(b). 
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.09 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.20(c) as though it
were a Lender.


 


(ii)          
A Participant (other than a Participant receiving its interest in the Canadian
Obligations pursuant to an assignment permitted by Section 9.05(b)(ii)(D))
shall not be entitled to receive any greater payment under Section 2.17
or 2.19 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with the Administrative
Borrower’s prior written consent.  A Participant that would be a a
Non-U.S. Lender (in the case of the U.S. Obligations) or a Non-Canadian Lender
(in the case of the Canadian Obligations) if it were a Lender shall not be
entitled to the benefits of Section 2.19 unless the Administrative
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrowers, to comply with Section
2.19(e) as though it were a Lender.


 


(d)          
Any Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender
or an Affiliate of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section
9.05 shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.


 


SECTION 9.06              
Survival.  All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that an Administrative Agent, an Issuing
Bank or any Lender may have had notice or knowledge of any Event of Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as


 


137












 


the Commitments have not
expired or terminated.  The provisions of Sections 2.17, 2.18,
2.19 and 9.04 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans and Acceptance Obligations, the
expiration or termination of the Letters of Credit and the Commitments or the
termination of this Agreement or any provision hereof.


 


SECTION 9.07              
Counterparts; Integration; Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This Agreement,
the other Loan Documents and any separate letter agreements with respect to
fees payable to the Administrative Agents constitute the entire contract among
the parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Administrative
Agents and when the Administrative Agents shall have received counterparts
hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. 
Delivery of an executed counterpart of a signature page of this Agreement by
facsimile shall be effective as delivery of a manually executed counterpart of
this Agreement.


 


SECTION 9.08              
Severability.  Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.


 


SECTION 9.09              
Right of Setoff.  If an Event of Default shall have occurred and be
continuing or if any Borrower or any other Loan Party becomes insolvent,
however evidenced, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the
Borrowers or such Loan Party against any of and all the Obligations held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under the Loan Documents and although such obligations may be
unmatured.  The rights of each Lender under this Section 9.09 are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.  NOTWITHSTANDING THE FOREGOING, AT ANY TIME
THAT ANY OF THE OBLIGATIONS SHALL BE SECURED BY REAL PROPERTY LOCATED IN
CALIFORNIA, NO LENDER SHALL EXERCISE A RIGHT OF SETOFF, LENDER’S LIEN OR
COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY
PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY LOAN DOCUMENT
UNLESS IT IS TAKEN WITH THE CONSENT OF THE LENDERS REQUIRED BY SECTION 9.03
OF THIS AGREEMENT, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT
(PURSUANT TO SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR
OTHERWISE) AFFECT OR


 


138












 


IMPAIR THE VALIDITY,
PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED TO AGENT PURSUANT TO THE
COLLATERAL DOCUMENTS OR THE ENFORCEABILITY OF THE OBLIGATIONS HEREUNDER, AND
ANY ATTEMPTED EXERCISE BY ANY LENDER OR ANY SUCH RIGHT WITHOUT OBTAINING SUCH
CONSENT OF THE PARTIES AS REQUIRED ABOVE, SHALL BE NULL AND VOID.  THIS
PARAGRAPH SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS.


 


SECTION 9.10              
Governing Law; Jurisdiction; Consent to Service of Process. 
(a)  THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS
CHOICE OF LAW PROVISION) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE
TO NATIONAL BANKS.


 


(b)          
EACH LOAN PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK
STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF
ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY ADMINISTRATIVE AGENT,
ISSUING BANK OR LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR
ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.


 


(c)          
Each Loan Party hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in any court
referred to in Section 9.10(b).  Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.


 


(d)          
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 9.01.  Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.


 


139












 


SECTION 9.11              
WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.


 


SECTION 9.12              
Headings.  Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.


 


SECTION 9.13              
Confidentiality.  Each of the Administrative Agents, the Issuing
Banks and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors except where such Person is engaged in a
competetive business with the Borrowers (it being understood that the Persons
to whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Loan Parties
and their obligations, (g) with the consent of the Administrative Borrower, or
(h) to the extent such Information (i) becomes publicly available other than as
a result of a breach of this Section, or (ii) becomes available to any
Administrative Agent, Issuing Bank or Lender on a nonconfidential basis from a
source other than the Borrowers.  For the purposes of this Section 9.12,
“Information” means all information received from the Borrowers relating
to the Borrowers or their business, other than any such information that is
available to any Administrative Agent, Issuing Bank or Lender on a
nonconfidential basis prior to disclosure by the Borrowers; provided
that, (a) in the case of information received from the Borrowers after the date
hereof, such information is clearly identified at the time of delivery as
confidential and (b) if the Administrative Agents, the Issuing Banks, the
Lenders or any of their Affiliates are engaged in a business that is
competetive with the business of the Borrowers as currently or in the future
conducted, the Administrative Agents, the Issuing Banks and the Lenders will
use commercially reasonable efforts to ensure that such competetive business
unit or units will be denied access to such Information.  Any Person
required to maintain the confidentiality of Information as provided in this Section
9.12 shall be


 


140












 


considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.


 


SECTION 9.14              
Several Obligations; Nonreliance; Violation of Law.  The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder
shall not relieve any other Lender from any of its obligations hereunder. 
Each Lender hereby represents that it is not relying on or looking to any
margin stock for the repayment of the Borrowings provided for herein. 
Anything contained in this Agreement to the contrary notwithstanding, neither
any Issuing Bank nor any Lender shall be obligated to extend credit to the
Borrowers in violation of any limitation or prohibition provided by any
applicable statute or regulation.


 


SECTION 9.15              
USA PATRIOT Act.  Each Lender that is subject to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October
26, 2001)) (the “Act”) hereby notifies the Borrowers that pursuant to
the requirements of the Act, it is required to obtain, verify and record
information that identifies the Borrowers, which information includes the names
and addresses of the Borrowers and other information that will allow such
Lender to identify the Borrowers in accordance with the Act.


 


SECTION 9.16              
Disclosure.  Each Loan Party and each Lender hereby acknowledges
and agrees that the Administrative Agents and/or their Affiliates from time to
time may hold investments in, make other loans to or have other relationships
with any of the Loan Parties and their respective Affiliates.


 


SECTION 9.17              
Execution of Loan Documents.  The Lenders hereby empower and
authorize the Administrative Agents, on behalf of the Lenders, to execute and
deliver to the Loan Parties the other Loan Documents and all related
agreements, certificates, documents, or instruments as shall be necessary or
appropriate to effect the purposes of the Loan Documents.  Each Lender
agrees that any action taken by the Administrative Agents or the Required
Lenders in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Administrative Agents or the Required
Lenders of their respective powers set forth therein or herein, together with
such other powers that are reasonably incidental thereto, shall be binding upon
all of the Lenders.  The Lenders acknowledge that all of the Obligations
hereunder constitute one debt, secured pari passu by all of the Collateral.


 


SECTION 9.18              
Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section 9.17 shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together


 


141












 


with interest thereon at
the Federal Funds Effective Rate (or, in the case of amounts denominated in
Canadian Dollars, the rate from time to time determined by the Canadian
Administrative Agent to represent its cost of overnight Canadian Dollars) to
the date of repayment, shall have been received by such Lender.


 


SECTION 9.19              
Progress Rail as Agent for Borrowers.  Each U.S. Borrower hereby
irrevocably appoints Progress Rail as the borrowing agent and attorney-in-fact
for all U.S. Borrowers and each Canadian Borrower hereby irrevocably appoints
Progress Rail as the borrowing agent and attorney-in-fact for all Canadian
Borrowers (the “Administrative Borrower”) which appointment shall remain
in full force and effect unless and until Administrative Agents shall have
received prior written notice signed by each Borrower that such appointment has
been revoked and that another Borrower has been appointed Administrative
Borrower.  Each U.S. Borrower hereby irrevocably appoints and authorizes
the Administrative Borrower (i) to provide Administrative Agents with all
notices with respect to Borrowings and Letters of Credit obtained for the
benefit of any U.S. Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Borrowings and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out
the purposes of this Agreement.  Each Canadian Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide
Administrative Agents with all notices with respect to Borrowings and Letters
of Credit obtained and Acceptances issued and accepted for the benefit of any
Canadian Borrower and all other notices and instructions under this Agreement
and (ii) to take such action as the Administrative Borrower deems appropriate
on its behalf to obtain Borrowings and Letters of Credit, to have Acceptances
issued and accepted and to exercise such other powers as are reasonably incidental
thereto to carry out the purposes of this Agreement.  It is understood
that the handling of the Funding Accounts, Collection Account, Controlled
Disbursement Accounts and Collateral of Borrowers in a combined fashion, as
more fully set forth herein, is done solely as an accommodation to Borrowers in
order to utilize the collective borrowing powers of Borrowers in the most
efficient and economical manner and at their request, and that no Lender shall
incur any liability to any Borrower as a result hereof.  Each Borrower
expects to derive benefit, directly or indirectly, from the handling of the
Funding Accounts, Collection Account, Controlled Disbursement Accounts and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated
group.  To induce the Lenders to do so, and in consideration thereof, each
Borrower hereby jointly and severally agrees to indemnify each Lender and hold
each Lender harmless against any and all liability, expense, loss or claim of
damage or injury, made against such Lender by any Borrower or by any third
party whosoever, arising from or incurred by reason of (a) the handling of the
Funding Accounts, Collection Account, Controlled Disbursement Accounts and
Collateral of Borrowers as herein provided, (b) the Lenders relying on any
instructions of the Administrative Borrower, or (c) any other action taken by
the Lenders hereunder or under the other Loan Documents, except that (i)
Borrowers will have no liability under this Section 9.19 with respect to
any liability that has been finally determined by a court of competent
jurisdiction to have resulted solely from the gross negligence or willful
misconduct of such Lender and (ii) the Canadian Borrowers shall only have
liability under this sentence to the extent that the claim for indemnification
relates to the Canadian sub-facility.


 


142












 


SECTION 9.20              
Subordination and Contribution.  (a)  Each Borrower hereby
agrees that any Indebtedness of any other Borrower now or hereafter owing to
such Borrower, whether heretofore, now or hereafter created (the “Borrower
Subordinated Debt”), is hereby subordinated to all of the Obligations and
that, except as permitted under Section 6.9, the Borrower
Subordinated Debt shall not be paid in whole or in part until the Obligations
have been paid in full and this Agreement is terminated and of no further force
or effect.  No Borrower shall accept any payment of or on account of any
Borrower Subordinated Debt at any time in contravention of the foregoing. 
Each payment on the Borrower Subordinated Debt received in violation of any of
the provisions hereof shall be deemed to have been received by such Borrower as
trustee for the Secured Parties and shall be paid over to the Administrative
Agents immediately on account of the Obligations, but without otherwise
affecting in any manner such Borrower’s liability hereunder.  Each
Borrower agrees to file all claims against the Borrower from whom the Borrower
Subordinated Debt is owing in any bankruptcy or other proceeding in which the
filing of claims is required by law in respect of any Borrower Subordinated
Debt, and the Administrative Agents shall be entitled to all of such Borrower’s
rights thereunder.  If for any reason a Borrower fails to file such claim
at least ten Business Days prior to the last date on which such claim should be
filed, such Borrower hereby irrevocably appoints the Administrative Agents as
its true and lawful attorney-in-fact, and the Administrative Agents are hereby
authorized to act as attorney-in-fact in such Borrower’s name to file such
claim or, in the Administrative Agents’ discretion, to assign such claim to and
cause proof of claim to be filed in the name of the Administrative Agents or
their nominee.  In all such cases, whether in administration, bankruptcy
or otherwise, the person or persons authorized to pay such claim shall pay to
the Administrative Agents the full amount payable on the claim in the
proceeding, and, to the full extent necessary for that purpose, each Borrower
hereby assigns to the Administrative Agents all of such Borrower’s rights to
any payments or distributions to which such Borrower otherwise would be
entitled.  If the amount so paid is greater than such Borrower’s liability
hereunder, the Administrative Agents shall pay the excess amount to the party
entitled thereto.  In addition, each Borrower hereby irrevocably appoints
the Administrative Agents as its attorney-in-fact to exercise all of such Borrower’s
voting rights in connection with any bankruptcy proceeding or any plan for the
reorganization of the Borrower from whom the Borrower Subordinated Debt is
owing.


 


(b)          
Additionally, to the extent that any Borrower shall be required to pay a portion
of the Obligations which shall exceed the amount of loans, advances or other
extensions of credit received by such Borrower and all interest, costs, fees
and expenses attributable to such loans, advances or other extensions of
credit, then such Borrower shall be reimbursed by the other Borrowers for the
amount of such excess.  This Section 9.20(b) is intended only to
define the relative rights of Borrowers, and nothing set forth in this Section
9.20(b) is intended or shall impair the obligations of each Borrower,
jointly and severally, to pay to Administrative Agents and Lenders the
Obligations as and when the same shall become due and payable in accordance
with the terms hereof.  Notwithstanding anything to the contrary set forth
in this Section 9.20(b) or any other provisions of this Agreement, it is
the intent of the parties hereto that the liability incurred by each Borrower
in respect of the Obligations of the other Borrowers (and any Lien granted by
each Borrower to secure such Obligations), not constitute a fraudulent
conveyance or fraudulent transfer under the provisions of any applicable law of
any state or other governmental unit (“Fraudulent Conveyance”). 
Consequently, each


 


143












 


Borrower, each Administrative Agent and each Lender
hereby agree that if a court of competent jurisdiction determines that the
incurrence of liability by any Borrower in respect of the Obligations of any
other Borrower (or any Liens granted by such Borrower to secure such
Obligations) would, but for the application of this sentence, constitute a
Fraudulent Conveyance, such liability (and such Liens) shall be valid and
enforceable only to the maximum extent that would not cause the same to
constitute a Fraudulent Conveyance, and this Agreement and the other Loan Documents
shall automatically be deemed to have been amended accordingly, nunc pro tunc.


 


(c)          
If for the purpose of obtaining judgment in any court it is necessary to
convert a sum due from any Borrower under any Loan Document or Acceptance in
the currency expressed to be payable in any Loan Document or Acceptance (the
“specified currency”) into another currency, the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the
applicable Administrative Agent could purchase the specified currency with such
other currency at (i) where the specified currency is Dollars, the
Administrative Agent’s New York office and (ii) where the specified currency is
Canadian Dollars, the Canadian Administrative Agent’s Toronto office, in each
case at 11:00 A.M. (Eastern time) on the Business Day preceding that on which
final judgment is given.  The obligations of each Borrower in respect of
any sum due to any Lender or either Administrative Agent under any Loan
Document or Acceptance shall, notwithstanding any judgment in a currency other
than the specified currency, be discharged only to the extent that on the
Business Day following receipt by such Lender or such Administrative Agent (as
the case may be) of any sum adjudged to be so due in such other currency such
Lender or such Administrative Agent (as the case may be) may in accordance with
normal banking procedures purchase the specified currency with such other
currency.  If the amount of the specified currency so purchased is less
than the sum originally due to such Lender or such Administrative Agent, as the
case may be, in the specified currency, each Borrower agrees, to the fullest
extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or such
Administrative Agent, as the case may be, against such loss.


 


144












 


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.


 


	
   

  	
  PROGRESS RAIL SERVICES
  HOLDINGS

  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  President
  and Chief Executive Officer

  



 


145












 


	
   

  	
  PROGRESS METAL
  RECLAMATION

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  President
  and Chief Executive Officer

  



 


146












 


	
   

  	
  WEST VIRGINIA AUTO
  SHREDDING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  Chief
  Executive Officer

  



 


147












 


	
   

  	
  PROGRESS RAIL SERVICES
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  President
  and Chief Executive Officer

  



 


148












 


	
   

  	
  PROGRESS RAIL HOLDINGS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  Chief
  Executive Officer

  



 


149












 


	
   

  	
  FM INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  President
  and Chief Executive Officer

  



 


150












 


	
   

  	
  SOUTHERN MACHINE AND
  TOOL COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  Chief
  Executive Officer

  



 


151












 


	
   

  	
  RAILCAR, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  President
  and Chief Executive Officer

  



 


152












 


	
   

  	
  CHEMETRON RAILWAY
  PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  Chief
  Executive Officer

  



 


153












 


	
   

  	
  UNITED INDUSTRIES
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  Chief
  Executive Officer

  



 


154












 


	
   

  	
  KENTUCKIANA RAILCAR
  REPAIR &

  STORAGE FACILITY, LLC

  
	
   

  	
   

  
	
   

  	
  By:  Progress Rail
  Services Corporation, as Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  H. Wangerin, Jr.

  	
   

  
	
   

  	
   

  	
  Name:  William
  H. Wangerin, Jr.

  
	
   

  	
   

  	
  Title:  Senior
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By: United Industries Corporation,
  as Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  H. Wangerin, Jr.

  	
   

  
	
   

  	
   

  	
  Name:  William
  H. Wangerin, Jr.

  
	
   

  	
   

  	
  Title:  Senior
  Vice President

  



 


155






 


 










 


	
   

  	
  PROGRESS VANGUARD
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  President

  



 


156












 


	
   

  	
  S&L RAILROAD, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  President
  and Chief Executive Officer

  



 


157












 


	
   

  	
  PROGRESS RAIL CANADA
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  President

  



 


158












 


	
   

  	
  PROGRESS RAIL
  TRANSCANADA

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  P. Ainsworth

  	
   

  
	
   

  	
   

  	
  Name:  William
  P. Ainsworth

  
	
   

  	
   

  	
  Title:  President
  and Chief Executive Officer

  



 


159












 


	
   

  	
  GENERAL ELECTRIC
  CAPITAL

  CORPORATION, individually, as U.S.

  Administrative Agent and U.S. Swingline Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Edward
  N. Parkes IV

  	
   

  
	
   

  	
   

  	
  Name:  Edward
  N. Parkes IV

  
	
   

  	
   

  	
  Title:  Vice
  President

  



 


160












 


	
   

  	
  CHASE LINCOLN FIRST
  COMMERCIAL

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Bruce
  Borden

  	
   

  
	
   

  	
   

  	
  Name:  Bruce
  Borden

  
	
   

  	
   

  	
  Title:  Vice
  President

  



 


161












 


	
   

  	
  JPMORGAN CHASE BANK,
  N.A., individually,

  as U.S. Issuing Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ John P.
  Freeman

  	
   

  
	
   

  	
   

  	
  Name:  John
  P. Freeman

  
	
   

  	
   

  	
  Title:  Vice
  President

  



 


162












 


	
   

  	
  GE CANADA FINANCE
  HOLDING COMPANY,

  individually, as Canadian Administrative Agent and

  Canadian Swingline Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Stephen
  B. Smith

  	
   

  
	
   

  	
   

  	
  Name:  Stephen
  B. Smith

  
	
   

  	
   

  	
  Title:  President

  



 


163












 


	
   

  	
  JPMORGAN CHASE BANK,
  N.A., TORONTO

  BRANCH, individually, as Canadian Issuing Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Steven
  Voigt

  	
   

  
	
   

  	
   

  	
  Name:  Steven
  Voigt

  
	
   

  	
   

  	
  Title:  Vice
  President

  



 


164












 


COMMITMENT
SCHEDULE


 


(a) U.S.
Lenders:


 




	
  U.S.
  Lender

  	
   

  	
  U.S. Commitment

  	
   

  
	
  Chase Lincoln First
  Commercial Corporation

  	
   

  	
  U.S.$

  	
  130,000,000

  	
   

  
	
  General Electric
  Capital Corporation

  	
   

  	
  U.S.$

  	
  70,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  U.S.$

  	
  200,000,000

  	
   

  






 


(b) Canadian
Lenders:


 




	
  Canadian
  Lender

  	
   

  	
  Canadian

  Commitment

  	
   

  
	
  JPMorgan Chase Bank,
  N.A., Toronto Branch

  	
   

  	
  U.S.$

  	
  13,000,000

  	
   

  
	
  GE Canada Finance
  Holding Company

  	
   

  	
  U.S.$

  	
  7,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  U.S.$

  	
  20,000,000

  	
   

  






 












 


SCHEDULE 1.1(b)


 


MORTGAGED PROPERTIES


 


Part I:


 


1.                                      
Albertville, AL,
10,000sf Truck Maintenance Facility and 26,000sf Frog & Switch (combined as
one property based on appraiser’s inspection)


2.                                      
Albertville, AL,
139,000sf Parts Shop, 12.5 acres


3.                                      
Albertville, AL, 50
acre recycling yard


4.                                      
Montgomery, AL,
150,000sf, 50 acres


5.                                      
Ashland, KY,
387,000sf Car Dismantling & Recycling, 50 acres


6.                                      
Louisville, KY,
30,000sf Wheel Shop


7.                                      
Louisville, KY,
43,000sf Signal Structures, 30 acres


8.                                      
Decoursey, KY,
230,800sf, Repair & Trackwork Plant, 339 acres


9.                                      
East Chicago, IN,
200,000sf Wheel Shop, 15 acres


10.                                
Columbia, SC,
10,000sf Commercial Recycling, 12 acres


11.                                
Jackson, SC, 64,350sf
Wheel Shop, 23 acres


12.                                
Ft. Worth, TX,
229,000sf FMI, 5 acres


13.                                
Sherman, TX, 80,000sf
Trackwork Plant


14.                                
Amarillo, TX,
120,00sf Care Repair, 157 acres


 


Part II:


 


1.                                      
Albertville, AL, 1605
Progress Road, 84,000sf office building, Paragon building


2.                                      
Albertville, AL,
24,000sf Corporate Office


 












 


EXHIBIT A


 


ASSIGNMENT AND ASSUMPTION


 


This
Assignment and Assumption (the “Assignment and Assumption”) is dated as
of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee]
(the “Assignee”). Capitalized terms used but not defined herein shall
have the meanings given to them in the Credit Agreement identified below (as
amended, modified, renewed or extended from time to time, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a
part of this Assignment and Assumption as if set forth herein in full.


 


For an
agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, effective as of the Effective Date inserted by the
applicable Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement
and any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective facilities
identified below (including, without limitation, any letters of credit,
guarantees, and swingline loans included in such facilities) and (ii) to the
extent permitted to be assigned under applicable law, all claims, suits, causes
of action and any other right of the Assignor (in its capacity as a Lender)
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered
pursuant thereto or the loan transactions governed thereby or in any way based
on or related to any of the foregoing, including contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and
(ii) above being referred to herein collectively as the “Assigned Interest”).
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by the Assignor.


 


	
  2.

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Assignee:

  	
   

  	
   

  
	
   

  	
   

  	
  [and is an
  Affiliate/Approved Fund of [identify
  Lender](1)]

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Borrower(s):

  	
  Progress Rail Services
  Holdings Corp., the Subsidiaries of Progress Rail Services Holdings Corp.
  party to the Credit Agreement, Progress Rail Canada Corporation and

  



 






(1)                                 
Select as applicable.


 












 


	
   

  	
   

  	
  Progress Rail
  Transcanada Corporation

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Administrative Agents:

  	
  General Electric
  Capital Corporation, as the U.S. Administrative Agent under the Credit
  Agreement and GE Canada Finance Holding Company, as the Canadian
  Administrative Agent under the Credit Agreement

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Credit Agreement:

  	
  The U.S.$220,000,000
  Credit Agreement dated as of March 24, 2005 among Progress Rail Services
  Holdings Corp., the Subsidiaries of Progress Rail Services Holdings Corp.
  party thereto, Progress Rail Canada Corporation, Progress Rail Transcanada
  Corporation, the Lenders party thereto, General Electric Capital Corporation,
  as U.S. Administrative Agent and GE Canada Finance Holding Company, as
  Canadian Administrative Agent

  
	
  7.

  	
  Assigned Interest:

  	
   

  



 


	
  Facility
  Assigned(2)

  	
   

  	
  Aggregate Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned of

  Commitment/Loans(3)

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  



 


Effective
Date:  
                      
     , 20     [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]


 


The terms set forth in
this Assignment and Assumption are hereby agreed to:


 


	
   

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 






(2)                                 
Fill in the
appropriate terminology for the types of facilities under the Credit Agreement
that are being assigned under this Assignment (e.g. “Revolving Commitment,”
etc.)


 


(3)                                 
Set forth, to at least
9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.


 












 


	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


Consented to and
Accepted:


 


	
  [GENERAL ELECTRIC
  CAPITAL CORPORATION/GE CANADA FINANCE HOLDING COMPANY], as

  
	
   [U.S./Canadian]
  Administrative Agent

  
	
   

  
	
   

  
	
  By

  	
   

  	
   

  
	
   Title:

  
	
   

  
	
   

  
	
  [Consented to:](4)

  
	
   

  
	
  [NAME OF RELEVANT
  PARTY]

  
	
   

  
	
   

  
	
  By

  	
   

  	
   

  
	
   Title:

  



 






(4)                                 
To be added only if
the consent of the Borrower and/or other parties (e.g. Swingline Lender,
Issuing Bank) is required by the terms of the Credit Agreement.


 












 


ANNEX 1


 


STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION


 


1.                                      
Representations
and Warranties.


 


1.1                                
Assignor. The Assignor (a) represents and
warrants that (i) it is the legal and beneficial owner of the Assigned
Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance
or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and
to consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrowers, any of their
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrowers, any of their
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.  [The Assignor further represents and
warrants that, unless a Default or an Event of Default under the Credit
Agreement has occurred and is continuing, the Assignee is not a Non-Canadian
Lender.(5)]


 


1.2                                
Assignee. The Assignee (a) represents and
warrants that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it satisfies the requirements, if any, specified in
the Credit Agreement that are required to be satisfied by it in order to
acquire the Assigned Interest and become a Lender, (iii) from and after the
Effective Date, it shall be bound by the provisions of the Credit Agreement as
a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on any Administrative Agent or
any other Lender, and (v) if it is a a Non-U.S. Lender (in the case of the U.S.
Obligations) or a Non-Canadian Lender (in the case of the Canadian
Obligations), attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by it; and (b) agrees that (i) it will,
independently and without reliance on any Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.


 






(5)                                 
To be included for
assignments by Canadian Lenders.


 












 


2.                                      
Payments. From and after the Effective Date, the
applicable Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to but excluding the
Effective Date and to the Assignee for amounts which have accrued from and
after the Effective Date.


 


3.                                      
General Provisions. This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by facsimile shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This
Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of New York, but giving effect to federal laws
applicable to national banks.


 












 


EXHIBIT B


 


BORROWING BASE CERTIFICATE


 












 


EXHIBIT C


 


COMPLIANCE CERTIFICATE


 


To:                             
The Lenders parties
to the


Credit
Agreement Described Below


 


This
Compliance Certificate is furnished pursuant to that certain Credit Agreement
among Progress Rail Services Holdings Corp., a Delaware corporation (the “Parent”),
each of Parent’s domestic Subsidiaries identified on the signature pages
thereof (together with the Parent, the “U.S. Borrowers”), Progress Rail
Canada Corporation and Progress Rail Transcanada Corporation (the “Canadian
Borrowers”; the Canadian Borrowers, together with the U.S. Borrowers,
individually a “Borrower”, and collectively the “Borrowers”), the
Lenders party thereto, General Electric Capital Corporation, as U.S.
Administrative Agent and U.S. Swingline Lender, JPMorgan Chase Bank, N.A., as
U.S. Issuing Bank and GE Canada Finance Holding Company, as Canadian
Administrative Agent and Canadian Swingline Lender and JPMorgan Chase Bank,
N.A., Toronto Branch, as Canadian Issuing Bank. Unless otherwise defined
herein, capitalized terms used in this Compliance Certificate have the meanings
ascribed thereto in the Agreement.


 


THE
UNDERSIGNED HEREBY CERTIFIES THAT:


 


1.                                      
I am the duly elected
                    
of the Progress Rail Services Corporation;


 


2.                                      
I have reviewed the
terms of the Agreement and I have made, or have caused to be made under my
supervision, a detailed review of the transactions and conditions of the Parent
and its Subsidiaries during the accounting period covered by the attached
financial statements [for quarterly or
monthly financial statements add: and such financial statements
present fairly in all material respects the financial condition and results of
operations of the Parent and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes];


 


3.                                      
Except as set forth
below, the examinations described in paragraph 2 did not disclose, and I have
no knowledge of (i) the existence of any condition or event which constitutes a
Default during or at the end of the accounting period covered by the attached
financial statements or as of the date of this Compliance Certificate or (ii)
any change in GAAP or in the application thereof that has occurred since the
date of the audited financial statements referred to in Section 3.04 of the
Agreement which affects the attached financial statements;


 


4.                                      
I hereby certify that
no Loan Party has changed (i) its name, (ii) its chief executive office, (iii)
principal place of business, (iv) the type of entity it is or (v) its state of
incorporation or organization without having given the Agent the notice
required by Section 4.1(b)(iii) of the Security Agreement;


 


5.                                      
Schedule I attached hereto sets forth financial
data and computations evidencing the Borrowers’ compliance with certain
covenants of the Agreement, all of which data and computations are true,
complete and correct; and


 












 


6.                                      
Schedule II hereto sets forth the computations
necessary to determine the Applicable Rate commencing on the Business Day this
certificate is delivered.


 


Described
below are the exceptions, if any, to paragraph 3 listing, in detail, the (i)
nature of each condition or event, the period during which it has existed and
the action which the Borrowers have taken, is taking, or proposes to take with
respect to each such condition or event or (i) the change in GAAP or the
application thereof and the effect of such change on the attached financial
statements:


 


 


 


The
foregoing certifications, together with the computations set forth in Schedule
I and Schedule II hereto and the financial statements delivered with
this Compliance Certificate in support hereof, are made and delivered this
      day of
           ,
       .


 


	
   

  	
  PROGRESS RAIL SERVICES
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  



 












 


SCHEDULE I


 


Compliance as of
              ,
        with

Provisions of Section 6.04(i), Section 6.06, Section 6.09,
Section 6.10 and Section 6.11 of the


Agreement


 












 


SCHEDULE II


 


Borrowers’ Applicable Rate Calculation


 












 


EXHIBIT D


 


CLOSING CHECKLIST


 


 

















 


CREDIT AGREEMENT


 


dated as of


 


March 24, 2005


 


among


 


PROGRESS RAIL SERVICES
HOLDINGS CORP.,


 


Each of its Domestic
Subsidiaries that are Signatories Thereto


 


PROGRESS RAIL CANADA
CORPORATION


 


PROGRESS RAIL TRANSCANADA
CORPORATION


 


THE LENDERS PARTY THERETO


 


GENERAL ELECTRIC CAPITAL
CORPORATION,

as
U.S. Administrative Agent


 


and


 


GE CANADA FINANCE HOLDING
COMPANY,

as Canadian Administrative Agent


 


* * *


 


J.P. MORGAN SECURITIES
INC., 

as Sole Bookrunner, Sole Lead Arranger and
Syndication Agent


 






CLOSING AGENDA


 

















 


This Closing Agenda sets forth a list of the principal
documents to be delivered on or before the date of closing in connection with
the Credit Agreement dated as of March 24, 2005 (the “Agreement”), among
PROGRESS RAIL SERVICES PARENT CORP., a Delaware corporation (the “Parent”),
each of Parent’s Subsidiaries identified on the signature pages thereof,
the Lenders party thereto, GENERAL ELECTRIC CAPITAL CORPORATION, as U.S.
Administrative Agent, U.S. Swingline Lender and Canadian Swingline Lender and
JPMORGAN CHASE BANK, N.A., as U.S. Issuing Bank and Canadian Issuing Bank.


 


Terms capitalized herein which are not defined herein
shall have the meanings ascribed to them in the Agreement.


 


PARTIES


 


Progress Rail Services Holdings Corp. (“Progress”) and each of
its domestic subsidiaries, as Borrowers (collectively, “US Borrowers”)


 


Progress Rail Canada Corporation and Progress Rail Transcanada Corporation
(collectively, the “Canadian Borrowers”; the Canadian Borrowers,
together with the US Borrowers, the “Borrowers”)


 


Progress Rail Services Corporation (in its individual capacity, “PRSC”
and in its capacity as Administrative Borrower, “Admin Borrower”)


 


General Electric Capital Corporation (“GECC”), as U.S.
Administrative Agent


 


Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), as counsel to JPMorgan Chase
Bank, N.A.


 


Weil, Gotshal & Manges LLP (“Weil Gotshal”), as counsel
to U.S. Administrative Agent


 


Morgan Lewis & Bockius LLP (“Morgan Lewis”), as counsel
to Borrowers


 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
  A.
  Senior Loan Documents

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  4.01(a)

  	
   

  	
  Credit Agreement along
  with the following Exhibits and Schedules:

  	
   

  	
  Skadden

  	
   

  	
  PRSHC

  PMRC

  WVASI

  PRSC

  PRHI

  FMII

  SM&TC

  RAILCAR

  CRPI

  UIC

  KRR&SF

  PVC

  S&L

  PRCC

  PRTC

  GECC

  Chase–Lincoln

  JPMORGAN US

  GE CANADA

  JPMorgan – 

  Toronto

  	
   

  	
  Final Executed

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit A

  	
   

  	
  Form of Assignment
  and Assumption

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit B

  	
   

  	
  Form of Borrowing
  Base Certificate

  	
   

  	
  GECC

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit C

  	
   

  	
  Form of Compliance
  Certificate

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit D                Closing
  Checklist

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit E Form of
  Discount Note

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit F Form of
  Notice of Borrowing

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit G                Form of
  Guaranty

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Commitment Schedule

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 1.1(a)   Acquisition
  Documents

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 1.1(b)   Mortgaged
  Properties

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.03      Consents
  and Termination Rights

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.05      Intellectual
  Property

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.6        Disclosed
  Matters

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.09      Taxes

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.12      Material
  Agreements

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.15      Capitalization
  and Subsidiaries

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.17      Financing
  Statements

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.18      Labor
  Matters

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.19                       Affiliate
  Transactions

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.23                       Properties

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 3.24                       Environmental
  Matters

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 6.01                       Existing
  Indebtedness

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 6.02                       Existing
  Liens

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 6.04                       Existing
  Investments

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule 6.08                       Existing
  Restrictions

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
  2.

  	
   

  	
   

  	
   

  	
  US Revolving Credit
  Note

  	
   

  	
  Skadden

  	
   

  	
  US Borrowers

  	
   

  	
  Final

  
	
  3.

  	
   

  	
   

  	
   

  	
  Canadian Revolving
  Credit note

  	
   

  	
  Skadden

  	
   

  	
  Canadian Borrowers

  	
   

  	
  Final Executed

  
	
  4.

  	
   

  	
  4.01(b)

  	
   

  	
  Borrowing Base
  Certificate

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final Executed

  
	
  5.

  	
   

  	
  4.01(b)

  	
   

  	
  Solvency Certificate

  	
   

  	
  Skadden

  	
   

  	
  PRSC

  	
   

  	
  Final Executed

  
	
  6.

  	
   

  	
  4.01(b)

  	
   

  	
  Notice of Borrowing

  

  (a) Exhibit A                              Wire
  Instructions

  	
   

  	
  Skadden

  

  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final Executed

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
  7.

  	
   

  	
  4.01(b)

  	
   

  	
  Guaranty

  	
   

  	
  Skadden

  	
   

  	
  PRSPC

  PRSHC

  PMRC

  WVASI

  PRSC

  PRHI

  FMII

  SM&TC

  RAILCAR

  CRPI

  UIC

  KRR&SF

  PVC

  S&L

  	
   

  	
  Final Executed

  
	
  8.

  	
   

  	
  4.01(b)

  	
   

  	
  Domestic Pledge and
  Security Agreement along with the following Schedules and Annexes:

  	
   

  	
  Skadden

  	
   

  	
  PRSHC

  PMRC

  WVASI

  PRSC

  PRHI

  FMII

  SM&TC

  RAILCAR

  CRPI

  UIC

  KRR&SF

  PVC

  S&L

  GECC

  	
   

  	
  Final Executed

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule I:
  General Information

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule II:
  Locations of Equipment and Inventory

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule III:
  Investment Related Property

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule IV:
  Description of Material Contracts

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule V:
  Descriptions of Letters of Credit

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule VI:
  Intellectual Property

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Schedule VII:
  Commercial Tort Claims

  	
   

  	
  Borrowers

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Annex I: Pledge
  Supplement

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Annex II: New Grantor
  Pledge Supplement

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Annex III: Form of
  Control Agreement for Securities Accounts

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Annex IV: Form of
  Patent Security Agreement

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Annex V: Form of
  Trademark Security Agreement

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Annex VI: Form of
  Copyright Security Agreement

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Annex VII: Form of
  Collateral Access Agreement

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Annex VIII: Form of
  Bailee Agreement

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
  9.

  	
   

  	
  401(b)

  	
   

  	
  The following Stock,
  Notes and instruments, all pledged pursuant to the Pledge and Security
  Agreement, along with Stock Powers or Allonges executed in Blank:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  PRSC (pledged by
  Progress)

  	
   

  	
  Borrowers

  	
   

  	
  PRSHC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Metal
  Reclamation Company (pledged by Progress)

  	
   

  	
  Borrowers

  	
   

  	
  PRSHC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  West Virginia Auto
  Shredding, Inc. (pledged by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PMRC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Chemetron Railway
  Products, Inc. (pledged by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Southern Machine and
  Tool Company (pledged by (PRSC)

  	
   

  	
  Barrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  FM Industries, Inc.
  (pledged by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  United Industries
  Corporation (pledged by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Vanguard Corporation
  (pledged by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Rail Holdings, Inc.
  (pledged by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Railcar, Ltd. (pledged
  by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Rail Canada
  Corporation (pledged by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  3079936 Nova Scotia
  Company (pledged by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Southern Machine and
  Tool Company (pledged by PRSC)

  	
   

  	
  Borrowers

  	
   

  	
  PRSC

  	
   

  	
  Final

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Rail
  Transcanada Corporation (pledged by Progress Rail Holdings, Inc.)

  	
   

  	
  Borrowers

  	
   

  	
  PRHI

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Rail Services
  de Mexico, S.A. de C.V. (65% pledge by Railcar, Ltd.)

  	
   

  	
  Borrowers

  	
   

  	
  Railcar, Ltd.

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Servicios Ferroviarios
  Progress, S. de R.L. de C.V. (65% pledge by Railcar, Ltd.)

  	
   

  	
  Borrowers

  	
   

  	
  Railcar, Ltd.

  	
   

  	
  Final

  
	
  10.

  	
   

  	
  4.01(b)

  	
   

  	
  Mortgages granting a
  lien on the properties listed on Schedule A

  	
   

  	
  Skadden

  	
   

  	
  Borrowers

  	
   

  	
  Final Executed

  
	
  11.

  	
   

  	
   

  	
   

  	
  Escrow Letter

  	
   

  	
  Skadden

  	
   

  	
  Morgan

  GECC

  Chicago

  Title

  	
   

  	
  Final Executed

  
	
  12.

  	
   

  	
  4.01(b)

  	
   

  	
  Memorandum of Security
  Agreement

  	
   

  	
  Skadden/Ball Janik

  	
   

  	
  PRSHC

  PRCC

  PRTC

  PMRC

  WVASI

  PRSC

  PRHI

  FMII

  SM&TC

  RAILCAR

  CRPI

  UIC

  KRR&SF

  PVC

  S&L

  GECC

  	
   

  	
  Final Executed

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
  l3.

  	
   

  	
  4.01(b)

  	
   

  	
  Patent Security
  Agreement, along with the following Schedule:

  

  Schedule I: Patents

  	
   

  	
  Skadden

  

  

  Borrowers

  	
   

  	
  GECC/

  FMII

  CRPI

  PVC

  PRSC

  	
   

  	
  Final Executed

  
	
  14.

  	
   

  	
  4.01(b)

  	
   

  	
  Trademark Security
  Agreement, along with the following Schedule:

  

  Schedule I: Trademarks

  	
   

  	
  Skadden

  

  

  Borrowers



  	
   

  	
  GECC

  FMII

  CRPI

  PRSC

  PVC

  	
   

  	
  Final Executed

  
	
  15.

  	
   

  	
  4.01(b)

  	
   

  	
  Copyright Security
  Agreement, along with the following Schedule:

  

  Schedule I: Copyrights

  	
   

  	
  Skadden

  

  

  Borrowers

  	
   

  	
  GECC

  PRSC



  	
   

  	
  Final Executed

  
	
  16.

  	
   

  	
  4.01(b)

  	
   

  	
  Intercompany Note and
  endorsement thereto

  	
   

  	
  Skadden

  	
   

  	
  PRSHC

  PRCC

  PRTC

  PMRC

  WVASI

  PRSC

  PRHI

  FMII

  SM&TC

  RAILCAR

  CRPI

  UIC

  KRR&SF

  PVC

  S&L

  	
   

  	
  Final Executed

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
  17.

  	
   

  	
   

  	
   

  	
  Post Closing Letter

  	
   

  	
  Skadden

  	
   

  	
  Borrowers

  	
   

  	
  Final Executed

  
	
  B.    Corporate Documents and Certificates

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  4.01(b)

  	
   

  	
  Secretary’s Certificate
  of each entity set forth on Schedule C, certifying as to (i) Charter
  (ii)

  Bylaws, (iii) Resolutions, and (iv) Incumbency

  	
   

  	
  Morgan Lewis

  	
   

  	
  Borrowers

  	
   

  	
  Final Executed

  
	
  19.

  	
   

  	
  4.01(b)

  	
   

  	
  Officer’s Certificate
  certifying as to:

  

  a) no material adverse effect

  b) representations and warranties

  c) no Default

  d) Availability not less than $75,000,000

  	
   

  	
  Morgan Lewis

  	
   

  	
  Admin Borrower

  	
   

  	
  Final Executed

  
	
  20.

  	
   

  	
  4.01(b)

  	
   

  	
  Officer’s Certificate
  certifying as to:

  

  a) copies of Acquisition Documentation

  b) consummation of Progress Rail Acquisition in accordance with the terms and
  conditions set forth in the Acquisition Documentation

  c) receipt of equity capital in an amount of not less than $100,000,000

  d) receipt of junior capital in an amount of not less than $200,000,000

  	
   

  	
  Morgan Lewis

  	
   

  	
  Admin Borrower

  	
   

  	
  Final Executed

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
  21.

  	
   

  	
  4.01(b)

  	
   

  	
  Perfection Certificate

  	
   

  	
  Morgan Lewis

  	
   

  	
  PRSC

  PRHI

  FMII

  SMATC

  RAILCAR

  CRPI

  UIC

  KRR&SF

  PVC

  S&L

  PMRC

  WVASI

  PRSHC

  PMRC ACQ.

  PRCC

  PRTC

  	
   

  	
  Final Executed

  
	
  22.

  	
   

  	
  4.01(d)

  	
   

  	
  Good Standing
  Certificates for each of the following Loan Parties in each of the following
  jurisdictions:

  	
   

  	
  Borrower

  	
   

  	
   

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Rail Services
  Holdings Corp.:

  Delaware, 3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Metal
  Reclamation Company:

  Kentucky, 3-16-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  West Virginia Auto
  Shredding, Inc.: West Virginia, 3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Rail Services
  Corporation: Alabama, 3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Rail Holdings, Inc.:
  Alabama,

  3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
  FM Industries, Inc.:
  Texas, 3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Southern Machine and
  Tool Company: Georgia, 3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Railcar, Ltd.: Georgia,
  3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Chemetron Railway
  Products, Inc.: Delaware,

  3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  United Industries
  Corporation: Kentucky,

  3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Kentuckiana Railcar
  Repair & Storage Facility, LLC: Indiana, 3-16-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Vanguard
  Corporation: Delaware,

  3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
   

  	
   

  	
   

  	
   

  	
  S&L Railroad, LLC:
  Nebraska, 3-15-05

  	
   

  	
  Morgan Lewis

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
  C.   Miscellaneous

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  4.01(o)

  	
   

  	
  Insurance Certificates
  naming GECC as loss payee and additional insured

  	
   

  	
  Progress

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
  24.

  	
   

  	
  4.01(c)

  	
   

  	
  UCC Search Reports

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Complete – on file with
  Skadden

  
	
  25.

  	
   

  	
  4.0l(c)

  	
   

  	
  UCC-1 Financing
  Statements, naming GECC as Secured Party, with respect to the Debtors and
  jurisdictions set forth on Schedule D

  	
   

  	
  Skadden

  	
   

  	
  N/A

  	
   

  	
  Final

  
	
  D.   Opinions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  4.01(b)

  	
   

  	
  Opinion of Morgan
  Lewis, counsel to Borrowers

  	
   

  	
  Morgan Lewis

  	
   

  	
  Morgan Lewis

  	
   

  	
  Final

  
	
  27.

  	
   

  	
  4.01(b)

  	
   

  	
  Opinion of Alvord &
  Alvord, counsel to Borrowers, with respect to Surface Transportation Board
  matters

  	
   

  	
  Morgan Lewis

  	
   

  	
  Alvoid

  	
   

  	
  Draft

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
  28.

  	
   

  	
  4.01(b)

  	
   

  	
  Opinion of Burr &
  Forman LLP, counsel to Borrowers, with respect to Alabama mortgages

  	
   

  	
  Morgan Lewis

  	
   

  	
  Burr

  	
   

  	
  Final
  Executed

  
	
  29.

  	
   

  	
  4.01(b)

  	
   

  	
  Opinion of Frost Brown Todd LLC, counsel to
  Borrowers, with respect to Kentucky mortgages

  	
   

  	
  Morgan Lewis

  	
   

  	
  Frost

  	
   

  	
  Final

  
	
  30.

  	
   

  	
  4.01(b)

  	
   

  	
  Opinions of Ice Miller, counsel to Borrowers, with
  respect to Indiana mortgages

  	
   

  	
  Morgan Lewis

  	
   

  	
  Ice

  	
   

  	
  Final
  Executed

  
	
  31.

  	
   

  	
  4.01(b)

  	
   

  	
  Opinion of Nexsen Pruet
  Adams Kleemeier, LLC, counsel to Borrowers, with respect to South Carolina
  mortgages

  	
   

  	
  Morgan Lewis

  	
   

  	
  Nexsen

  	
   

  	
  Final

  
	
  32.

  	
   

  	
  4.01(b)

  	
   

  	
  Opinion of Hayes and
  Boone, LLP, counsel to Borrowers, with respect to Texas mortgages

  	
   

  	
  Morgan Lewis

  	
   

  	
  Hayes

  	
   

  	
  Final
  Executed

  
	
  33.

  	
   

  	
  4.01(b)

  	
   

  	
  Opinion of Spilman
  Thomas & Battle PLLC, West Virginia Counsel to Borrower

  	
   

  	
  Morgan Lewis

  	
   

  	
  Spilman

  	
   

  	
  Final
  Executed

  
	
  34.

  	
   

  	
  4.01(b)

  	
   

  	
  Opinion
  of Knudsen, Berkheimer, Richardson & Endacott, LLP, Nebraska Counsel
  to Borrower

  	
   

  	
  Morgan Lewis

  	
   

  	
  Knudsen

  	
   

  	
  Final

  
	
  E.   Post-Closing

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.

  	
   

  	
   

  	
   

  	
  Pledge
  Agreement of 35% pledge entities

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  36.

  	
   

  	
  4.01(b)

  	
   

  	
  Mexican Pledge Agreement

  	
   

  	
  Skadden

  	
   

  	
  Railcar,
  Ltd. GECC

  	
   

  	
  Post
  Closing

  
	
  37.

  	
   

  	
  4.01(b)

  	
   

  	
  The following Stock,
  pledged pursuant to the Mexican Pledge Agreement, along with Stock Powers
  executed in Blank:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Post
  Closing

  
	
   

  	
   

  	
   

  	
   

  	
  Progress Rail Services de
  Mexico, S.A. de C.V. (65% pledge by Railcar, Ltd.)

  	
   

  	
  Borrowers

  	
   

  	
  Railcar,
  Ltd.

  	
   

  	
  Post
  Closing

  
	
   

  	
   

  	
   

  	
   

  	
  Servicios
  Ferroviarios Progress, S. de R.L. de C.V. (65% pledge by Railcar, Ltd.)

  	
   

  	
  Borrowers

  	
   

  	
  Railcar,
  Ltd.

  	
   

  	
  Post
  Closing

  



 

















 


	
  Doc.

  No.

  	
   

  	
  Section

  Reference

  	
   

  	
  Document Description

  	
   

  	
  To Be

  Provided

  By or

  Drafting

  Responsibility

  	
   

  	
  Signatures

  	
   

  	
  Status

  
	
  38.

  	
   

  	
   

  	
   

  	
  Deposit Account Control
  Agreements(s)

  	
   

  	
  Skadden

  	
   

  	
  GECC/
  

  Borrowers/ 

  Wachovia

  	
   

  	
  Final

  



 

















 


Schedule A

Mortgages


 


	
  Property
  Location

  	
   

  	
  Mortgage

  	
   

  	
  Fixture

  Financing

  Statement

  
	
  1605 Progress Drive,
  Albertville, Alabama 35950

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  100 Industrial
  Boulevard, Albertville, Alabama 35950

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  1600 Progress Drive, Albertville,
  Alabama 35950

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  1002 Industrial
  Boulevard, Albertville, Alabama 35950

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  1185 Industrial
  Boulevard, Boaz, Alabama 35957

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  10650 highway 80 East,
  Montgomery, Alabama 36117

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  175 West Chicago
  Avenue, East Chicago, Indiana 46312

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  8587 Railroad Drive,
  Taylor Mill (Covington), KY 41015

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  8701 Progress Drive,
  Taylor Mill (Covington), KY 41015

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  1900 Front Street,
  Ashland, KY 41101

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  3000 Industrial
  Boulevard, Louisville, KY 40219

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  8021 National Turnpike,
  Louisville, KY 40214

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  1148 Shop Road,
  Columbia, SC 29250

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  168 Fischer Road,
  Jackson, SC 29831

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  12100 East Walls Road,
  Amarillo, Texas 79118

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  8600 Will Rogers
  Boulevard, Fort Worth, Texas 76140

  	
   

  	
  Final Executed

  	
   

  	
  Final

  
	
  525 West Progress
  Drive, Sherman, Texas 75092

  	
   

  	
  Final Executed

  	
   

  	
  Final

  



 

















 


Schedule B

Secretary’s Certificates


 


	
  Entity

  	
   

  	
  Status

  
	
  Progress Rail Services
  Holdings Corp.

  	
   

  	
  Final Executed

  
	
  Progress Metal
  Reclamation Company

  	
   

  	
  Final Executed

  
	
  West Virginia Auto
  Shredding, Inc.

  	
   

  	
  Final Executed

  
	
  Progress Rail Services
  Corporation

  	
   

  	
  Final Executed

  
	
  Progress Rail Holdings, Inc.

  	
   

  	
  Final Executed

  
	
  FM Industries, Inc.

  	
   

  	
  Final Executed

  
	
  Southern Machine and
  Tool Company

  	
   

  	
  Final Executed

  
	
  Railcar, Ltd.

  	
   

  	
  Final Executed

  
	
  Chemetron Railway
  Products, Inc.

  	
   

  	
  Final Executed

  
	
  United Industries
  Corporation

  	
   

  	
  Final Executed

  
	
  Kentuckiana Railcar
  Repair & Storage Facility, LLC

  	
   

  	
  Final Executed

  
	
  Progress Vanguard
  Corporation

  	
   

  	
  Final Executed

  
	
  S&L Railroad, LLC

  	
   

  	
  Final Executed

  



 

















 


Schedule C 

UCC-1 Financing Statements


 


	
  Entity

  	
   

  	
  Status

  
	
  Progress Rail Services
  Holdings Corp.: Delaware, 3915520

  	
   

  	
  Final doc. #444812

  
	
  Progress Metal
  Reclamation Company: Kentucky, 0418884

  	
   

  	
  Final doc. #445001

  
	
  West Virginia Auto
  Shredding, Inc.: West Virginia, N/A

  	
   

  	
  Final doc. #445002

  
	
  Progress Rail Services
  Corporation: Alabama, N/A

  	
   

  	
  Final doc. #4445003

  
	
  Progress Rail Holdings, Inc.:
  Alabama, N/A

  	
   

  	
  Final doc. #445007

  
	
  FM Industries, Inc.:
  Texas, 110626600

  	
   

  	
  Final doc. #445008

  
	
  Southern Machine and
  Tool Company: Georgia, N/A

  	
   

  	
  Final doc. #445012

  
	
  Railcar, Ltd.: Georgia,
  N/A

  	
   

  	
  Final doc. #445013

  
	
  Chemetron Railway
  Products, Inc.: Delaware, 0884056

  	
   

  	
  Final doc. #445017 &
  445316

  
	
  United Industries
  Corporation: Kentucky, 0053254

  	
   

  	
  Final doc. #445018

  
	
  Kentuckiana Railcar
  Repair & Storage Facility, LLC: Indiana, 1995040463

  	
   

  	
  Final doc. #445020

  
	
  Progress Vanguard
  Corporation: Delaware, 3119773

  	
   

  	
  Final doc. #445021

  
	
  S&L Railroad, LLC:
  Nebraska, N/A

  	
   

  	
  Final doc. #445022

  



 

















 


EXHIBIT E


 


FORM OF DISCOUNT NOTE


 


	
  Cdn$

  	
   

  	
  Date:

  



 


FOR
VALUE RECEIVED, the undersigned unconditionally promises to pay on
                                ,
                ,
to or to the order of
                                                
(the “Holder”), the sum of
Cdn$                                          with
no interest thereon.


 


The
undersigned hereby waives presentment, protest and notice of every kind and
waives any defences based upon indulgences which may be granted by the Holder
to any party liable hereon and any days of grace.


 


This
promissory note evidences an Acceptance Equivalent Loan, as defined in the
Credit Agreement made as of March    , 2005 among Progress Rail
Services Holdings Corp. (the “Parent”), each of the domestic subsidiaries of
Parent party thereto (such subsidiaries, together with the Parent, the “U.S.
Borrowers”), Progress Rail Canada Corporation, Progress Rail Transcanada
Corporation (the “Canadian Borrowers”, and together with the U.S.
Borrowers, the “Borrowers”), the Issuing Banks, GECC, as U.S.
Administrative Agent, GE Canada Finance Holding Company, as Canadian
Administrative Agent, the Lenders and the other parties thereto, as amended,
restated, supplemented and otherwise modified from time to time, (the “Credit
Agreement”) and constitutes indebtedness to the Holder arising under the
Acceptance Equivalent Loan.  Payment of this note shall be made at the
offices of
                      
at
                      ,
Toronto, Ontario.  Capitalized terms used and not defined herein have the
meaning given to them in the Credit Agreement.


 


 


	
   

  	
  PROGRESS RAIL CANADA
  CORPORATION /

  PROGRESS RAIL TRANSCANADA

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 














 


EXHIBIT F


 


FORM OF
NOTICE OF DRAWING


 

















 


EXHIBIT F


 


FORM OF NOTICE OF BORROWING


 


[General Electric
Capital Corporation, as U.S.

administrative agent under the Credit

Agreement referenced below]


 


[GE Canada Finance
Holding Company, as Canadian 

administrative agent under the Credit

Agreement referenced below]


 


This Notice of Borrowing is given pursuant to Section 2.4(a) of that
certain Credit Agreement dated as of March [      ],
2005 (the “Credit Agreement”); terms defined therein and not otherwise
defined herein are used herein as therein defined), by and among Progress Rail
Services Holdings Corp. (the “Parent”), each of Parent’s domestic
subsidiaries identified on the signature pages thereof (the Parent and such
subsidiaries, collectively, the “U.S. Borrowers”), Progress Rail Canada
Corporation, Progress Rail Transcanada Corporation (the “Canadian Borrowers,
and together with the U.S. Borrowers, the “Borrowers”), General Electric
Capital Corporation, as U.S. Administrative Agent (the “U.S. Administrative Agent”),
GE Canada Finance Holding Company, as Canadian Administrative Agent, the
Lenders and the Issuing Banks.


 


The undersigned hereby (one checked as applicable):


 


o                       gives the [U.S./Canadian]
Administrative Agent irrevocable notice


 


o                       confirms its irrevocable
telephonic notice to the [U.S./Canadian] Administrative Agent


 


that it requests
the making of a Revolving Loan under the Credit Agreement on behalf of                                            as
follows:


 


1.         Date of Revolving Loan. The
requested date of the proposed Revolving Loan is                         ,
20     .


 


2.         Amount of Revolving Loan. The
requested aggregate amount of the proposed Revolving Loan is: $                        .


 


3.         Class and Currency of Revolving Loan.
The proposed Revolving Loan is to be (one checked as applicable):


 


o                       (a)       a U.S. Borrowing


 


o                       (b)       a Canadian Borrowing.


 


If to be a
Canadian Borrowing, the currency of such Borrowing is to be (one checked as
applicable):


 


o                       (a)       U.S. Dollars


 


o                       (b)       Canadian Dollars.


 

















 


4.         Rate Option and Interest Period.
If the proposed Revolving Loan is to be denominated in U.S. Dollars, the
requested type of interest rate borrowing option and (if applicable) Interest
Period for the proposed Revolving Loan is ((a) or (b) checked as applicable):


 


o        (a)       Eurodollar
Borrowing for an Interest Period of (one checked as applicable):


 


o                       1 month


o                       2 months


o                       3 months


o                       6 months


 


o        (b)       ABR
Borrowing.


 


5.         The representations and warranties set
forth in Article III of the Credit Agreement are true and correct as though
made on and as of the date of the Borrowing.


 


6.         No Default has occurred and is
continuing.


 


7.         After giving effect to the Borrowing,
[U.S./Canadian] Availability is not less than zero.


 


The undersigned hereby directs the [U.S./Canadian] Administrative
Agent to disburse the proceeds of the proposed Revolving Loan in the amounts
and to the accounts as indicated on Exhibit A.


 


[Signature Page Follows]


 

















 


Wherefore, the undersigned has provided this Notice of Borrowing in
compliance with the provisions of Section 2.04 of the Credit Agreement this          
day of                                      ,
20       .


 


	
   

  	
   

  	
  PROGRESS RAIL SERVICES
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 

















 


Exhibit A

to

Notice of Borrowing 


 


[Attached]


 

















 


EXHIBIT G


 


FORM OF
GUARANTY


 

















 


EXHIBIT G


 


FORM OF GUARANTY


 


This Guaranty (this “Guaranty”), dated as of March 24, 2005, is
made, jointly and severally, by each of the parties listed on the signature
pages hereof and those additional entities that hereafter become parties hereto
by executing a counterpart signature page hereof substantially in the form of
Appendix I hereto (each a “Guarantor” and
collectively the “Guarantors”) in
favor of and for the benefit of the Administrative Agents, each Lender and the
Issuing Banks and each other Secured Party (each as defined in the Credit
Agreement referenced below) (each, a “Guarantied
Party” and, collectively, the “Guarantied
Parties”). Capitalized
terms used herein and not otherwise defined herein shall have the meaning
assigned to such terms in the Credit Agreement (as defined below).


 


W I T N E S S E T H:


 


WHEREAS, Progress
Rail Services Holdings Corp., a Delaware corporation (the “Parent”), each of Parent’s domestic subsidiaries identified on the signature
pages thereof (together with the Parent, the “U.S.
Borrowers”), Progress Rail Canada
Corporation and Progress Rail Transcanada Corporation (the “Canadian Borrowers”; the Canadian
Borrowers, together with the U.S. Borrowers, jointly and severally, the “Borrowers”), the Lenders party thereto, General Electric Capital
Corporation, as U.S. Administrative Agent, GE Canada Finance Holding Company,
as Canadian Administrative Agent, and the other parties thereto have entered
into that certain Credit Agreement, dated as of March [   ],
2005 (as it may be amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”);


 


WHEREAS, each
Guarantor has agreed to guaranty the Obligations of the Canadian Borrowers;


 


WHEREAS, each of
the Guarantors is an affiliate of the Canadian Borrowers and each expects to
realize substantial direct and indirect benefits as a result of the Canadian
Borrowers entering into the Credit Agreement;


 


WHEREAS, the
execution and delivery by each Guarantor of this Guaranty is a condition
precedent to the availability of credit under the Credit Agreement.


 


NOW, THEREFORE, in
consideration of the foregoing, to induce the Guarantied Parties to enter into
the Credit Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Guarantors hereby agree
as follows:


 


Section 1.     Guaranty. Each Guarantor hereby agrees
that it is jointly and severally liable for, and, as primary obligor and not
merely as surety, absolutely and unconditionally guarantees to the Guarantied
Parties the full and prompt payment when due, whether at stated maturity, upon
acceleration or otherwise, and at all times thereafter, of the Canadian
Obligations (including interest that accrues or that would accrue but for the
filing of a bankruptcy case by a Canadian Borrower, whether or not


 

















 


such interest
would be an allowable claim under any applicable bankruptcy or other similar
proceeding, and other obligations accruing or arising after commencement of any
case under any bankruptcy or similar laws by or against any Canadian Borrower
(or that would accrue or arise but for the commencement of any such case)), and
all costs and expenses including, without limitation, all court costs and
attorneys’ and paralegals’ fees (including allocated costs of in-house counsel
and paralegals) and expenses paid or incurred by the Guarantied Parties in
endeavoring to collect all or any part of the Canadian Obligations from, or in
prosecuting any action against, the Canadian Borrowers, any Guarantor or any
other guarantor of all or any part of the Canadian Obligations (such costs and
expenses, together with such Canadian Obligations, collectively the “Guaranteed Obligations”). Each Guarantor
further agrees that the Guaranteed Obligations may be increased, extended,
renewed or otherwise altered in whole or in part without notice to or further
assent from it, and that it remains bound upon its guarantee notwithstanding
any such increase, extension, renewal or alteration. All terms of this Guaranty
apply to and may be enforced by or on behalf of any domestic or foreign branch
or Affiliate of any Guarantied Party that extended any portion of the
Guaranteed Obligations.


 


Section 2.     Guaranty of Payment. This Guaranty is a
guaranty of payment and not of collection. Each Guarantor waives any right to
require any Guarantied Party or any other Person to proceed against the
Canadian Borrowers, any Guarantor, any other guarantor, or any other Person
obligated for all or any part of the Guaranteed Obligations (each, an “Obligated Party”), or otherwise to enforce
its payment against any security or collateral securing all or any part of the
Guaranteed Obligations.


 


Section 3.     No Discharge or Diminishment of Guaranty.
(a) Except as otherwise expressly provided for herein, the obligations of each
Guarantor hereunder are irrevocable, unconditional and absolute and not subject
to any reduction, limitation, impairment or termination for any reason (other
than the indefeasible payment in full in cash of the Guaranteed Obligations),
including: (i) any claim of waiver, release, extension, renewal, settlement,
surrender, alteration, or compromise of any of the Guaranteed Obligations, by
operation of law or otherwise; (ii) any change in the corporate or company
existence, structure or ownership of any Canadian Borrower, any Guarantor or
any other guarantor of or other Person liable for any of the Guaranteed
Obligations; (iii) any workout, insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Obligated Party or any of their assets or any
resulting release or discharge of any obligation of any Obligated Party; or
(iv) the existence of any claim, setoff or other rights which any Guarantor may
have at any time against any Obligated Party, any Guarantied Party or any other
Person, whether in connection herewith or in any unrelated transactions.


 


(b)       The obligations of each
Guarantor hereunder are not subject to any defense or setoff, counterclaim,
recoupment, or termination whatsoever by reason of the invalidity, illegality,
or unenforceability of any of the Guaranteed Obligations, the Canadian
Borrowers’ Obligations under any Loan Document or any agreement or instrument
related thereto or otherwise, or any provision of applicable law or regulation


 


2

















 


purporting to
prohibit payment by any Obligated Party of the Guaranteed Obligations or any
part thereof.


 


(c)       Further, the obligations
and liabilities of any Guarantor hereunder are independent of the obligations
of any other Guarantor or any other guarantor of the Obligations of the
Canadian Borrowers and such obligations and liabilities shall not be discharged
or impaired or otherwise affected by: (i) the failure of any Guarantied Party
to attempt to collect the Guarantied Obligations, assert any claim or demand or
to enforce any remedy with respect to all or any part of the Guaranteed
Obligations; (ii) any waiver or modification of or supplement to any provision
of any agreement relating to the Guaranteed Obligations; (iii) any release,
non-perfection, invalidity or unenforceability of any indirect or direct
security or collateral for the obligations of the Canadian Borrowers for all or
any part of the Guaranteed Obligations or any obligations of any other
guarantor of or other Person liable for any of the Guaranteed Obligations; (iv)
any action or failure to act by any Guarantied Party with respect to any
collateral securing any part of the Guaranteed Obligations (including elections
by a Secured Party to proceed separately against the Collateral in accordance
with applicable law); or (v) any default, failure or delay, willful or
otherwise, in the payment or performance of any of the Guaranteed Obligations,
or any other circumstance, act, omission or delay that might in any manner or
to any extent vary the risk of such Guarantor or that would otherwise operate
as a discharge of any Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of the Guaranteed Obligations).


 


Section 4.     Defenses Waived. To the fullest extent
permitted by applicable law, each Guarantor hereby waives any defense based on
or arising out of any defense of any Canadian Borrower or any Guarantor or the
unenforceability of all or any part of the Guaranteed Obligations from any
cause, or the cessation from any cause of the liability of any Canadian
Borrower or any Guarantor, other than the indefeasible payment in fall in cash
of the Guaranteed Obligations. Without limiting the generality of the
foregoing, each Guarantor irrevocably waives any requirement of notice or
acceptance hereof or other formality relating to the obligations of any
Guarantor hereunder, promptness, diligence, presentment, demand, protest and,
to the fullest extent permitted by law, any notice not provided for herein, as
well as any requirement that at any time any action be taken by any person
against any Obligated Party, or any other person. The Administrative Agent may,
at its election, foreclose on any Collateral held by it by one or more judicial
or nonjudicial sales, accept an assignment of any such Collateral in lieu of
foreclosure or otherwise act or fail to act with respect to any security or
collateral securing all or a part of the Guaranteed Obligations, compromise or
adjust any part of the Guaranteed Obligations, make any other accommodation
with any Obligated Party or exercise any other right or remedy available to it
against any Obligated Party, without affecting or impairing in any way the
liability of such Guarantor under this Guaranty except to the extent the
Guaranteed Obligations have been fully and indefeasibly paid in cash. To the
fullest extent permitted by applicable law, each Guarantor waives any defense
arising out of any such election even though that election may operate,
pursuant to applicable law, to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of any Guarantor against any Obligated
Party or any other Person or any security.


 


3

















 


Section 5.     Rights of Subrogation. No Guarantor
will assert any right, claim or cause of action, including, without limitation,
a claim of subrogation, contribution or indemnification that it has against any
Obligated Party, or any collateral, until the Loan Parties have fully performed
all their obligations to each Guarantied Party and all of the Guaranteed
Obligations have been indefeasibly paid in full in cash.


 


Section 6.     Reinstatement; Stay of Acceleration. If
at any time any payment or performance of any portion of the Guaranteed
Obligations is rescinded or must otherwise be restored or returned upon the
insolvency, bankruptcy, or reorganization of any Canadian Borrower or
otherwise, each Guarantor’s obligations under this Guaranty with respect to
that payment or performance shall be reinstated at such time as though the
payment or performance had not been made, whether or not any Guarantied Party
is in possession of this Guaranty and notwithstanding any purported termination
of this Guaranty. If acceleration of the time for payment of any of the
Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of any Canadian Borrower, all such amounts otherwise subject to
acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Guarantors forthwith on demand
by the Administrative Agent.


 


Section 7.     Direct Benefit; Information. Each
Guarantor expressly represents and warrants to the Guarantied Parties that the
extensions of credit under the Credit Agreement and any other financial
accommodations by the Guarantied Parties are and will be of direct or indirect
interest, benefit and advantage to such Guarantor. Each Guarantor further
assumes all responsibility for being and keeping itself informed of Canadian
Borrowers’ financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks that such Guarantor assumes and incurs
under this Guaranty, and agrees that no Guarantied Party shall have any duty to
advise any Guarantor of information known to it regarding those circumstances
or risks.


 


Section 8.     Taxes. All payments of the Guaranteed
Obligations by any Guarantor will be made free and clear of and without
deduction for any Indemnified Taxes; provided that if any Guarantor
shall be required to deduct any Indemnified Taxes from such payments, then (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Bank (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Guarantor shall make such deductions and
(iii) such Guarantor shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.


 


Section 9.     Maximum Liability. The provisions of
this Guaranty are severable, and in any action or proceeding involving any
state corporate law, or any state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of any Guarantor under this Guaranty would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount
of such Guarantor’s liability under this Guaranty, then, notwithstanding any


 


4

















 


other provision of
this Guaranty to the contrary, the amount of such liability shall not exceed
the maximum amount that is valid and enforceable as determined in such action
or proceeding (such highest amount determined hereunder being the relevant Guarantor’s
“Maximum Liability”). This Section with respect to the Maximum
Liability of each Guarantor is intended solely to preserve the rights of each
Guarantied Party to the maximum extent not subject to avoidance under
applicable law, and no Guarantor nor any other person or entity shall have any
right or claim under this Section with respect to such Maximum Liability,
except to the extent necessary so that the obligations of any Guarantor
hereunder shall not be rendered voidable under applicable law. Each Guarantor
agrees that the Guaranteed Obligations may at any time and from time to time
exceed the Maximum Liability of each Guarantor without impairing this Guaranty
or affecting the rights and remedies of any Guarantied Party hereunder, provided
that, nothing in this sentence shall be construed to increase any Guarantor’s
obligations hereunder beyond its Maximum Liability.


 


Section 10.   Contribution. In the event any Guarantor
(a “Paying Guarantor”) shall make any payment or payments under
this Guaranty or shall suffer any loss as a result of any realization upon any
collateral granted by it to secure its obligations under this Guaranty, each
other Guarantor (each a “Non-Paying
Guarantor”) shall
contribute to such Paying Guarantor an amount equal to such Non-Paying
Guarantor’s Applicable Percentage (as defined below) of such payment or
payments made, or losses suffered, by such Paying Guarantor. For purposes of
this Section 10, each Non-Paying Guarantor’s “Applicable Percentage” with respect to any such payment or
loss by a Paying Guarantor shall be determined as of the date on which such
payment or loss was made by reference to the ratio of (i) such Non-Paying
Guarantor’s Maximum Liability as of such date (without giving effect to any
right to receive, or obligation to make, any contribution hereunder) or, if
such Non-Paying Guarantor’s Maximum Liability has not been determined, the
aggregate amount of all monies received by such Non-Paying Guarantor from the
Canadian Borrowers after the date hereof (whether by loan, capital infusion or
by other means) to (ii) the aggregate Maximum Liability of all Guarantors
hereunder (including such Paying Guarantor) as of such date (without giving
effect to any right to receive, or obligation to make, any contribution hereunder),
or to the extent that a Maximum Liability has not been determined for any
Guarantor, the aggregate amount of all monies received by such Guarantors from
the Canadian Borrowers after the date hereof (whether by loan, capital infusion
or by other means). Nothing in this provision shall affect any Guarantor’s
several liability for the entire amount of the Guaranteed Obligations (up to
such Guarantor’s Maximum Liability). Each of the Guarantors covenants and
agrees that its right to receive any contribution under this Guaranty from a
Non-Paying Guarantor shall be subordinate and junior in right of payment to the
indefeasible payment in full in cash of the Guaranteed Obligations. This
provision is for the benefit of both the Guarantied Parties and the Guarantors
and may be enforced by any one, or more, or all of them in accordance with the
terms hereof.


 


Section 11.   Liability Cumulative. The liability of
each Loan Party as a Guarantor under this Guaranty is in addition to and shall
be cumulative with all liabilities of each Loan Party to the Guarantied Parties
under the other Loan Documents to which such Loan Party is a party or in
respect of any obligations or liabilities of the other Loan


 


5

















 


Parties, without
any limitation as to amount, unless the instrument or agreement evidencing or
creating such other liability specifically provides to the contrary.


 


Section 12.   Subordination. (a) Guarantor
Subordinated Debt. Each Guarantor hereby agrees that any Indebtedness of
the Canadian Borrowers now or hereafter owing to or held by any Guarantor,
whether heretofore, now or hereafter created (the “Guarantor Subordinated Debt”), is hereby subordinated to all of the Obligations and that,
except as permitted by the Credit Agreement, the Guarantor Subordinated Debt
shall not be paid in whole or in part until the Obligations have been
indefeasibly paid in full in cash and this Guaranty has terminated and is of no
further force or effect. No Guarantor shall accept any payment of or on account
of any Guarantor Subordinated Debt at any time in contravention of the
foregoing. Upon the occurrence and during the continuance of an Event of
Default and on notice from the Administrative Agent, the Canadian Borrowers
shall pay to the Administrative Agent any payment of all or any part of the
Guarantor Subordinated Debt and any amount so paid to the Administrative Agent
shall be applied to payment of the Guaranteed Obligations as provided in
Section 2.19 of the Credit Agreement. Each payment on the Guarantor
Subordinated Debt received in violation of any of the provisions hereof shall
be deemed to have been received by such Guarantor as trustee for the Guarantied
Parties, shall be segregated from other property and funds of such Guarantor
and shall be paid over or delivered to the Administrative Agent in the same
form as so received (with any necessary endorsement or assignment) immediately
on account of the Guaranteed Obligations and all other amounts payable under
this Guaranty or to be held as Collateral for any Guaranteed Obligations or
other amounts payable under this Guaranty thereafter arising, but without
otherwise affecting in any manner such Guarantor’s liability hereof. Each
Guarantor agrees to file all claims against the Canadian Borrowers in any
bankruptcy or other proceeding in which the filing of claims is required by law
in respect of any Guarantor Subordinated Debt. If for any reason a Guarantor
fails to file such claim at least ten Business Days prior to the last date on which
such claim should be filed, such Guarantor hereby irrevocably appoints the
Administrative Agent as its true and lawful attorney-in-fact and the
Administrative Agent is hereby authorized to act as attorney-in-fact in such
Guarantor’s name to file such claim or, in the Administrative Agent’s
discretion, to assign such claim to and cause proof of claim to be filed in the
name of the Administrative Agent or its nominee. In all such cases, whether in
administration, bankruptcy or otherwise, the person or persons authorized to
pay such claim shall pay to the Administrative Agent the full amount payable on
the claim in the proceeding, and, to the full extent necessary for that
purpose, each Guarantor hereby assigns to the Administrative Agent all of such
Guarantor’s rights to any payments or distributions to which such Guarantor
otherwise would be entitled. If the amount so paid is greater than such
Guarantor’s liability hereunder, the Administrative Agent shall pay the excess
amount to the party entitled thereto.


 


(b)       Canadian Subordinated
Debt. Each Guarantor and the Guaranteed Parties, by the Guaranteed Parties’
acceptance hereof, covenant and agree that, each Guarantor’s obligations
hereunder with respect to the Guaranteed Obligations (the “Canadian Subordinated Debt”), is hereby subordinated to all of the U.S.
Obligations and that, except as permitted by the Credit Agreement, the Canadian
Subordinated Debt shall not be paid in whole or in part until the U.S.
Obligations have been indefeasibly paid in full


 


6

















 


in cash. No
Guaranteed Party shall accept any payment of or on account of any Canadian
Subordinated Debt at any time in contravention of the foregoing. Each payment
on the Canadian Subordinated Debt received in violation of any of the
provisions hereof shall be deemed to have been received by such Guaranteed
Party as trustee for the U.S. Secured Parties, shall be segregated from other
property and funds of such Guaranteed Party and shall be paid over or delivered
to the U.S. Collateral Agent in the same form as so received (with any
necessary endorsement or assignment) immediately on account of the U.S.
Obligations or to be held as Collateral for any U.S. Obligations, but without
otherwise affecting in any manner such Guaranteed Party’s liability hereof.
Each Guaranteed Party agrees to file all claims against the Canadian Borrowers
in any bankruptcy or other proceeding in which the filing of claims is required
by law in respect of any Canadian Subordinated Debt. If for any reason a
Guaranteed Party fails to file such claim at least ten Business Days prior to
the last date on which such claim should be filed, such Guaranteed Party hereby
irrevocably appoints the U.S. Collateral Agent as its true and lawful attorney-in-fact
and the U.S. Collateral Agent is hereby authorized to act as attorney-in-fact
in such Guaranteed Party’s name to file such claim or, in the U.S. Collateral
Agent’s discretion, to assign such claim to and cause proof of claim to be
filed in the name of the U.S. Collateral Agent or its nominee. In all such
cases, whether in administration, bankruptcy or otherwise, the person or
persons authorized to pay such claim shall pay to the U.S. Collateral Agent the
full amount payable on the claim in the proceeding, and, to the full extent
necessary for that purpose, each Guaranteed Party hereby assigns to the U.S.
Collateral Agent all of such Guaranteed Party’s rights to any payments or
distributions to which such Guaranteed Party otherwise would be entitled. If
the amount so paid is greater than such Guaranteed Party’s liability hereunder,
the U.S. Collateral Agent shall pay the excess amount to the party entitled
thereto.


 


Section 13.   Default; Remedies. The obligations of
each Guarantor hereunder are independent of and separate from the Obligations.
If any Obligation is not paid when due, or upon any Event of Default under
Article VII of the Credit Agreement, the Administrative Agent may, at its sole
election, proceed directly and at once, without notice, against any Guarantor
to collect and recover the full amount or any portion of the Obligations then
due, without first proceeding against any Canadian Borrower, any other
Guarantor or any other guarantor of the Obligations, or against any Collateral
under the Loan Documents or joining any Canadian Borrower or any other
guarantor in any proceeding against any Guarantor. At any time after maturity
of the Obligations, each Guaranteed Party may (until such time as the
Guaranteed Obligations are indefeasibly paid in full in cash and all
Commitments and other obligations under the Credit Agreement have been
terminated), with notice to the Administrative Agent but without notice to any
Guarantor, and regardless of the acceptance of any Collateral or security for the
payment hereof, appropriate and apply toward the payment of all or any part of
the Guaranteed Obligations (a) any indebtedness due or to become due from such
Guarantied Party or any of its Affiliates to or for the credit of such
Guarantor and (b) any deposits, moneys, credits or other property belonging to
such Guarantor, at any time held by, or coming into the possession of, or under
the control of, such Guarantied Party or any of its Affiliates.


 


7

















 


Section 14.   Continuing Guaranty; Irrevocability. This
Guaranty shall be a continuing guaranty and shall be operative and binding and
the obligations and liabilities of each Guarantor hereunder shall be
irrevocable until such time as the Administrative Agent shall have acknowledged
in writing that all of the Guaranteed Obligations have been indefeasibly paid
in full in cash and all Commitments and other obligations under the Credit
Agreement have been terminated, at which time this Guaranty shall automatically
terminate; provided, that, solely to the extent permitted by the
provisions of the Credit Agreement, the Administrative Agent shall release any
Guarantor from its obligations hereunder if such Person ceases to be a
Subsidiary of the Parent in connection with a sale, transfer or other
disposition of all of the Stock of such Person in a transaction permitted by
the Credit Agreement or such Person shall have been liquidated or dissolved in
a transaction permitted by the Credit Agreement. Upon termination of this
Guaranty and at the written request of the Guarantors or their respective
successors or assigns, and at the cost and expense of the Canadian Borrowers or
the Guarantors or their respective successors or assigns, the Administrative
Agent shall execute such instruments, documents or agreements as are reasonably
necessary to evidence such termination.


 


Section 15.   Setoff. In addition to any rights now
or hereafter granted under applicable law and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default or if any Canadian Borrower or any Guarantor becomes insolvent, and
with notice to the Administrative Agent, each Guarantied Party and each
Affiliate of a Guarantied Party may at any time or from time to time without
notice to any Guarantor (any such notice being expressly waived) or to any
other Person and regardless of the acceptance of any security or collateral for
the payment hereof, appropriate and apply toward the payment of all or any part
of the Guaranteed Obligations (a) any indebtedness due or to become due from
such Guarantied Party or such Affiliate to or for the credit of such Guarantor
and (b) any deposits, moneys, credits or other property belonging to such
Guarantor, at any time held by, or coming into the possession of, or under the
control of, such Guarantied Party or such Affiliate.


 


Section 16.   No Marshalling. Each Guarantor
consents and agrees that no Guarantied Party or Person acting for or on behalf
of any Guarantied Party shall be under any obligation to marshal any assets in
favor of any Guarantor or against or in payment of any or all of the
Obligations.


 


Section 17.   Representations and Warranties. Each
Guarantor represents and warrants that such Guarantor has, independently and
without reliance upon any Guarantied Party and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Guaranty and each other Loan Document to which it
is a party, and such Guarantor has established adequate means of obtaining from
each other Loan Party on a continuing basis information pertaining to, and is
now and on a continuing basis will be completely familiar with, the financial
condition and assets of such other Loan Parties.


 


8

















 


Section 18.   Notices. All notices and other
communications provided for herein shall be made at the addresses, in the
manner and with the effect provided in Section 9.01 of the Credit Agreement.


 


Section 19.   Enforcement; Amendments; Waiver. No
failure or delay on the part of any Guarantied Party in the exercise of any
right, power, privilege or remedy arising under this Guaranty, the Credit
Agreement, any other Loan Document or otherwise shall operate as a waiver
thereof, and no single or partial exercise by any such Person of any such right
or remedy shall preclude any other or further exercise thereof or the exercise
of any other right or remedy and no course of dealing between any Guarantor and
any Guarantied Party shall operate as a waiver thereof. No modification or
waiver of any term or provision of this Guaranty shall be binding upon any
Guarantied Party, except as expressly set forth in a writing duly signed and
delivered by the party making such modification or waiver. Failure by any
Guarantied Party at any time or times hereafter to require strict performance
by any Canadian Borrower, any Guarantor, any other guarantor of all or any part
of the Obligations or any other Person of any provision, warranty, term or
condition contained in any Loan Document now or at any time hereafter executed
by any such Persons and delivered to any Guarantied Party shall not waive,
affect or diminish any right of any Guarantied Party at any time or from time
to time thereafter to demand strict performance thereof and such right shall
not be deemed to have been waived by any act or knowledge of any Guarantied
Party, or its respective agents, officers or employees, unless such waiver is
contained in an instrument in writing, directed and delivered to the Canadian
Borrowers or such Guarantor, as applicable, specifying such waiver, and is
signed by the party or parties necessary to give such waiver under the Credit
Agreement. No waiver of any Event of Default by any Guarantied Party shall
operate as a waiver of any other Event of Default or any recurrence of such
Event of Default on a future occasion, and no action by any Guarantied Party
permitted hereunder shall in any way affect or impair this Guaranty or any
right, power, privilege or remedy of any Guarantied Party hereunder or the
obligations of any Guarantor under this Guaranty. Any determination by a court
of competent jurisdiction of the amount of any principal or interest owing by
the Canadian Borrowers to a Guarantied Party shall be conclusive and binding on
each Guarantor irrespective of whether such Guarantor was a party to the suit
or action in which such determination was made. The remedies provided in this
Guaranty are cumulative and are not exclusive of any other remedies provided by
any other Loan Document or by law.


 


Section 20.   Successors and Assigns. This Guaranty
shall be binding upon each Guarantor and its respective successors and assigns
and shall inure to the benefit of the Guarantied Parties and their successors
and assigns, provided,  however, that, no Guarantor may transfer,
or otherwise assign, any of its obligations hereunder without the prior written
consent of the Administrative Agent.


 


Section 21.   Severability. Any provision of this
Guaranty held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions thereof; and the
invalidity of a


 


9

















 


particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.


 


Section 22.   Joinder. Any other Person (including
any new Subsidiary of any Loan Party that is required to become a party to this
Guaranty) may become a Guarantor by executing and delivering to the Guarantied
Parties a counterpart signature page hereto substantially in the form of Appendix
I hereto and upon the execution and delivery of such counterpart signature
page to the Administrative Agent shall become a Guarantor hereunder and shall
become bound by the terms and provisions hereof with the same force and effect
as if originally named a Guarantor herein. The obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor hereunder.


 


Section 23.   Collateral. Each Guarantor hereby
acknowledges and agrees that its obligations under this Guaranty are secured
pursuant to the terms and provisions of the Collateral Documents executed by it
in favor of the Administrative Agent, for the benefit of the Secured Parties.


 


Section 24.   Governing Law; Jurisdiction; Consent to
Service of Process. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 


EACH GUARANTOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT SITTING
IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL
COURT. EACH GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
GUARANTY SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY AGAINST ANY
GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.


 


Each Guarantor
hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Guaranty in any court referred to in this Section 24.
Each Guarantor hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.


 


10

















 


Each Guarantor
irrevocably consents to service of process in the manner provided for notices
in Section 18 hereof. Nothing in this Guaranty will affect the right of
any party to this Guaranty to serve process in any other manner permitted by
law.


 


Section 25.  WAIVER
OF JURY TRIAL. EACH GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
GUARANTY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS GUARANTY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.


 


Section 26.  Waiver
of Consequential Damages. EACH GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGE IN ANY LEGAL ACTION OR PROCEEDING IN RESPECT OF THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT.


 


Section 27.  Headings.
Article and Section headings used herein are for convenience of reference only,
are not part of this Guaranty and shall not affect the construction of, or be
taken into consideration in interpreting, this Guaranty.


 


Section 28.  Counterparts.
This Guaranty and any amendments, waivers, consents or supplements hereto or in
connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.


 


Section 29.  Entire
Agreement. This Guaranty, taken together with all of the other Loan
Documents executed and delivered by the Guarantors, represents the entire
agreement and understanding of the parties hereto and supersedes all prior
understandings, written and oral, relating to the subject matter hereof.


 


[Signatures to Follow]


 


11

















 


IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be
duly executed by their respective authorized officers as of the day and year
first above written.


 


	
   

  	
   

  	
  PROGRESS RAIL SERVICES
  HOLDINGS 

  CORP.

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	 

	
   

  	
   

  	
   

  	
  Title:

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  PROGRESS METAL
  RECLAMATION 

  COMPANY

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	 

	
   

  	
   

  	
   

  	
  Title:

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  WEST VIRGINIA AUTO
  SHREDDING, 

  INC.

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By::

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	 

	
   

  	
   

  	
   

  	
  Title:

  	 




 


12

















 


	
   

  	
   

  	
  PROGRESS
  RAIL SERVICES

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PROGRESS
  RAIL HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FM
  INDUSTRIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOUTHERN
  MACHINE AND TOOL

  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RAILCAR,
  LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


13

















 


	
   

  	
   

  	
  CHEMETRON
  RAILWAY PRODUCTS,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UNITED
  INDUSTRIES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KENTUCKIANA
  RAILCAR REPAIR &

  STORAGE FACILITY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Progress Rail Services
  Corporation, as

  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  United Industries Corporation,
  as

  Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PROGRESS
  VANGUARD

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


14

















 


	
   

  	
   

  	
  S&L
  RAILROAD, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


15

















 


Appendix
I to Guaranty


 


[Form of
Counterpart Signature Page to Guaranty]


 


By signing below, [each of] the undersigned becomes a Guarantor under
the Guaranty dated as of March [   ], 2005 (as amended,
restated, supplemented or otherwise modified from time to time, the “Guaranty”), in favor of and for the benefit
of the Guarantied Parties (as defined in the Guaranty), to which this signature
page is attached and is made a part, and agrees that, upon the execution and
delivery of this signature page to the Administrative Agent, it is bound by the
terms, conditions and obligations thereof applicable to it as a “Guarantor”
under the Guaranty and further represents and warrants to the Administrative
Agent that (i) the representations and warranties made by it as a “Guarantor”
thereunder are true and correct on as of the date hereof and (ii) this Form of
Counterpart Signature Page to Guaranty has been duly executed and delivered by
it.


 


	
  Address:

  	
   

  	
  [GUARANTOR]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  [GUARANTOR]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					



 


16














 


Annex III

TO PLEDGE AND SECURITY AGREEMENT


 


FORM OF CONTROL AGREEMENT FOR SECURITIES ACCOUNTS


 


[See Attached]


 

















 


ANNEX III 

PLEDGE AND 

SECURITY AGREEMENT


 


FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT


 


[    ], 20[    ]


 


General Electric Capital Corporation, in its capacity as collateral
agent under that certain [Domestic/Canadian] Pledge and Security Agreement (in
such capacity, the “[US / Canadian] Collateral Agent”) for certain lenders (the
“Lenders”), [name of applicable Borrower], a [    ]
[corporation/limited liability company/limited partnership] (“Debtor”), and [  ]
(“Securities Intermediary”) hereby agree as follows:


 


PREAMBLE:


 


1.         Securities Intermediary
and Debtor have entered into a [customer
agreement], a copy of which is attached hereto as Exhibit A
(as such agreement may be amended, supplemented or otherwise modified in
accordance with its terms, the “Customer Agreement”), pursuant to which
Securities Intermediary has established its securities account number [    ]
in the name of Debtor (the “Account”).


 


2.         Debtor and certain of its
affiliates have entered or are about to enter into financing arrangements with
General Electric Capital Corporation, as U.S. administrative agent, [    ],
as Canadian administrative agent and the Lenders pursuant to which Debtor may
from time to time have certain indebtedness or other obligations to the Agents
and the Lenders.


 


3.         Debtor and the other
parties designated therein as Grantors have executed a Pledge and Security
Agreement in favor of the [US/Canadian] Collateral Agent (as from time to time
amended, restated, supplemented or otherwise modified, the “Security
Agreement”), in which inter alia, Debtor
has granted to the [US/Canadian] Collateral Agent on behalf of itself and the
other Secured Parties the Account and the financial assets and any free credit
balance carried therein.


 


4.         [US/Canadian] Collateral
Agent, Debtor and Securities Intermediary are entering into this Agreement to
provide for the control of the Account and to perfect the security interest of
[US/Canadian] Collateral Agent in the Account and the financial assets and any
free credit balance carried therein as more fully described in the Security
Agreement.


 


TERMS:


 


1.         The Account. Securities Intermediary
hereby represents and warrants Debtor that (a) the Account has been established
in the name of Debtor and with the account number as recited above, and neither
the Securities Intermediary nor the Debtor shall change the name or the account
number of the Account without the prior written consent of the [US/Canadian]
Collateral Agent, (b) the Account does not contain any financial assets which
are registered in the name of Debtor, payable to its order, or specially
endorsed to it, which have not been specially endorsed to Securities Intermediary
or in blank, (c) the Customer Agreement, the


 

















 


security
entitlements arising out of the financial assets carried in the Account and
such free credit balance are valid and legally binding obligations of
Securities Intermediary, (d) except for the claims and interests of
[US/Canadian] Collateral Agent and of Debtor in the Account, Securities
Intermediary does not know of any lien on, claim to or interest in the Account
or in any “financial asset” (as defined in Section 8-102(a) of the Code), cash
or funds credited thereto and all other property and rights now or hereafter
received in such Account (collectively, the “Assets”), (e) the Account is, and
will be maintained as, a “securities account” (as defined in Section 8-501 of
the Code (as defined below), and (f) all financial assets delivered to the
Securities Intermediary will be promptly credited to the Account. Securities
Intermediary will treat all property held by it in the Account as “financial
assets” within the meaning of Section 8-102(a)(9) of the Uniform Commercial
Code of the State of New York (the “Code”).


 


2.         No Withdrawals. Securities Intermediary
shall neither accept nor comply with any entitlement order or instruction from
Debtor withdrawing any financial assets from the Account nor deliver any such
financial assets to Debtor nor pay any free credit balance or other amount
owing from Securities Intermediary to Debtor with respect to the Account
following a Notice of Exclusive Control (as defined below) from [US/Canadian]
Collateral Agent.


 


3.         Priority of Lien. Debtor hereby confirms
that, pursuant to the Security Agreement, Debtor has granted to [US/Canadian]
Collateral Agent for the benefit of itself and the other Secured Parties a
security interest in the Account and all Assets therein.  Securities Intermediary consents to the
foregoing security interest. Securities Intermediary hereby confirms that the
Account is a cash account and that it will not advance any margin or other
credit to Debtor therein, either directly or indirectly, by executing purchase
orders in excess of any credit balance or money market mutual funds held in the
Account, executing sell orders on securities not held in the Account or by
executing trades in instruments such as options and commodities contracts that
create similar obligations, nor shall Securities Intermediary hypothecate any
securities carried in the Account. Securities Intermediary hereby waives and
releases all liens, encumbrances, claims, rights of setoff and any other rights
Securities Intermediary may at any time have by agreement, operation of law or
otherwise against the Account or any financial asset carried in the Account or
any credit balance in the Account and agrees that, except for payment of its
customary fees and commissions pursuant to the Customer Agreement, it will not
assert any such lien, encumbrance, claim or right or the priority thereof
against the Account or any financial asset carried in the Account or any credit
balance in the Account.  Securities Intermediary
has not and will not (i) agree with any third party that Securities
Intermediary will comply with entitlement orders (as defined in Section
8-102(a)(8) of the Code) or instructions (within the meaning of Section 9-104
of the Code) concerning the Account originated by such third party or (ii)
enter into any agreement purporting to limit or condition the obligation of the
Securities Intermediary to comply with entitlement orders or instructions.


 


4.         Control. Securities Intermediary will
comply with any order or instruction originated by [US/Canadian] Collateral
Agent directing transfer or redemption of the financial assets or otherwise
concerning the Account without further consent by Debtor or any other person.
Except as otherwise provided in Section 3 above, Securities Intermediary shall
make trades of financial assets held in the Account at the instruction of
Debtor, or its authorized representatives, and comply with entitlement orders
concerning such trades from Debtor, or its authorized representatives in any of
the permitted investments set forth on Exhibit A hereto, until


 


2

















 


such time as
[US/Canadian] Collateral Agent delivers a written notice to Securities
Intermediary which states that [US/Canadian] Collateral Agent is exercising
exclusive control over the Account. Such notice is referred to herein as the
“Notice of Exclusive Control.” After Securities Intermediary receives a Notice
of Exclusive Control, it will immediately cease complying with all instructions
or entitlement orders concerning the Account originated by Debtor or its
representatives until such Notice of Exclusive Control is withdrawn by
[US/Canadian] Collateral Agent in writing. Notwithstanding anything to the
contrary contained herein or in any other agreement, if at any time the
Securities Intermediary shall receive conflicting orders or instructions from
the [US/Canadian] Collateral Agent and the Debtor, the Securities Intermediary
shall follow the order or instructions of the [US/Canadian] Collateral Agent
and not the Debtor.


 


5.         Statements, Confirmations and Notices of Adverse
Claims. Securities Intermediary will send copies of all statements,
confirmations and other correspondence concerning the Account simultaneously to
each of Debtor and [US/Canadian] Collateral Agent at the addresses set forth
herein and will provide to the Administrative Agent a monthly statement of
Assets. If any person asserts any lien, encumbrance or adverse claim against
the Account or in any financial asset cash, or funds carried therein,
Securities Intermediary will promptly notify [US/Canadian] Collateral Agent and
Debtor thereof.


 


6.         Responsibility of Securities Intermediary. Except
for advancing margin or other credit to Debtor in violation of Section 3 above,
Securities Intermediary shall have no responsibility or liability to
[US/Canadian] Collateral Agent for making trades of financial assets held in
the Account at the instruction of Debtor, or its authorized representatives, or
complying with entitlement orders in accordance with Section 4 above concerning
the Account from Debtor, or its authorized representatives, which are received
by Securities Intermediary before Securities Intermediary receives a Notice of
Exclusive Control. Securities Intermediary shall have no responsibility or
liability to Debtor for complying with a Notice of Exclusive Control or
complying with entitlement orders concerning the Account originated by
[US/Canadian] Collateral Agent. Securities Intermediary shall have no duty to
investigate or make any determination as to whether the conditions for the
issuance or withdrawal of a Notice of Exclusive Control contained in any
agreement between Debtor and [US/Canadian] Collateral Agent have occurred.
Neither this Agreement nor the Security Agreement imposes or creates any
obligation or duty of Securities Intermediary other than those expressly set
forth herein.


 


7.         Tax Reporting. All items of income, gain,
expense and loss recognized in the Account shall be reported to the Internal
Revenue Service and all state and local taxing authorities under the name and
taxpayer identification number of Debtor.


 


8.         Customer Agreement. This Agreement
supplements the Customer Agreement between Securities Intermediary and
Customer. There are no other agreements entered into between the Securities
Intermediary and the Debtor with respect to the Account except for the Customer
Agreement. In the event of a conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered into,
including, without limitation, the Customer Agreement, the terms of this
Agreement will prevail. Regardless of any provision in the Customer Agreement
or any other agreement, New York shall be deemed to be the Securities
Intermediary’s jurisdiction (within the meaning of Section 8- 110(e) of the
Code) for purposes of the Code.


 


3

















 


9.         Termination. The rights and powers granted
herein to [US/Canadian] Collateral Agent have been granted in order to perfect
its security interest in the Account, are powers coupled with an interest and
will neither be affected by the bankruptcy or insolvency of Debtor nor by the
lapse of time. The obligations of Securities Intermediary under Sections 2, 3,
4 and 5 above shall continue in effect until the security interest of
[US/Canadian] Collateral Agent in the Account has been terminated pursuant to
the terms of the Security Agreement and [US/Canadian] Collateral Agent has
notified Securities Intermediary of such termination in writing. Upon receipt
of such notice, the obligations of Securities Intermediary under Sections 2, 3,
4 and 5 above with respect to the operation and maintenance of the Account
after the receipt of such notice shall terminate, [US/Canadian] Collateral
Agent shall have no further right to originate entitlement orders concerning
the Account and Securities Intermediary may take such steps as Debtor may
request to vest full ownership and control of the Account in Debtor, including,
but not limited to, transferring all of the financial assets and credit
balances in the Account to another securities account in the name of Debtor or
its designee.


 


10.       This Agreement. This Agreement, the schedules and exhibits
hereto and the agreements and instruments required to be executed and delivered
hereunder set forth the entire agreement of the parties hereto with respect to
the subject matter hereof and supersede and discharge all prior agreements
(written or oral) and negotiations and all contemporaneous oral agreements
concerning such subject matter and negotiations. There are no oral conditions
precedent to the effectiveness of this Agreement.


 


11.       Amendments. No amendment, modification or termination of
this Agreement or waiver of any right hereunder shall be binding on any party
hereto unless it is in writing and is signed by all of the parties hereto.


 


12.       Severability. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement,
or the application of such terms or provisions to persons or circumstances,
other than those to which it is held invalid or unenforceable, shall be
construed in all respects as if such invalid or unenforceable term or provision
were omitted.


 


13.       Successors. The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective corporate successors or permitted assigns.


 


14.       Rules of Construction. In this Agreement, words in the
singular number include the plural, and in the plural include the singular;
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates words of the neuter gender may refer to any gender and the
word “or” is disjunctive but not exclusive. The captions and section numbers
appearing in this Agreement are inserted only as a matter of convenience. They
do not define, limit or describe the scope or intent of the provisions of this
Agreement. Except as otherwise defined herein all terms herein shall have the
meanings ascribed thereto in Article 8 of the Code.


 


15.       Notices. Any notice, request or other communication required
or permitted to be given under this Agreement shall be in writing and deemed to
have been properly


 


4

















 


given when
delivered in person, or when sent by telecopy or other electronic means and
electronic confirmation of error free receipt is received or three days after
being sent by certified or registered United States mail, return receipt
requested, postage prepaid, addressed to the party at the address specified
below:


 


	
  [US/Canadian]
  Collateral

  	
   

  	
  General Electric
  Capital Corporation

  
	
  Agent:

  	
   

  	
  [    ]

  
	
   

  	
   

  	
  [    ]

  
	
   

  	
   

  	
  Attention:
  [    ]

  
	
   

  	
   

  	
  Facsimile:
  [    ]

  
	
   

  	
   

  	
   

  
	
  Debtor:

  	
   

  	
  [Name of
  applicable Borrower]

  
	
   

  	
   

  	
  [    ]

  
	
   

  	
   

  	
  [    ]

  
	
   

  	
   

  	
  Attention:
  [    ]

  
	
   

  	
   

  	
  Facsimile:
  [    ]

  
	
   

  	
   

  	
   

  
	
  Securities
  Intermediary:

  	
   

  	
  [    ]

  
	
   

  	
   

  	
  [    ]

  
	
   

  	
   

  	
  [    ]

  
	
   

  	
   

  	
  Attn:
  [    ]

  
	
   

  	
   

  	
  Facsimile:
  [    ]

  



 


Any party may
change its address for notices in the manner set forth above.


 


16.       Counterparts. This Agreement may be executed in any number
of counterparts, all of which shall constitute one and the same instrument, and
any party hereto may execute this Agreement by signing and delivering one or
more counterparts.


 


17.       Choice of Law. The parties hereto agree that certain
material events, occurrences and transactions relating to this Agreement bear a
reasonable relationship to the State of New York. The validity, terms,
performance and enforcement of this Agreement shall be governed by the laws of
the State of New York which are applicable to agreements which are executed,
delivered and performed in that State.


 


5

















 


IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.


 


 


	
   

  	
   

  	
  GENERAL
  ELECTRIC CAPITAL CORPORATION, 

  as [US/Canadian] Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME
  OF APPLICABLE BORROWER]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [    ]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  



 

















 


Exhibit
A


 


[Please insert description of one day and one week commercial paper]


 

















 


Annex IV

TO PLEDGE AND SECURITY AGREEMENT


 


FORM OF PATENT SECURITY AGREEMENT 


 


[See Attached]


 

















 


ANNEX IV

PLEDGE AND

SECURITY AGREEMENT


 


FORM OF

PATENT SECURITY AGREEMENT


 


This PATENT SECURITY AGREEMENT (this “Agreement”), dated as of
March [    ], 2005, is made between each of the entities
listed on the signature pages hereof (each a “Grantor” and,
collectively, the “Grantors”), in favor of General Electric Capital
Corporation (“GECC”), as U.S. collateral agent (in such capacity,
together with its successors and permitted assigns, the “Collateral Agent”)
for the benefit of itself and the U.S. Secured Parties.


 


W I T N E S S E T H:


 


WHEREEAS pursuant to the terms of that certain Credit Agreement, dated
as of March [    ], 2005 (as it may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among Progress Rail Services Parent Corp. (the “Parent”), each of
Parent’s domestic subsidiaries identified on the signature pages thereof (the
Parent and such subsidiaries, collectively, the “U.S. Borrowers”),
Progress Rail Canada Corporation, Progress Rail Transcanada Corporation (the “Canadian
Borrowers”; the Canadian Borrowers and the U.S. Borrowers, collectively,
the “Borrowers”), GECC, as U.S. Administrative Agent,                                              ,
as Canadian Administrative Agent, the Lenders and the other parties thereto,
the U.S. Administrative Agent, the Canadian Administrative Agent, the Lenders
and the other parties thereto have agreed to extend credit and make certain
financial accommodations to the Borrowers;


 


WHEREEAS pursuant to that certain Domestic Pledge and Security
Agreement, of even date herewith (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Security
Agreement”), between Grantors and Collateral Agent, each Grantor has
granted to the Collateral Agent a security interest and continuing lien on all
of such Grantor’s right, title and interest in, to and under all Collateral,
including the Patent Collateral (as defined below), and all Collateral in each
case whether now owned or existing or hereafter acquired or arising and
wherever located to secure the prompt and complete payment and performance of
all Secured Obligations (as defined in the Security Agreement) including the
obligations of the Borrowers under the Credit Agreement; and


 


WHEREAS pursuant to the Credit Agreement, the Grantors are required to
execute and deliver this Agreement.


 


NOW, THEREFORE, in consideration of the premises and to induce the
Lenders, the Issuing Banks, and the Administrative Agents to enter into the
Credit Agreement and to induce the Lenders and the Issuing Banks to make their
respective extensions of credit to the Borrowers thereunder, each Grantor
hereby agrees with the Collateral Agent as follows:


 


Section 1.      Defined Terms


 


Unless otherwise defined herein, terms defined in the Security
Agreement and used herein have the meaning given to them in the Security
Agreement.


 


Section 2.      Grant of Security Interest in
Patents


 


Each Grantor hereby grants to the Collateral Agent a security interest
and continuing lien on all of such Grantor’s right, title and interest in, to
and under the following


 

















 


Collateral of such
Grantor, in each case whether owned or existing or hereafter acquired or
arising and wherever located (collectively, the “Patent Collateral”):


 


(i)        all of its Patents and all
Intellectual Property Licenses providing for the grant by or to such Grantor of
any right under any Patent, including, without limitation, those referred to on
Schedule 1 hereto;


 


(ii)       all reissues,
reexaminations, continuations, continuations-in-part, divisionals, renewals and
extensions of the foregoing; and


 


(iii)      all income, royalties,
proceeds and liabilities at any time due or payable or asserted under and with
respect to any of the foregoing, including, without limitation, all rights to
sue and recover at law or in equity for any past, present and future
infringement, misappropriation, dilution, violation or other impairment
thereof.


 


Section 3.      Security for
Obligations


 


This Agreement secures, and the Patent Collateral is collateral
security for, the prompt and complete payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. §362(a) (and any successor provision thereof)), of all Secured
Obligations.


 


Section 4.      Security Agreement


 


The security interests granted pursuant to this Agreement are granted
in conjunction with the security interests granted to the Collateral Agent
pursuant to the Security Agreement and each Grantor hereby acknowledges and
affirms that the rights and remedies of the Collateral Agent with respect to
the security interest in the Patent Collateral made and granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which
are incorporated by reference herein as if fully set forth herein. In the event
of any irreconcilable conflict between the terms of this Agreement and the
terms of the Security Agreement, the terms of the Security Agreement shall
control.


 


Section 5.      Grantor Remains Liable


 


Each Grantor hereby agrees that, anything herein to the contrary
notwithstanding, such Grantor shall remain liable for all obligations under the
Collateral, and shall assume full and complete responsibility for the prosecution,
defense, enforcement or any other necessary or desirable actions in connection
with their Patents and Intellectual Property Licenses subject to a security
interest hereunder.


 


Section 6.      Counterparts


 


This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.


 


2

















 


Section 7.      Governing Law


 


This agreement and the rights and obligations of the parties hereto
shall be governed by, and construed in accordance with the laws of the State of
Illinois, but giving effect to federal laws applicable to national banks.


 


 


[SIGNATURE PAGE FOLLOWS]


 


3

















 


IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its duly authorized officer as of the date first set
forth above.


 


	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME OF GRANTOR],

  as Grantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [[Name of Additional
  Grantor],

  as Grantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title: ]

  



 

















 


	
  ACCEPTED AND
  AGREED

  
	
  as of the date
  first above written:

  
	
   

  
	
  GENERAL ELECTRIC
  CAPITAL

  CORPORATION,

  
	
  as
  U.S. Collateral Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


ACKNOWLEDGEMENT OF GRANTOR


 


	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  COUNTY OF

  	
  )

  	
   

  



 


On this               
day of               ,
20      before me personally appeared                                              ,
proved to me on the basis of satisfactory evidence to be the person who
executed the foregoing instrument on behalf of [             ],
who being by me duly sworn did depose and say that he is an authorized officer
of said corporation, that the said instrument was signed on behalf of said
corporation as authorized by its Board of Directors and that he acknowledged
said instrument to be the free act and deed of said corporation.


 


 




	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  






 

















 


SCHEDULE I


 


TO


 


PATENT SECURITY AGREEMENT


 


	
  A.

  	
   

  	
  PATENTS

  
	
   

  	
   

  	
  [Include Issued
  Number and Date]

  
	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  PATENT
  APPLICATIONS

  
	
   

  	
   

  	
  [Include
  Application Number and Date]

  
	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  INTELLECTUAL
  PROPERTY LICENSES

  
	
   

  	
   

  	
  [Include
  complete legal description of agreement (name of agreement, parties and
  date)]

  



 


4

















 


Annex V

TO PLEDGE AND SECURITY AGREEMENT


 


FORM OF
TRADEMARK SECURITY AGREEMENT


 


[See
Attached]


 

















 


ANNEX V

PLEDGE AND

SECURITY AGREEMENT


 


FORM OF 

TRADEMARK SECURITY AGREEMENT


 


This TRADEMARK SECURITY AGREEMENT (this “Agreement”),
dated as of [    ], 2005, is made between each of the
entities listed on the signature pages hereof (each a “Grantor” and,
collectively, the “Grantors”), in favor of General Electric Capital
Corporation (“GECC”), as U.S. collateral agent (in such capacity, together
with its successors and permitted assigns, the “Collateral Agent”) for
the benefit of itself and the U.S. Secured Parties.


 


W I T N E S
S E T H:


 


WHEREAS pursuant to the terms of that certain
Credit Agreement, dated as of March [    ], 2005 (as it may
be amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), by and among Progress Rail Services Parent Corp.
(the “Parent”), each of Parent’s domestic subsidiaries identified on the
signature pages thereof (the Parent and such subsidiaries, collectively, the “U.S.
Borrowers”), Progress Rail Canada Corporation, Progress Rail Transcanada
Corporation (the “Canadian Borrowers”; the Canadian Borrowers and the
U.S. Borrowers, collectively, the “Borrowers”). GECC, as U.S.
Administrative Agent,                                              , as Canadian Administrative Agent, the
Lenders and the other parties thereto, the U.S. Administrative Agent, the
Canadian Administrative Agent, the Lenders and the other parties thereto have
agreed to extend credit and make certain financial accommodations to the
Borrowers;


 


WHEREAS pursuant to that certain Domestic
Pledge and Security Agreement, of even date herewith (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Security
Agreement”), between Grantors and Collateral Agent, each Grantor has
granted to the Collateral Agent a security interest and continuing lien on all
of such Grantor’s right, title and interest in, to and under all Collateral,
including the Trademark Collateral (as defined below), and all Collateral in
each case whether now owned or existing or hereafter acquired or arising and
wherever located to secure the prompt and complete payment and performance of
all Secured Obligations (as defined in the Security Agreement) including the
obligations of the Borrowers under the Credit Agreement; and


 


WHEREAS pursuant to the Credit Agreement, the
Grantors are required to execute and deliver this Agreement.


 


NOW, THEREFORE, in consideration of the
premises and to induce the Lenders, the Issuing Banks, and the Administrative
Agents to enter into the Credit Agreement and to induce the Lenders and the
Issuing Banks to make their respective extensions of credit to the Borrowers
thereunder, each Grantor hereby agrees with the Collateral Agent as follows:


 


Section 1.      Defined
Terms


 


Unless otherwise defined herein, terms defined
in the Security Agreement and used herein have the meaning given to them in the
Security Agreement.


 


1

















 


Section 2.      Grant of
Security Interest in Trademarks


 


Each Grantor hereby grants to the Collateral
Agent a security interest and continuing lien on all of such Grantor’s right,
title and interest in, to and under the following Collateral of such Grantor,
in each case whether owned or existing or hereafter acquired or arising and
wherever located (collectively, the “Trademark Collateral”) provided
that applications filed in the U.S. Patent and Trademark Office to register trademarks
or service marks on the basis of any Grantor’s “intent to use” such marks will
not be deemed Trademark Collateral unless and until the filing of a “Statement
of Use” or “Amendment to Allege Use” has been filed and accepted in the United
States Patent and Trademark Office, whereupon such applications shall be
automatically subject to the lien granted herein and deemed included in the
Collateral:


 


(i) all of its Trademarks and all Intellectual Property Licenses
providing for the grant by or to such Grantor of any right under any Trademark,
including, without limitation, those referred to on Schedule 1 hereto;


 


(ii) all renewals and extensions of the
foregoing;


 


(iii) all goodwill of the business connected with the use of, and
symbolized by, each such Trademark; and


 


(iv) all income, royalties, proceeds and liabilities at any time
due or payable or asserted under and with respect to any of the foregoing,
including, without limitation, all rights to sue and recover at law or in
equity for any past, present and future infringement, misappropriation,
dilution, violation or other impairment thereof.


 


Section 3.      Security
for Obligations


 


This Agreement secures, and the Trademark
Collateral is collateral security for, the prompt and complete payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a) (and any successor
provision thereof)), of all Secured Obligations.


 


Section 4.      Security
Agreement


 


The security interests granted pursuant to
this Agreement are granted in conjunction with the security interests granted
to the Collateral Agent pursuant to the Security Agreement and each Grantor
hereby acknowledges and affirms that the rights and remedies of the Collateral
Agent with respect to the security interest in the Trademark Collateral made
and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein. In the event of any irreconcilable conflict between the terms
of this Agreement and the terms of the Security Agreement, the terms of the
Security Agreement shall control.


 


2

















 


Section 5.      Grantor
Remains Liable


 


Each Grantor hereby agrees that, anything herein to the contrary
notwithstanding, such Grantor shall remain liable for all obligations under the
Collateral, and shall assume full and complete responsibility for the
prosecution, defense, enforcement or any other necessary or desirable actions
in connection with their Trademarks and Intellectual Property Licenses subject
to a security interest hereunder.


 


Section 6.      Counterparts


 


This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.


 


Section 7.      Governing Law


 


This agreement and the rights and obligations of the parties hereto
shall be governed by, and construed in accordance with the laws of the State of
Illinois, but giving effect to federal laws applicable to national banks.


 


 


[SIGNATURE PAGE FOLLOWS]


 


3

















 


IN WITNESS WHEREOF, each Grantor has caused this Trademark Security
Agreement to be duly executed and delivered by its duly authorized officer as
of the date first set forth above.


 


 


	
   

  	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [Name
  of Grantor],

  as Grantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [[Name of Additional Grantor],

  as Grantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:  ]

  



 

















 


	
  ACCEPTED AND AGREED

  
	
  as of the date
  first above written:

  
	
   

  
	
  GENERAL ELECTRIC
  CAPITAL CORPORATION,

  
	
  as U.S.
  Collateral Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 

















 


ACKNOWLEDGEMENT OF GRANTOR


 


	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  COUNTY OF

  	
  )

  	
   

  



 


On this           day of                      ,
2005 before me personally appeared                                        ,
proved to me on the basis of satisfactory evidence to be the person who
executed the foregoing instrument on behalf of [                              ],
who being by me duly sworn did depose and say that he is an authorized officer
of said corporation, that the said instrument was signed on behalf of said
corporation as authorized by its Board of Directors and that he acknowledged
said instrument to be the free act and deed of said corporation.


 


 




	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  






 

















 


[ACKNOWLEDGEMENT
OF GRANTOR


 


	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  COUNTY OF

  	
  )

  	
   

  



 


On this       
day of                    ,
2005 before me personally appeared                                       ,
proved to me on the basis of satisfactory evidence to be the person who
executed the foregoing instrument on behalf of [                                       
], who being by me duly sworn did depose and say that he is an authorized
officer of said limited liability company, that the said instrument was signed
on behalf of said limited liability company as authorized by its Board of
Directors and that he acknowledged said instrument to be the free act and deed
of said limited liability company.


 


 




	
   

  	
   

  	
  .]

  
	
   

  	
  Notary Public

  	
   

  






 

















 


SCHEDULE I


 


TO


 


TRADEMARK SECURITY AGREEMENT


 


	
  A.

  	
   

  	
  REGISTERED
  TRADEMARKS

  
	
   

  	
   

  	
  [Include
  Registration Number and Date]

  
	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  TRADEMARK
  APPLICATIONS

  
	
   

  	
   

  	
  [Include
  Application Number and Date]

  
	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  INTELLECTUAL
  PROPERTY LICENSES

  
	
   

  	
   

  	
  [Include complete legal description of agreement (name of agreement,
  parties and date)]

  



 

















 


Annex VI

TO PLEDGE AND SECURITY AGREEMENT


 


FORM OF COPYRIGHT SECURITY AGREEMENT


 


[See Attached]


 

















 


ANNEX VI

PLEDGE AND

SECURITY AGREEMENT


 


FORM OF

COPYRIGHT SECURITY AGREEMENT


 


This COPYRIGHT SECURITY AGREEMENT (this “Agreement”), dated as
of March [    ], 2005, is made between each of the entities
listed on the signature pages hereof (each a “Grantor” and,
collectively, the “Grantors”), in favor of General Electric Capital
Corporation (“GECC”), as U.S. collateral agent (in such capacity,
together with its successors and permitted assigns, the “Collateral Agent”)
for the benefit of itself and the U.S. Secured Parties.


 


W I T N E S S E T H:


 


WHEREAS pursuant to the terms of that certain Credit Agreement, dated
as of March [    ], 2005 (as it may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among Progress Rail Services Parent Corp. (the “Parent”), each of
Parent’s domestic subsidiaries identified on the signature pages thereof (the
Parent and such subsidiaries, collectively, the “U.S. Borrowers”),
Progress Rail Canada Corporation, Progress Rail Transcanada Corporation (the “Canadian
Borrowers”; the Canadian Borrowers and the U.S. Borrowers; collectively,
the “Borrowers”), GECC, as U.S. Administrative Agent,                                              
as Canadian Administrative Agent, the Lenders and the other parties thereto,
the U.S. Administrative Agent, the Canadian Administrative Agent, the Lenders
and the other parties thereto have agreed to extend credit and make certain
financial accommodations to the Borrowers;


 


WHEREAS pursuant to that certain Domestic Pledge and Security
Agreement, of even date herewith (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Security
Agreement”), between Grantors and Collateral Agent, each Grantor has
granted to the Collateral Agent a security interest and continuing lien on all
of such Grantor’s right, title and interest in, to and under all Collateral,
including the Patent Collateral (as defined below), and all Collateral in each
case whether now owned or existing or hereafter acquired or arising and
wherever located to secure the prompt and complete payment and performance of
all Secured Obligations (as defined in the Security Agreement) including the
obligations of the Borrowers under the Credit Agreement; and


 


WHEREAS pursuant to the Credit Agreement, the Grantors are required to
execute and deliver this Agreement.


 


Now, THEREFORE, in consideration of the premises and to induce the
Lenders, the Issuing Banks, and the Administrative Agents to enter into the
Credit Agreement and to induce the Lenders and the Issuing Banks to make their
respective extensions of credit to the Borrowers thereunder, each Grantor
hereby agrees with the Collateral Agent as follows:


 


Section 1.      Defined Terms


 


Unless otherwise defined herein, terms defined in the Security
Agreement and used herein have the meaning given to them in the Security
Agreement.


 


Section 2.      Grant of Security Interest
in the Copyright Collateral


 


Each Grantor hereby grants to the Collateral Agent a security interest
and continuing lien on all of such Grantor’s right, title and interest in, to
and under the following


 

















 


Collateral of such
Grantor, in each case whether owned or existing or hereafter acquired or
arising and wherever located (collectively, the “Copyright Collateral”):


 


(i)        all
of its Copyrights and all Intellectual Property Licenses providing for the
grant by or to such Grantor of any right under any Copyright, including,
without limitation, those referred to on Schedule A hereto;


 


(ii)       all
renewals, reversions, continuations and extensions of the foregoing; and


 


(iii)      all
income, royalties, proceeds and liabilities at any time due or payable or
asserted under and with respect to any of the foregoing, including, without
limitation, all rights to sue and recover at law or in equity for any past,
present and future infringement, misappropriation, dilution, violation or other
impairment thereof.


 


Section 3.      Security for Obligations


 


This Agreement secures, and the Copyright Collateral is collateral
security for, the prompt and complete payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. §362(a) (and any successor provision thereof)), of all Secured
Obligations.


 


Section 4.      Security Agreement


 


The security interests granted pursuant to this Agreement are granted
in conjunction with the security interests granted to the Collateral Agent
pursuant to the Security Agreement and each Grantor hereby acknowledges and
affirms that the rights and remedies of the Collateral Agent with respect to
the security interest in the Copyright Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein. In the
event of any irreconcilable conflict between the terms of this Agreement and
the terms of the Security Agreement, the terms of the Security Agreement shall
control.


 


Section 5.      Grantor
Remains Liable


 


Each Grantor hereby agrees that, anything herein to the contrary
notwithstanding, such Grantor shall remain liable for all obligations under the
Collateral, and shall assume full and complete responsibility for the prosecution,
defense, enforcement or any other necessary or desirable actions in connection
with their Copyrights and Intellectual Property Licenses subject to a security
interest hereunder.


 


Section 6.      Counterparts


 


This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.


 


2

















 


Section 7.      Governing Law


 


This agreement and the rights and obligations of the parties hereto
shall be governed by, and construed in accordance with the laws of the State of
Illinois, but giving effect to federal laws applicable to national banks.


 


[SIGNATURE PAGE FOLLOWS]


 


3

















 


IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its duly authorized officer as of the date first set
forth above.


 


	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME OF GRANTOR],

  as Grantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [[Name of Additional
  Grantor],

  as Grantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title: ]

  
						



 

















 


	
  ACCEPTED AND AGREED

  
	
  as of the date first
  above written:

  
	
   

  
	
   

  
	
  GENERAL ELECTRIC
  CAPITAL

  CORPORATION,

  
	
  as
  U.S. Collateral Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 

















 


ACKNOWLEDGEMENT OF GRANTOR


 


	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  COUNTY OF

  	
  )

  	
   

  



 


On this             
day of           , 20  
before me personally appeared                           ,
proved to me on the basis of satisfactory evidence to be the person who
executed the foregoing instrument on behalf of [              ],
who being by me duly sworn did depose and say that he is an authorized officer
of said corporation, that the said instrument was signed on behalf of said corporation
as authorized by its Board of Directors and that he acknowledged said
instrument to be the free act and deed of said corporation.


 


 




	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  






 

















 


ACKNOWLEDGEMENT OF GRANTOR


 


	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  COUNTY OF

  	
  )

  	
   

  



 


On this      day of        ,
20   before me personally appeared                                     ,
proved to me on the basis of satisfactory evidence to be the person who
executed the foregoing instrument on behalf of [                    ],
who being by me duly sworn did depose and say that he is an authorized officer
of said corporation, that the said instrument was signed on behalf of said
corporation as authorized by its Board of Directors and that he acknowledged
said instrument to be the free act and deed of said corporation.


 


 




	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  






 

















 


SCHEDULE I


 


TO


 


COPYRIGHT
SECURITY AGREEMENT


 


A.       REGISTERED
COPYRIGHTS

[Include Registration Number and Date]


 


B.        COPYRIGHT
APPLICATIONS

[Include Application Number and Date]


 


C.        INTELLECTUAL
PROPERTY LICENSES 

[Include complete legal description of agreement (name of agreement, parties
and date)


 

















 


Annex VII

TO PLEDGE AND SECURITY AGREEMENT


 


FORM OF COLLATERAL ACCESS AGREEMENT


 


[See Attached]


 


7

















 


ANNEX VII

PLEDGE AND

SECURITY AGREEMENT


 


COLLATERAL ACCESS AGREEMENT


 


This COLLATERAL
ACCESS AGREEMENT (this “Agreement”)
is dated as of         , 2005 and
entered into by [NAME OF LANDLORD]
(“Landlord”), to and for the
benefit of GENERAL ELECTRIC CAPITAL
CORPORATION, as [U.S./Canadian] collateral agent for [U.S./Canadian]
Lenders (as defined below) under that certain [Domestic/Canadian] Pledge and
Security Agreement, dated as of [    ], 2005 (in such
capacity, “Collateral Agent”).


 


RECITALS:


 


WHEREAS,
[GRANTOR], a [     ]
corporation (“Tenant”), has
possession of and occupies all or a portion of the property described on Exhibit
A annexed hereto (the “Premises”);


 


WHEREAS, Tenant’s interest in the Premises arises
under the lease agreement (the “Lease”)
more particularly described on Exhibit B annexed hereto, pursuant to
which Landlord has rights, upon the terms and conditions set forth therein, to
take possession of, and otherwise assert control over, the Premises;


 


WHEREAS, reference is made to that certain Credit
Agreement, dated as of [  ], 2005
(as it may be amended, restated, supplemented or otherwise modified, the “Credit Agreement”; the terms defined
therein and not otherwise defined herein being used herein as therein defined),
by and among Progress Rail Services Holdings Corp. (“Parent”), each domestic subsidiary of Parent party thereto
(Parent and each such subsidiary, the “U.S.
Borrowers”), Progress Rail Canada Corporation, Progress Rail
Transcanada Corporation (the “Canadian Borrowers”; the Canadian Borrowers,
together with the U.S. Borrowers, the “Borrowers”) the Lenders party thereto, GENERAL ELECTRIC CAPITAL CORPORATION, as
U.S. administrative agent,                ,
as Canadian administrative agent, J.P. MORGAN
SECURITIES INC., as Sole Bookrunner, Sole Lead Arranger and Syndication
Agent, pursuant to which Tenant has executed a security agreement and other
collateral documents (the “Collateral
Documents”);


 


WHEREAS, [U.S./Canadian] Borrowers’ repayment of the
extensions of credit made by Lenders under the Credit Agreement will be
secured, in part, by all inventory of Tenant (including all inventory of Tenant
now or hereafter located on the Premises (the “Subject Inventory”)) and all equipment and trade fixtures used
in Tenant’s business (including all equipment and trade fixtures of Tenant now
or hereafter located on the Premises (the “Subject
Equipment”; and, together with the Subject Inventory, the “Collateral”)); and


 


WHEREAS, Collateral Agent has requested that Landlord
execute this Agreement as a condition to the extension of credit to Borrowers
under the Credit Agreement and Tenant has agreed to deliver this Agreement
pursuant to the terms of the Collateral Documents.


 


NOW,
THEREFORE, in
consideration of the premises and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Landlord hereby
represents and warrants to, and covenants and agrees with, Collateral Agent as
follows:


 


1.         Landlord hereby (a) waives and releases unto
Collateral Agent and its successors and assigns any and all rights granted by
or under any present or future laws to levy or distraint for rent or any other
charges which may be due to Landlord against the Collateral, and any and all
other


 

















 


claims, liens and demands of every kind which it now has or may
hereafter have against the Collateral, and (b) agrees that any rights it may
have in or to the Collateral, no matter how arising (to the extent not
effectively waived pursuant to clause (a) of this paragraph 1), shall be second
and subordinate to the rights of Collateral Agent in respect thereof. Landlord
acknowledges that the Collateral is and will remain personal property and not
fixtures even though it may be affixed to or placed on the Premises,


 


2.         Landlord certifies that (a) Landlord is the
landlord under the Lease, (b) the Lease is in full force and effect and has not
been amended, modified, or supplemented except as set forth on Exhibit B
annexed hereto, (c) there is no defense, offset, claim or counterclaim by or in
favor of Landlord against Tenant under the Lease or against the obligations of
Landlord under the Lease, (d) no notice of default has been given under or in
connection with the Lease which has not been cured, and Landlord has no
knowledge of the occurrence of any other default under or in connection with
the Lease, and (e) except as disclosed to Collateral Agent, no portion of the
Premises is encumbered in any way by any deed of trust or mortgage lien or
ground or superior lease.


 


3.         Landlord consents to the installation or
placement of the Collateral on the Premises, and Landlord grants to Collateral
Agent a license to enter upon and into the Premises to do any or all of the
following with respect to the Collateral: assemble, have appraised, display,
remove, maintain, prepare for sale or lease, repair, transfer, or sell (at
public or private sale).


 


4.         Landlord agrees that it will not prevent
Collateral Agent or its designee from entering upon the Premises at all
reasonable times to inspect or remove the Collateral. In the event that Landlord
has the right to, and desires to, obtain possession of the Premises (either
through expiration of the Lease or termination thereof due to the default of
Tenant thereunder), Landlord will deliver notice (the “Landlord’s Notice”) to Collateral Agent to
that effect. Within the 45-day period after Collateral Agent receives the
Landlord’s Notice, Collateral Agent shall have the right, but not the
obligation, to cause the Collateral to be removed from the Premises. During
such 45-day period, Landlord will not remove the Collateral from the Premises
nor interfere with Collateral Agent’s actions in removing the Collateral from
the Premises or Collateral Agent’s actions in otherwise enforcing its security
interest in the Collateral. Notwithstanding anything to the contrary in this
paragraph, Collateral Agent shall at no time have any obligation to remove the
Collateral from the Premises.


 


5.         Landlord shall send to Collateral Agent a
concurrent copy of any notice of default or event of default or acceleration of
rent payments under the Lease sent by Landlord to Tenant.


 


6.         All notices to Collateral Agent under this
Agreement shall be in writing and sent to Collateral Agent at its address set
forth on the signature page hereof by telefacsimile, by United States mail, or
by overnight delivery service.


 


7.         The provisions of this Agreement shall
continue in effect until Landlord shall have received Collateral Agent’s
written certification that all amounts advanced under the Credit Agreement have
been paid in full.


 


8.         This Agreement and the rights and obligations
of the parties hereunder shall be governed by, and shall be construed and
enforced in accordance with, the internal laws of the internal laws of State in
which the Premises arc located.


 


9.         This Agreement may be executed in any number
of several counterparts. The agreements contained herein may not be modified
except by an agreement in writing signed by Landlord, Collateral Agent and
Tenant, or their respective successors in interest. The agreements


 

















 


contained herein
shall inure to the benefit of and shall be binding upon Collateral Agent and
its successors and assigns and Landlord and its successors and assigns
(including any transferees of the property in which the Premises is located).
Any provision contained herein which is held to be inoperative, unenforceable
or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable or invalid without affecting the remaining provisions of this
Agreement in that jurisdiction or the operation, enforceability or validity of
such provision in any other jurisdiction.


 


[Remainder of page intentionally
left blank]


 

















 


IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be duly executed and delivered as of
the day and year first set forth above.


 


	
   

  	
   

  	
  [NAME
  OF LANDLORD]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  
	
   

  	
   

  	
  Telecopier:

  	
   

  
							



 


By its acceptance hereof, as of the day and year first set forth above,
Collateral Agent agrees to be bound by the provisions hereof.


 


	
   

  	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION

  
	
   

  	
   

  	
  as [US/Canadian]
  Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  
	
   

  	
   

  	
  Telecopier:

  	
   

  
						



 


	
  AGREED AND
  ACCEPTED:

  
	
   

  
	
  [               ],
  as Tenant

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  



 

















 


EXHIBIT A TO

LANDLORD WAIVER AND CONSENT


 


Legal Description
of Premises:


 

















 


EXHIBIT B TO 

LANDLORD WAIVER AND CONSENT


 


Description of Lease:


 

















 


Annex VIII

TO PLEDGE AND SECURITY AGREEMENT


 


FORM OF BAILEE AGREEMENT


 


[See Attached]


 


8

















 


ANNEX VIII

PLEDGE AND

SECURITY AGREEMENT


 


FORM OF 

BAILEE AGREEMENT


 


General Electric
Capital Corporation, as Administrative Agent


[    ]

[    ]

Attention: [    ]

Facsimile No: [    ]


 


Re: [Insert Address of Premises]


 


[Insert Name of Grantor] (the “Bailor”), a [  ]
[corporation/limited liability company/limited partnership], now does or
hereafter may deliver to certain premises owned or leased by [Insert Name of
Bailee] (the “Bailee”) and located at [                       ]
(the “Premises”), certain of its merchandise, inventory or other of its
personal property, for storage and/or for the performance by the undersigned of
certain processing functions.


 


The Bailor and certain of its affiliates (collectively, the “Borrowers”)
intend to enter or have entered into financing arrangements with certain
financial institutions (the “Lenders”), for which GENERAL ELECTRIC
CAPITAL CORPORATION shall act as administrative agent (the “Agent”). As
a condition to the Agent’s and the Lenders’ loans and other financial
accommodations to the Borrowers, the Agent and the Lenders require, among other
things, liens on all of the Bailor’s property, including any property located
on the Premises, and the proceeds thereof (the “Collateral”).


 


To induce the Agent and the Lenders (together with their respective
agents and assigns) to enter into said financing arrangements, and for other
good and valuable consideration, the undersigned hereby acknowledges receipt of
the above notice, and hereby further agrees that:


 


(i) title to the Collateral remains with the Bailor
while the Collateral is in the custody, control or possession of the Bailee,
the undersigned does not know of any security interest or claim with respect to
such goods or proceeds, other than the security interest which is the subject
of this agreement, and the Bailee will not assert against the Collateral any
lien, right of distraint or levy, right of offset, claim, deduction,
counterclaim, security or other interest in the Collateral, including any of
the foregoing which might arise or exist in its favor pursuant to any
agreement, common law, statute (including the Federal Bankruptcy Code) or
otherwise, all of which the undersigned hereby subordinates in favor of the
Agent;


 

















 


(ii) the Collateral shall be clearly identified as
being owned by the Bailor and kept separate and distinct from the property of
the Bailee and other property in its possession;


 


(iii) none of the Collateral located on the Premises
shall be deemed to be fixtures;


 


(iv) the Bailee has not issued, and shall not issue,
any negotiable documents or other negotiable instruments in respect of any
Collateral;


 


(v) if the Borrowers default on their obligations to
the Agent and the Lenders, and, as a result, the Agent undertakes to enforce
its security interest in the Collateral, the Bailee (a) will hold the
Collateral for the Agent’s account for the benefit of the Lenders, and release
the Collateral only to the Agent or its designee, (b) will cooperate with the
Agent in its efforts to assemble, take possession of, and remove all of the
Collateral located on the Premises; (c) will permit the Agent to remain on the
Premises for forty-five (45) days after the Agent notifies the Bailee of the
default, or, at the Agent’s option, to remove the Collateral from the Premises
within a reasonable time, not to exceed forty-five (45) days after the Agent
notifies the undersigned of the default; (d) will not hinder the Agent’s
actions in enforcing its liens on the Collateral; and (e) after the Agent
notifies the Bailee of the default, will, without further consent or agreement
of the Bailor, abide solely by Agent’s instructions with respect to the
Collateral, and not those of the Bailor.


 


[The undersigned hereby irrevocably and unconditionally authorizes
Agent (or its designee) to file at any time such financing statements naming
the undersigned as the debtor consignee, the Bailor as the secured party
consignor, and the Agent as assignee, indicating as the collateral goods of the
Bailor now or hereafter in custody, control or possession of the undersigned
and proceeds thereof, and including any other information with respect to the
undersigned required under the Uniform Commercial Code for the sufficiency of
such financing statement or for it to be accepted by the filing office of any
applicable jurisdiction (and any amendments or continuations with respect
thereto).](1)


 


Any notice(s) required or desired to be given hereunder shall be
directed to the party to be notified at the address stated herein.


 


The agreements contained herein shall continue in force until all of
the Borrowers’ obligations and liabilities to the Agent and the Lenders are
paid and satisfied in full and all financing arrangements among the Agent, the
Lenders and the Borrowers have been terminated.


 






(1)       For
consignees/processors.


 


2

















 


The consent of the Bailor hereto constitutes its acknowledgment that
Agent may assert any of the rights set forth or referred to herein, without
objection by the Bailor, and that the undersigned may act in accordance with
this Agreement without liability to the Bailor. By its signature below, the
Bailor agrees to reimburse the undersigned for all reasonable costs and
expenses incurred by the undersigned as a direct result of compliance with this
Agreement. The parties hereto agree that all fees and expenses of the
undersigned, including with respect to the storage and handling of the
Collateral, shall be solely for the account of the Bailor.


 


The undersigned will notify all successor owners, transferees,
purchasers and mortgagees of the existence of this waiver. The agreements
contained herein may not be modified or terminated orally and shall be binding upon
the successors, assigns and personal representatives of the undersigned, upon
any successor owner or transferee of the Premises, and upon any purchasers,
including any mortgagee, from the undersigned.


 


[Signature pages follow]


 


3

















 


This Agreement may be executed in any number of counterparts and by
different parties to this Agreement on separate counterparts, each of which,
when so executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature hereto. The
undersigned hereby waives notice of acceptance of this Agreement by Agent.


 


Executed and delivered this             day
of                         , 20   .


 


 


	
   

  	
   

  	
  [NAME OF BAILOR]

  [Address]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CONSENTED AND AGREED
  TO:

  
	
   

  
	
  [NAME OF BAILEE]

  
	
  [Address]

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  
	
   

  
	
  ACKNOWLEDGED AND
  ACCEPTED:

  
	
   

  
	
  GENERAL
  ELECTRIC CAPITAL CORPORATION,

  as administrative agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title: