Exhibit 10.8


 


MEXICAN
PLEDGE AGREEMENT


 


 


dated
effective as of May 4, 2005


 


 


between


 


 


RAILCAR,
LTD.




as
Grantor




and




GENERAL
ELECTRIC CAPITAL CORPORATION,




as
Collateral Agent


 

















 


This PLEDGE AGREEMENT,
dated effective as of May 4, 2005 (this “Agreement”),
is entered into by and between RAILCAR, LTD (hereinafter referred to as “Railcar” or as “Grantor”), and
General Electric Capital Corporation (“GECC”) acting
in the capacity of U.S. collateral agent for the benefit of the Secured Parties
(as such term is defined in the Credit Agreement, defined below) (in such
capacity, the “Collateral Agent”). Capitalized
terms used in this Agreement and not defined herein shall have the meanings
assigned to them in the Credit Agreement, as such term is defined below.


 


RECITALS:


 


WHEREAS,
reference is made to that certain Credit Agreement, dated as of March 24,
2005 (as it may be amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”),
by and among Progress Rail Services Holdings Corp. (the “Parent”),
each of the domestic subsidiaries of Parent parry 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 and the Lenders party thereto from time to time, and


 


WHEREAS,
Railcar has concurrently hereof formalized its pledge of (a) its 65%
shareholding interest in Progress Rail Services de México S.A. de C.V. (the “Pledged Shares”) and (b) its 65% equity interest in
Servicios Ferroviarios Progress S. de R.L. de C.V. (the “Pledged
Membership Interests”) as more fully described in Schedule A
hereto, to fully guarantee the obligations of the Borrowers under the Credit
Agreement (the “Pledge”), and desires to enter
into this Agreement with the Collateral Agent for the purposes of agreeing as
to certain terms and conditions applying to the Pledge, and


 


NOW,
THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the Grantor and the
Collateral Agent agree as follows:


 


SECTION 1                  DEFINITIONS.


 


1.1          General
Definitions.  In this Agreement, the
following terms shall have the following meanings:


 


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


 


“Collateral
Agent” shall have the meaning set forth in the preamble. 


 


“Credit
Agreement” shall have the meaning set forth in the recitals.


 


“Indemnitee”
shall mean the Collateral Agent, and its Affiliates’ officers, partners,
directors, trustees, employees and agents.


 


“Notarial
Copy” shall mean a copy of any relevant document which is
certified as conforming to original documents by a duly appointed Notary Public
in the United Mexican States (“Mexico”).


 


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“Pledged
Equity Interests” shall mean all Pledged Shares and Pledged
Membership Interests listed in Schedule A hereto.


 


“Proceeds”
shall mean (i) all payments or distributions made with respect to any
Pledged Equity Interests, and (ii) whatever is receivable or received when
any Pledged Equity Interests are sold, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary.


 


“Representation
Date” shall mean each of (i) the date hereof, (ii) each
date on which a Borrowing is made (on or after the date hereof) and (iii) each
date on which any Letter of Credit is issued, amended, renewed or extended (on
or after the date hereof).


 


1.2          Definitions;
Interpretation.  All capitalized
terms used herein (including the preamble and recitals hereto) and which are
not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement. Defined terms shall apply equally to the singular and plural
forms of such terms. References to “Sections,” “Annexes” and “Schedules” shall
be to Sections, Annexes and Schedules, as the case may be, of this Agreement
unless otherwise specifically provided.  Section headings
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose or be given
any substantive effect.


 


SECTION 2                  CONCURRENT FORMALIZATION OF PLEDGE.


 


The Grantor has,
through this Agreement and/or concurrently with the execution of this
Agreement, granted and formalized the Pledge of its Pledged Equity Interests in
favor of the Collateral Agent through (a) the physical and legal delivery
of certificates representing the Pledged Shares (attaching the relevant
endorsement legend in the terms required by this Agreement); (b) the
physical and legal delivery of this Agreement through which the Pledge of the
Pledged Membership Interests is formalized; (c) its causing that the
issuer of the respective Pledged Shares and the Pledged Membership Interests to
register the respective Pledges on the relevant books and records of each
respective issuer, and (d) generally through the actions described in this
Agreement and particularly in Section 3.1(c) hereof, as a guarantee
for the prompt and complete payment in full when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise, of all obligations of the Borrowers under the Credit Agreement.


 


SECTION 3                  REPRESENTATIONS, WARRANTIES AND COVENANTS


 


3.1          Generally.


 


(a)           Representations
and Warranties.  Grantor hereby
represents and warrants, on each Representation Date, that:


 


(i)    having performed
such inquiry and verification actions as Grantor has deemed to be appropriate
and sufficient for all legal purposes, the Pledged Shares and the Pledged
Membership Interests listed in Schedule A hereto, have been duly
authorized and issued by their respective issuers in accordance with Mexican
law and the respective corporate bylaws of each of the issuer of the Pledged
Shares and the issuer of the Pledged Membership Interests, and are fully paid
and outstanding;


 


(ii)   it has full legal
title and ownership of the Pledged Shares and the Pledged Membership Interests
listed in Schedule A hereto, in each case free and clear of any and
all Liens, rights or claims of all other Persons other than Liens permitted by Section 6.02
of the Credit Agreement, including, without limitation, liens arising as a


 


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result of Grantor
becoming bound (as a result of merger or otherwise) as debtor under a security
agreement entered into by another Person;


 


(iii)  the
Grantor, and each of the issuers of the Pledged Shares and the Pledged
Membership Interests listed in Schedule A hereto, has been duly
organized as a corporation (sociedad anónima
de capital variable), limited liability company (sociedad de responsabilidad limitada de capital
variable) or limited partnership, as applicable, under the laws of
its jurisdiction of incorporation or formation and remains duly existing as
such;


 


(iv)  the execution and
delivery of this Agreement by Grantor and the performance by the Grantor of its
obligations under this Agreement are within its corporate, limited liability
company or other powers and have been duly authorized by all necessary
corporate or other action, and the individual representing the Grantor in the
execution of this Agreement has all requisite corporate powers as are required
under applicable law in order to duly bind the Grantor in the terms of this
Agreement;


 


(v)   no authorization,
approval or other action by the Grantor or, in each case, by the issuer of the
Pledged Shares and the issuer of the Pledged Membership Interests, and no
notice to or filing with, any governmental authority or regulatory body is
required for either (x) the pledge or grant by the Grantor of the Pledge
created or purported to be created in favor of the Collateral Agent hereunder or
(y) the exercise by Collateral Agent of any rights or remedies in respect of
the Pledged Equity Interests, except for those actions and deliveries listed in
Section 3.1(c) hereof;


 


(vi)  all actions and
consents, including all filings, notices, registrations and recordings
necessary or desirable for the exercise by the Collateral Agent of the voting
or other rights provided for in this Agreement or the exercise of remedies in
respect of the Pledged Equity Interests have been made or obtained;


 


(vii) all
information supplied by the Grantor with respect to its Pledged Equity
Interests (in each case taken as a whole with respect to any particular Pledged
Equity Interests) is accurate and complete in all material respects;


 


(viii)  the
individual executing the certificate referred to in Section 3.1(c)(iv)
is in fact the duly appointed and acting alternate secretary (not member of the
board of directors) of the issuer of the Pledged Shares, and his or her
appointment as alternate secretary has not been revoked as of the date hereof,
and


 


(ix)   the individual
executing the certificate referred to in Section 3.1(c)(v) is in
fact the duly appointed and acting alternate secretary (not member of the board
of managers) of the issuer of the Pledged Membership Interests, and his or her
appointment as alternate secretary has not been revoked as of the date hereof.


 


(b)           Covenants
and Agreements.  The Grantor hereby
covenants and agrees that:


 


(i)    except for the
Pledge, it shall not create or suffer to exist any Lien upon or with respect to
any of the Pledged Equity Interests, except Liens


 


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permitted by Section 6.02
of the Credit Agreement, and Grantor shall defend the Pledged Equity Interests
against all Persons at any time claiming any interest therein;


 


(ii)   it shall not
change Grantor’s name, identity, corporate
structure (e.g. by merger, consolidation, change in corporate form or
otherwise), sole place of business, chief executive office, type of
organization or jurisdiction of organization or establish any trade names
unless it shall have (a) notified the Collateral Agent in writing at least
thirty (30) days prior to any such change or establishment, identifying such
new proposed name, identity, corporate structure, sole place of business, chief
executive office, jurisdiction of organization or trade name and providing such
other information in connection therewith as the Collateral Agent may
reasonably request and (b) taken all actions necessary or advisable to
maintain the continuous validity, perfection and the same or better priority of
the Collateral Agent’s rights in the Pledged Equity Interests;


 


(iii)  upon
the Grantor or its officers obtaining knowledge thereof, it shall promptly
notify the Collateral Agent in writing of any event that may materially and
adversely affect the value of the Pledged Equity Interests or any portion
thereof, the ability of the Grantor or the Collateral Agent to dispose of the
Pledged Equity Interests or any portion thereof, or the rights and remedies of
the Collateral Agent in relation thereto, including, without limitation, the
levy of any legal process against the Pledged Equity Interests or any portion
thereof;


 


(iv)  it shall not take
or permit any action which could impair the Collateral Agent’s rights in the
Pledged Equity Interests;


 


(v)   it shall not sell,
transfer, assign, abandon or permit to lapse (by operation of law or otherwise)
any Pledged Equity Interests;


 


(vi)  as long as no Event
of Default shall have occurred and be continuing, the Collateral Agent will
cause for Grantor to retain all ordinary cash dividends and distributions paid
in the normal course of the business of the issuer and consistent with the past
practice of the issuer and in respect of each of the Pledged Equity Interest,
in each case to the extent permitted by Section 6.06 of the Credit
Agreement, and the Collateral Agent agrees to reasonably assist Grantor in its
receipt of such ordinary cash dividends and distributions, and


 


(vii) Grantor
shall take such additional actions, including without limitation, causing each
relevant issuer of the Pledged Equity Interests to register the pledge on its
books and records or making such filings or recordings, in each case as may be
necessary or advisable, under the laws of Mexico to insure the validity,
perfection and priority of the Collateral Agent’s rights to the Pledged Equity
Interests.


 


(c)           Deliveries.  Concurrently with the execution of this
Agreement, Grantor shall:


 


(i)    have formalized
the Pledge through (A) the physical and legal delivery to the Collateral
Agent of the original certificates evidencing the Pledged Shares, duly endorsed
as transferred in pledge to the Collateral Agent, including the legend
substantially in the forms set forth in Exhibit A hereto, in the terms
of paragraph II of article 334 of the General Law of Negotiable
Instruments and Credit Transactions


 


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(Ley
General de Títulos y Operaciones de Crédito); (B) the
physical and legal delivery of this Agreement and the certificate referred to
in paragraph (v) below, through which the Pledge of the Pledged Membership
Interests is formalized, in the terms of paragraph III of article 334 of
the General Law of Negotiable Instruments and Credit Transactions (Ley General de Titulos y Operaciones de Crédito), and
(C) its causing that the issuer of the respective Pledged Shares and the
Pledged Membership Interests to register the respective Pledges on the relevant
books and records of each respective issuer, including without limitation the
share register of the issuer of the Pledged Shares and the special members’
register of the issuer of the Pledged Membership Interests, substantially in
the record forms set forth in Exhibit B hereto, and the Collateral
Agent has delivered to Grantor a document evidencing its receipt of the Pledged
Shares and the Pledged Membership Interests in the terms hereof and as Grantor
may have reasonably requested from the Collateral Agent;


 


(ii)   shall have caused
for the Pledge of the Pledged Shares to have been duly approved by the
unanimous shareholders’ meeting of the issuer of the Pledged Shares, in form
and substance acceptable to the Collateral Agent (the “Pledged
Shares Resolution”);


 


(iii)  shall
have caused for the Pledge of the Pledged Membership Interests and any
potential ownership transfer thereof derived from the pledge rights to have
been duly approved by the unanimous members’ meeting of the issuer of the
Pledged Membership Interests, in form and substance acceptable to the Collateral
Agent (the “Pledged Membership Interests Resolution”);


 


(iv)  shall deliver to
the Collateral Agent a certificate, issued by the alternate secretary (not
member of the board of directors) of the issuer of the Pledged Shares,
certifying as to the completeness and duly formalization of the registration of
the Pledge of the Pledged Shares on the relevant books and records of such
issuer, in the terms required under Section 3.1(c)(i)(A) above,
and attaching (A) a Notarial Copy of all such relevant records; (B) a
Notarial Copy of the incorporation deed of the issuer of the Pledged Shares;(C) a
Notarial Copy of each bylaws amendment which has been adopted by the issuer of
the Pledged Shares as of the date hereof, and (D) a Notarial Copy of the
relevant public deed through which the Pledged Shares Resolution adopted under Section 3.l(c)(ii) above
has been protocolized in Mexico, including evidence of its registration in the
Public Registry of Commerce in Monterrey, Nuevo Leon, Mexico, and


 


(v)   shall deliver to
the Collateral Agent a certificate, issued by the alternate secretary (not
member of the board of managers) of the issuer of the Pledged Membership
Interests, certifying as to the completeness and duly formalization of the
registration of the Pledge of the Pledged Membership Interests on the relevant
books and records of such issuer, in the terms required under Section 3.1(c)(i)(B)
above, and attaching (A) a Notarial Copy of all such relevant records; (B) a
Notarial Copy of the incorporation deed of the issuer of the Pledged Membership
Interests, and (C) a Notarial Copy of each bylaws amendment which has been
adopted by the issuer of the Pledged Membership Interests as of the date
hereof, and (D) a Notarial Copy of the relevant public deed through which the
Pledged Membership Interests Resolution required under Section 3.1(c)(iii) above
has been protocolized in Mexico, including evidence of its registration in the
Public Registry of Commerce in Monterrey, Nuevo Leon, Mexico, and


 


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(vi)  deliver to the
Collateral Agent a legal opinion issued by the Grantor’s Mexican counsel
regarding, among others, that (A) each of the issuer of the Pledged Shares
and the issuer of the Pledged Membership Interests has been duly organized as a
corporation (sociedad anónima de capital
variable) and a limited liability company (sociedad de responsabilidad limitada de capital variable), respectively,
under the laws of Mexico; (B) in accordance with the respective corporate
records of the issuer of Pledged Shares and the issuer of the Pledged
Membership Interests, the Grantor has full legal title and ownership of its
respective Pledged Shares and Pledged Membership Interests listed in Schedule A
hereto, in each case free and clear of any pledge (except for the Pledge); (C) the
Pledged Shares and the Pledged Membership Interests have been duly issued and
are outstanding as of the date hereof in accordance with Mexican law and the
bylaws of each of its respective issuers, (D) the Pledge of the Pledged
Shares has been duly authorized by the Pledged Shares Resolution and has been
formalized and recorded in the relevant corporate records of the issuer of the
Pledged Shares, and such Pledge is valid, duly binding and enforceable under
Mexican law in accordance with its terms; (E) the Pledge of the Pledged
Membership Interests has been duly authorized by the Pledged Membership
Interests Resolution and has been formalized and recorded in the relevant
corporate records of the issuer of the Pledged Membership Interests, and such
Pledge is valid, duly binding and enforceable under Mexican law in accordance
with its terms; (F) no authorization, approval or other action by the
issuer of the Pledged Shares and the issuer of the Pledged Membership Interests,
and no notice to or filing with, any governmental authority or regulatory body
is required for either (1) the pledge by the Grantor of the Pledge created
in favor of the Collateral Agent hereunder or (2) the exercise by
Collateral Agent of any rights or remedies in respect of the Pledged Equity
Interests; (G) the alternate secretary (not member of the board of
directors) of the issuer of the Pledged Shares who is executing the certificate
referred to in Section 3.1(c)(iv) is in fact the duly appointed
and acting alternate secretary (not member of the board of directors) of the
issuer of the Pledged Shares, and (subject to the reasonable qualifications to
be included in the legal opinion) his or her appointment as alternate secretary
(not member of the board of directors) of the issuer of the Pledged Shares has
not been revoked as of the date hereof, and (H) that the alternate
secretary (not member of the board of managers) of the issuer of the Pledged
Membership Interests who is executing the certificate referred to in Section 3.1(c)(v) is
in fact the duly appointed and acting alternate secretary (not member of the
board of managers) of the issuer of the Pledged Membership Interests, and
(subject to the reasonable qualifications to be included in the legal opinion)
his or her appointment as alternate secretary (not member of the board of
managers) has not been revoked as of the date hereof.


 


(d)           Voting
and Distributions.


 


(i)    So long as no
Event of Default shall have occurred and be continuing:


 


(A)          except as
otherwise provided under the covenants and agreements in this Agreement or
elsewhere herein or in the Credit Agreement, the Collateral Agent agrees that
the Grantor shall be entitled to exercise or refrain from exercising any and
all voting and other consensual rights pertaining to the Pledged Equity
Interests or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Credit Agreement; provided, that the Grantor
shall exercise or refrain from exercising any such right if the Collateral
Agent


 


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shall have
notified the Grantor that, in the Collateral Agent’s reasonable judgment, such
action would have a Material Adverse Effect on the value of the Pledged Equity
Interests or any part thereof; and provided further, that the Grantor shall
give the Collateral Agent at least five (5) Business Days prior written
notice of the manner in which it intends to exercise, or the reasons for
refraining from exercising, any such right; and


 


(B)           the
Collateral Agent shall promptly execute and deliver (or cause to be executed
and delivered) to Grantor all proxies, and other instruments as the Grantor may
from time to time reasonably request for the purpose of enabling the Grantor to
exercise the voting and other consensual rights when and to the extent which it
is entitled to exercise pursuant to paragraph (A) above; and


 


(ii)   upon the
occurrence and during the continuation of an Event of Default:


 


(A)          the provisions
of Section 3.1(d)(i)(A) and Section 3.l(d)(i)(B) above
shall cease to apply and the Collateral Agent shall directly exercise or
refrain from exercising the voting and other consensual rights, and shall have
the sole right to exercise such voting and other consensual rights; and


 


(B)           the
provisions of Section 3.1(b)(vi) shall cease to apply and the
Collateral Agent will retain all Proceeds and ordinary and extraordinary cash
dividends and distributions paid by the issuers, allocating such Proceeds and
ordinary and extraordinary cash dividends and distributions in accordance with
the terms and conditions of the Credit Agreement, and the Grantor agrees to
reasonably assist the Collateral Agent in its receipt of such Proceeds and
ordinary and extraordinary cash dividends and distributions and


 


(C)           in order
to permit the Collateral Agent to exercise the voting and other consensual
rights which it may be entitled to exercise pursuant hereto and to receive all
dividends and other distributions which it may be entitled to receive hereunder,
the Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to the Collateral Agent all proxies, dividend payment orders and
other documents and instruments as the Collateral Agent may from time to time
reasonably request.


 


SECTION 4                  RIGHT OF INSPECTION AND FURTHER
ASSURANCES


 


4.1          Right
of Inspection. The Collateral Agent shall at all times have full and free
access during normal business hours to all the books, correspondence and
records of the Grantor, and the Grantor shall cause for the Collateral Agent to
have full and free access during normal business hours to the corporate books
and records of each issuer of the Pledged Equity Interests, and the Collateral
Agent and its representatives may examine the same, take extracts therefrom and
make photocopies thereof, and the Grantor agrees to render to the Collateral
Agent, at the Grantor’s cost and expense, such assistance as may be reasonably
requested with regard thereto.


 


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4.2          Further Assurances.


 


(a)           The
Grantor agrees that from time to time, at its expense, it shall promptly authenticate,
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Collateral Agent may
reasonably request, in order to create and/or maintain the validity, perfection
or priority of and protect the Pledge granted or purported to be granted
hereby, or to enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Equity Interests.  Without limiting the generality of the
foregoing, Grantor shall:


 


(i)    execute, deliver and
file such other agreements, instruments, endorsements, records, powers of
attorney or notices, as may be necessary or desirable, or as the Collateral
Agent may reasonably request, in order to perfect and preserve the Pledge
granted or purported to be granted hereby;


 


(ii)   at the Collateral
Agent’s request, appear in and defend any action or proceeding that may affect
the Grantor’s title to, or the Collateral Agent’s pledge in, all or any part of
the Pledged Equity Interests.


 


(b)           The
Grantor hereby authorizes the Collateral Agent to take all steps it deems
reasonably necessary to maintain and preserve the Pledged Equity Interests,
consistent with the Grantor’s obligations to do so hereunder, the making of
additional proceedings and filings (including without limitation the proceeding
described in Section 8.16 hereof), the payment of maintenance fees,
and the defense of challenges to the Grantor’s title or validity, all at the
Grantor’s expense.


 


SECTION 5                  APPLICATION OF PROCEEDS


 


5.1          Application
of Proceeds.  Except as expressly
provided elsewhere in this Agreement, all Proceeds received by the Collateral
Agent in respect of any sale, any collection from, or other realization upon
all or any part of the Pledged Equity Interests shall be applied in full or in
part by the Collateral Agent against the Borrowers’ obligations under the
Credit Agreement in the following order of priority: first, to the
payment of all costs and expenses of such sale, collection or other
realization, including reasonable compensation to the Collateral Agent and its
agents and counsel, and all other expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith, and all amounts for
which the Collateral Agent is entitled to indemnification hereunder (in its
capacity as the Collateral Agent) and all advances made by the Collateral Agent
hereunder for the account of the Grantor, and to the payment of all costs and
expenses paid or incurred by the Collateral Agent in connection with the
exercise of any right or remedy hereunder or under any Loan Document, all in
accordance with the terms hereof or thereof; second, to the extent of
any excess of such proceeds, to the payment of all other Borrowers’ obligations
for the ratable benefit of each Secured Party in the order set forth in Section 2.20
of the Credit Agreement, and third, to the extent of any excess of such
proceeds, to the payment to or upon the order of the Grantor or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.


 


SECTION 6                  COLLATERAL AGENT


 


(a)           The
Collateral Agent has been appointed to act as Collateral Agent hereunder by
each Secured Party either pursuant to the Loan Documents or pursuant to its
acceptance of the benefits hereof. The Collateral Agent shall only be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution
of Pledged Equity


 


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Interests), solely in accordance
with this Agreement and the Credit Agreement.  Without the written consent of the Secured
Parties that would be affected thereby, no amendment, modification,
termination, or consent shall be effective if the effect thereof would release
any of the Pledged Equity Interests except as expressly provided herein. In
furtherance of the foregoing provisions of this Section, each Secured Party, by
its acceptance of the benefits hereof, agrees that it shall have no right
individually to realize upon any of the Pledged Equity Interests hereunder, it
being understood and agreed by such Secured Party that all rights and remedies
hereunder may be exercised solely by the Collateral Agent for the benefit of
each Secured Party in accordance with the terms of this Section.


 


(b)           Subject
to the appointment and acceptance of a successor Collateral Agent as provided
in this paragraph, the Collateral Agent may resign at any time by notifying
Grantor, Lenders, the Administrative Agents, 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 appointed by such Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Collateral Agent gives notice of its resignation, then the retiring
Collateral Agent may, on behalf of the Lenders and the Issuing Banks, appoint a
successor Collateral Agent which shall be a commercial bank or an Affiliate of any such commercial bank.


 


(c)           Upon
the acceptance of any appointment as Collateral Agent under the terms of this Section by
a successor Collateral Agent, that successor Collateral Agent shall thereby
also be deemed the successor Collateral Agent and such successor Collateral
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent under this Agreement,
and the retiring Collateral Agent under this Agreement shall promptly (i) transfer
to such successor Collateral Agent all the Pledged Equity Interests, together
with all records and other documents necessary or appropriate in connection
with the performance of the duties of the successor Collateral Agent under this
Agreement, and (ii) execute and deliver to such successor Collateral
Agent, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Collateral Agent of the
Pledge, whereupon such retiring or removed Collateral Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Collateral Agent’s resignation or removal hereunder as the Collateral
Agent, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
the Collateral Agent hereunder.


 


(d)           Upon
the occurrence of any of the events set forth in this Section 6,
and specifically for the purposes set forth in Section 6(c),
Grantor agrees to reasonably cooperate and assist the retiring Collateral Agent
and the succeeding Collateral Agent, as the case may be, for the purposes of giving
effect to, and executing any documents required for, the due transfer of the
Pledge in favor of the succeeding Collateral Agent.


 


SECTION 7                  INDEMNITY
AND EXPENSES


 


(a)           The
Grantor agrees:


 


(i)    to defend
(subject to Indemnitees’ selection of counsel), indemnify, pay and hold
harmless each Indemnitee, from and against any and all claims, losses and
liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result from such Indemnitee’s gross negligence or willful
misconduct; and


 


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(ii)   to pay to the
Collateral Agent promptly following written demand the amount of any and all
reasonable costs and reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents in accordance with the
terms and conditions of the Credit Agreement.


 


(b)           The
obligations of the Grantor in this Section 7 shall survive the termination
of this Agreement and the discharge of Grantor’s other obligations under this
Agreement, the Credit Agreement and any other Loan Documents, until such
obligations have expired through the ordinary expiration of their corresponding
statute of limitations under applicable law.


 


SECTION 8                  MISCELLANEOUS


 


8.1          Reinstatement.  The Grantor agrees that, if any payment made
by any Loan Party or other Person and applied to the Borrowers’ obligations is
at any time annulled, avoided, set aside, rescinded, invalidated, declared to
be fraudulent or preferential or otherwise required to be refunded or repaid,
or the Proceeds of Pledged Equity Interests are required to be returned by any
Secured Party to such Loan Party, its estate, trustee, receiver or any other
party, including the Grantor, under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or
repayment, any Pledged Equity Interests securing such liability shall be and
remain in full force and effect, as fully as if such payment had never been
made. If, prior to any of the foregoing, any Pledged Equity Interests securing
Grantor’s liability hereunder shall have been released or terminated by virtue
of such cancellation or surrender, such Pledged Equity Interests shall be
reinstated in full force and effect and such prior cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect the
obligations of Grantor in respect of any Pledged Equity Interests securing such
obligation or the amount of such payment.


 


8.2          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, provided,
however, that for this purpose, the addresses of Grantor and the Collateral
Agent shall be the ones specified opposite their respective signatures below.


 


8.3          Expenses. In addition to amounts owed under Section 9.04
of the Credit Agreement, the Grantor agrees to pay promptly all the actual and
reasonable costs and expenses of preparation of this Agreement and any
consents, amendments, waivers or other modifications thereto; the reasonable
fees, expenses and disbursements of counsel to Collateral Agent (in each case including
allocated costs of internal counsel) in connection with the negotiation,
preparation, execution and administration of this Agreement and any consents,
amendments, waivers or other modifications thereto and any other documents or
matters requested by the Grantor; all the actual costs and reasonable expenses
of creating and perfecting the Pledge in favor of Collateral Agent, for the
benefit of each Secured Party pursuant hereto, including filing and recording
fees, expenses and taxes, stamp or documentary taxes, search fees, title
insurance premiums and reasonable fees, expenses and disbursements of counsel
to Collateral Agent and of counsel providing any opinions that Collateral Agent
may request in respect of the Pledged Equity Interests and the Pledge; all the
actual costs and reasonable fees, expenses and disbursements of any auditors,
accountants, consultants or appraisers; all the actual costs and reasonable
expenses (including the reasonable fees, expenses and disbursements of any
appraisers, consultants, advisors and agents employed or retained by Collateral
Agent and its counsel) in connection with the custody or preservation of any of
the Pledged Equity Interests, and the negotiation, preparation and execution of
this Agreement and any consents, amendments, waivers or other modifications
thereto and the transactions contemplated thereby; and after the occurrence of
a Default or an Event of Default, all costs and expenses, including reasonable
attorneys’ fees (including allocated costs of internal counsel) and costs of
settlement, incurred by Collateral Agent in enforcing any Borrowers’
obligations of or in


 


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collecting any payments
due from the Grantor hereunder or under the other Loan Documents by reason of
such Default or Event of Default (including in connection with the sale of,
collection from, or other realization upon any of the Pledged Equity Interests)
or in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a “work-out” or pursuant to
any insolvency or bankruptcy cases or proceedings.


 


8.4          Amendments
and Waivers.


 


(a)           Collateral
Agent’s Consent. No amendment, modification, termination or waiver of any
provision of this Agreement, or consent to any departure by the Grantor
therefrom, shall in any event be effective without the written concurrence of
the Collateral Agent.


 


(b)           No
Waiver: Remedies Cumulative. No failure or delay on the part of the Collateral
Agent in the exercise of any power, right or privilege hereunder or under any
other Loan Document shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other power, right or privilege. All rights,
powers and remedies existing under this Agreement and the other Loan Documents
are cumulative, and not exclusive of, any rights or remedies otherwise
available. Any forbearance or failure to exercise, and any delay in exercising,
any right, power or remedy hereunder shall not impair any such right, power or
remedy or be construed to be a waiver thereof, nor shall it preclude the
further exercise of any such right power or remedy.


 


8.5          Successors
and Assigns.  This Agreement shall be
binding upon the parties hereto and their respective successors and assigns
including all persons who become bound as debtor to this Agreement.  Grantor shall, without the prior written consent
of the Collateral Agent (which consent shall not be unreasonably withheld),
assign any right, duty or obligation hereunder.


 


8.6          Independence
of Covenants.  All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.


 


8.7          Survival
of Representations,  Warranties and Agreements. All representations, warranties and
agreements made herein shall survive the execution and delivery hereof.
Notwithstanding anything herein or implied by law to the contrary, the
agreements of the Grantor set forth in Section 7 and Section 8.2
shall survive the payment of any Borrowers’ obligations and the termination
hereof.


 


8.8          Severability.  In case any provision in or obligation
hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.


 


8.9          Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE FEDERAL LAWS OF MEXICO.  THE PLEDGE IS SPECIFICALLY GOVERNED BY, AND
SHOULD BE CONSTRUED IN ACCORDANCE WITH THE MEXICAN GENERAL LAW OF NEGOTIABLE INSTRUMENTS
AND CREDIT TRANSACTIONS, OR LEY GENERAL DE
TITULOS Y OPERACIONES DE CRÉDITO.


 


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8.10        Consent
to Jurisdiction.


 


(a)           Any
controversy or claim arising out of or relating to this Agreement or any
document or instrument delivered in connection herewith, shall be resolved by
the competent courts of the First Judicial District of the State of Nuevo Leon,
Mexico, based in the city of Monterrey, Nuevo Leon, Mexico.


 


(b)           The
Grantor 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 in any court referred to in Section 8.10(a).
Grantor 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.


 


8.11        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.


 


8.12        Effectiveness. This Agreement will become effective as
of May      , 2005, and shall continue to be in
full force and effect until such time in which Grantor has discharged all of
its other obligations under this Agreement, the Credit Agreement and any other
Loan Documents.


 


Upon the
satisfaction of all of the obligations of Grantor under this Agreement, the
Credit Agreement and any other Loan Document, the Pledge shall terminate and
the Collateral Agent agrees to return the Pledged Shares to Grantor and to
execute such documents as Grantor may reasonably require from the Collateral
Agent in order to give effect to the termination of the Pledge.


 


8.13        Entire
Agreement.  This Agreement and the
other Loan Documents embody the entire agreement and understanding between
Grantor and the Collateral Agent and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Loan Documents may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. There are
no unwritten oral agreements between the parties.


 


8.14        Absence
of Consent Vices.  Each of the
parties individually declares, represents, warrants and acknowledges to each of
the other parties hereto that in this Agreement there is no, as there has been
no, fraud, error, bad faith, damage or vices which could affect the consent of
the parties, given that they have mutually agreed on the purpose of this
Agreement and on all the terms and conditions contained herein.


 


8.15        Language.  This Agreement has been drafted in English. In
the event that any Spanish translations are prepared and there is any
discrepancy between the English version and the Spanish translation of this
Agreement, the English version shall prevail.


 


8.16        Execution
Before Notary Public.  This Agreement
will be executed by each of the parties in the presence of a notary public
having jurisdiction in the place in which the Agreement is executed by each
such party, who will ratify its execution. In the event the Agreement is
executed by the parties outside of Mexico, then apostilles will be affixed for
its validity in Mexico.


 


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IN WITNESS WHEREOF, the
Grantor and the Collateral Agent have caused this Agreement to be duly executed
and delivered by their respective officers thereunto duly authorized as of
their respective execution dates.


 


	
  RAILCAR,
  LTD.

  
	
   

  	
   

  
	
   

  	
  1600 Progress Drive.

  
	
   

  	
  Albertville, Alabama
  35950.

  
	
  By:

  	
    /s/ John R.
  Grace

  	
   

  	
  United States of
  America.

  
	
  Name:

  	
  John R. Grace

  	
   

  	
  Fax: (256) 840-2782.

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
  GENERAL
  ELECTRIC CAPITAL CORPORATION.

  
	
   

  	
   

  
	
   

  	
  125 Summer Street.

  
	
   

  	
  Suite 1230.

  
	
  By:

  	
  /s/ Edward N. Parkes IV

  	
   

  	
  Boston, Massachusetts
  02115.

  
	
  Name:

  	
  Edward N. Parkes IV

  	
   

  	
  United States of
  America.

  
	
  Title:

  	
  Vice President

  	
   

  	
  Fax: (617) 507-8107

  
					



 


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