<PAGE>

                                                                     EXHIBIT 2.3

                                                                  EXECUTION COPY

                                COMMON AGREEMENT

                          Dated as of February 23, 2005

                                      among

                       CORPORACION DURANGO, S.A. DE C.V.,
                                 as the Company,

                 COMPANIA PAPELERA DE ATENQUIQUE, S.A. DE C.V.,
                  PONDEROSA INDUSTRIAL DE MEXICO, S.A. DE C.V.,
                     EMPAQUES DE CARTON TITAN, S.A. DE C.V.,
                       INDUSTRIAS CENTAURO, S.A. DE C.V.,
                   ENVASES Y EMPAQUES DE MEXICO, S.A. DE C.V.,
             ADMINISTRACION CORPORATIVA DE DURANGO, S.A. DE C.V. and
                            CARTONPACK, S.A. DE C.V.,
                                 as Guarantors,

              COMPANIA NORTEAMERICANA DE INVERSIONES EN CELULOSA Y
                              PAPEL, S.A. DE C.V.,
                      DURANGO INTERNACIONAL, S.A. DE C.V.,
                          DURANGO INTERNATIONAL, INC.,
                      RECICLAJES CENTAURO, S.A. DE C.V. and
                      PORTEADORES DE DURANGO, S.A. DE C.V.,
                            as Additional Guarantors,

                   BANCO NACIONAL DE MEXICO, SOCIEDAD ANONIMA,
                    INTEGRANTE DEL GRUPO FINANCIERO BANAMEX,
                           CITIBANK INTERNATIONAL PLC,
                       BANC OF AMERICA SECURITIES LIMITED,
                           JPMORGAN CHASE BANK, N.A.,
                          CALIFORNIA COMMERCE BANK and
                      DEUTSCHE BANK, A.G., NEW YORK BRANCH,
                                  as A Lenders,

                              THE BANK OF NEW YORK,
               as Administrative Agent under the A Loan Documents,

                    LAW DEBENTURE TRUST COMPANY OF NEW YORK,
                     as Trustee under the B Note Documents,

                      DEUTSCHE BANK TRUST COMPANY AMERICAS,
                              as Collateral Agent,

       DEUTSCHE BANK MEXICO, S.A., INSTITUCION DE BANCA MULTIPLE, DIVISION
                                   FIDUCIARIA
                              as Collateral Agent,

                    DEUTSCHE BANK TRUST COMPANY AMERICAS,
          as Guarantor Paying Agent under the A Loans and the B Notes,

<PAGE>

    COMPANIA NORTEAMERICANA DE INVERSIONES EN CELULOSA Y PAPEL, S.A. DE
                                     C.V.,
                  COMPANIA PAPELERA DE ATENQUIQUE S.A. DE C.V.,
                          GRUPO PIPSAMEX, S.A. DE C.V.,
                         DURANGO MCKINLEY PAPER COMPANY,
              ADMINISTRACION CORPORATIVA DE DURANGO, S.A. DE C.V.,
                      PORTEADORES DE DURANGO, S.A. DE C.V.,
                   ENVASES Y EMPAQUES DE MEXICO, S.A. DE C.V.,
                     EMPAQUES DE CARTON TITAN, S.A. DE C.V.,
                     DURANGO INTERNACIONAL, S.A. DE C.V. and
                          DURANGO INTERNATIONAL, INC.,
                           as Subordinating Creditors

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                            <C>
ARTICLE I      DEFINITIONS AND RULES OF CONSTRUCTION.....................................................        3
         Section 1.01   Definitions......................................................................        3
         Section 1.02   Interpretation...................................................................       20
         Section 1.03   Accounting Terms.................................................................       21
         Section 1.04   Exchange Rate Convention.........................................................       21
         Section 1.05   Conflict in Restructuring Documents..............................................       21

ARTICLE II     CONDITIONS SUBSEQUENT.....................................................................       21
         Section 2.01   Conditions.......................................................................       21

ARTICLE III    REPRESENTATIONS AND WARRANTIES............................................................       23
         Section 3.01   Corporate Existence and Power....................................................       23
         Section 3.02   Corporate Authorization; Non-Contravention.......................................       23
         Section 3.03   Binding Effect...................................................................       23
         Section 3.04   Financial Condition..............................................................       24
         Section 3.05   Ownership; Subsidiaries..........................................................       24
         Section 3.06   Commercial Activity; Absence of Immunity.........................................       24
         Section 3.07   Full Disclosure..................................................................       24
         Section 3.08   Guarantor Paying Agent...........................................................       25
         Section 3.09   Secured Indebtedness.............................................................       25
         Section 3.10   Real Property....................................................................       25

ARTICLE IV     AFFIRMATIVE COVENANTS.....................................................................       25
         Section 4.01   Financial Reporting..............................................................       25
         Section 4.02   Certain Notices..................................................................       28
         Section 4.03   Preservation of Existence........................................................       28
         Section 4.04   Maintenance of Property..........................................................       29
         Section 4.05   Insurance........................................................................       29
         Section 4.06   Payment of Taxes and other Governmental Charges..................................       29
         Section 4.07   Compliance with Laws.............................................................       29
         Section 4.08   Maintenance of Books and Records/Fiscal Year.....................................       29
         Section 4.09   Further Assurances...............................................................       29
         Section 4.10   New Subsidiaries; New Intercompany Notes.........................................       30
</TABLE>

<PAGE>

                                TABLE OF CONTENTS

                                   (continued)

<TABLE>
<CAPTION>
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<S>                                                                                                            <C>
         Section 4.11   Consultants......................................................................       31
         Section 4.12   Mortgage Registration............................................................       31
         Section 4.13   Listing of Restructuring Equity..................................................       31
         Section 4.14   Distribution of Restructuring Equity.............................................       31
         Section 4.15   Filing of Definitive Documents...................................................       32

ARTICLE V      NEGATIVE COVENANTS........................................................................       32
         Section 5.01   Indebtedness.....................................................................       32
         Section 5.02   Liens............................................................................       34
         Section 5.03   Investments......................................................................       35
         Section 5.04   Restricted Payments; Payments of Intercompany Loans..............................       37
         Section 5.05   Sales of Assets..................................................................       37
         Section 5.06   Consolidations, Mergers, Etc.....................................................       38
         Section 5.07   Transactions with Affiliates.....................................................       39
         Section 5.08   Change in Business...............................................................       40
         Section 5.09   Equity Issuances.................................................................       40
         Section 5.10   Purchases of Restructured Debt by the Company and Affiliates.....................       40
         Section 5.11   Conflicting Agreements...........................................................       40
         Section 5.12   Indebtedness of Pipsamex and McKinley............................................       40
         Section 5.13   Removal of Collateral............................................................       41

ARTICLE VI     OPTIONAL PREPAYMENTS OF A LOANS AND B NOTES...............................................       41
         Section 6.01   Limitations on Optional Prepayments of A Loans and Optional Redemptions
                        of B Notes Prior to December 31, 2005............................................       41
         Section 6.02   Pro-Rata Treatment of A Loans and B Notes........................................       41

ARTICLE VII    MANDATORY PREPAYMENTS AND REDEMPTIONS.....................................................       42
         Section 7.01   Excess Cash......................................................................       42
         Section 7.02   Equity Issuances.................................................................       42
         Section 7.03   Dispositions.....................................................................       42
         Section 7.04   Casualty Insurance Proceeds......................................................       44
         Section 7.05   Application of Certain Net Cash Proceeds to Mandatory Prepayments and
                        Redemptions......................................................................       44
</TABLE>

                                      -ii-
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                                TABLE OF CONTENTS

                                   (continued)
<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                            <C>
         Section 7.06   Payments By Company/Guarantors...................................................       44

ARTICLE VIII   THE DEBT SERVICE RESERVE ACCOUNT..........................................................       44
         Section 8.01   Funding the DSRA.................................................................       44
         Section 8.02   Withdrawals from the DSRA........................................................       45

ARTICLE IX     CERTAIN INTERCREDITOR ISSUES..............................................................       46
         Section 9.01   Equal and Ratable Enhancement of A Loans and B Notes.............................       46
         Section 9.02   Payments.........................................................................       46
         Section 9.03   Collateral Voting Issues.........................................................       46
         Section 9.04   Sharing of Recoveries............................................................       46

ARTICLE X      GUARANTEE OF A LOANS AND B NOTES..........................................................       47
         Section 10.01  Guaranty.........................................................................       47
         Section 10.02  Obligations Unconditional........................................................       47
         Section 10.03  Reinstatement....................................................................       48
         Section 10.04  Subrogation......................................................................       48
         Section 10.05  Remedies.........................................................................       48
         Section 10.06  Instrument for the Payment of Money..............................................       49
         Section 10.07  Continuing Guarantee.............................................................       49
         Section 10.08  General Limitation on Guarantee Obligations......................................       49

ARTICLE XI     THE COLLATERAL AGENT......................................................................       49
         Section 11.01  Appointment of Collateral Agent, Powers and Immunities...........................       49
         Section 11.02  Duties...........................................................................       50
         Section 11.03  Reliance by Collateral Agent.....................................................       50
         Section 11.04  Defaults.........................................................................       51
         Section 11.05  Rights as a Creditor.............................................................       51
         Section 11.06  Resignation or Removal of Collateral Agent.......................................       51
         Section 11.07  Fees of Collateral Agent.........................................................       52
         Section 11.08  Enforcement Proceeds Account.....................................................       52
         Section 11.09  Distribution of Proceeds of Collateral...........................................       52

ARTICLE XII    GUARANTOR PAYING AGENT PROVISIONS.........................................................       53
</TABLE>

                                     -iii-
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                                TABLE OF CONTENTS

                                   (continued)
<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                            <C>
         Section 12.01  Appointment, Powers and Immunities...............................................       53
         Section 12.02  Direct Payment; Allocation.......................................................       53
         Section 12.03  Reliance by Guarantor Paying Agent...............................................       54
         Section 12.04  Rights as a Creditor.............................................................       54
         Section 12.05  Replacement of Guarantor Paying Agent............................................       54
         Section 12.06  Fees of Guarantor Paying Agent...................................................       54

ARTICLE XIII   SUBORDINATION OF C NOTES..................................................................       55
        Section 13.01  Defined Terms....................................................................        55
         Section 13.02  General..........................................................................       55
         Section 13.03  Remedies.........................................................................       55
         Section 13.04  Hold in Trust....................................................................       55
         Section 13.05  Payments in Bankruptcy or Liquidation............................................       55
         Section 13.06  Subordinated Debt Voting Rights..................................................       56
         Section 13.07  Further Assurances...............................................................       56
         Section 13.08  Modification or Sale of Subordinated Debt........................................       56
         Section 13.09  Termination of Subordination.....................................................       56

ARTICLE XIV    SUBORDINATION OF INTERCOMPANY NOTES.......................................................       56
         Section 14.01  Defined Terms....................................................................       56
         Section 14.02  General..........................................................................       57
         Section 14.03  Remedies.........................................................................       57
         Section 14.04  Hold in Trust....................................................................       57
         Section 14.05  Payments in Bankruptcy or Liquidation............................................       57
         Section 14.06  Subordinated Debt Voting Rights..................................................       58
         Section 14.07  Further Assurances...............................................................       58
         Section 14.08  Modification or Sale of Subordinated Debt........................................       58
         Section 14.09  Termination of Subordination.....................................................       58

ARTICLE XV     MISCELLANEOUS.............................................................................       58
         Section 15.01  Reinstatement of Pre-Restructuring Claims........................................       58
         Section 15.02  Amendments and Waivers...........................................................       59
</TABLE>

                                      -iv-
<PAGE>

                                TABLE OF CONTENTS

                                   (continued)

<TABLE>
<CAPTION>
                                                                                                     Page
<S>                                                                                                  <C>
Section 15.03  Costs and Expenses...............................................................       59
Section 15.04  Indemnification..................................................................       60
Section 15.05  Limitation of Rights; No Waiver..................................................       61
Section 15.06  Sharing of Information...........................................................       61
Section 15.07  Judgment Currency................................................................       61
Section 15.08  GOVERNING LAW....................................................................       62
Section 15.09  Payments Set Aside...............................................................       62
Section 15.10  Notices..........................................................................       62
Section 15.11    Successors and Assigns.........................................................       62
Section 15.12  Counterparts; Severability.......................................................       62
Section 15.13  Waiver of Immunity...............................................................       63
Section 15.14  Use of English Language..........................................................       63
Section 15.15  Survival.........................................................................       63
Section 15.16  Consent to Jurisdiction; Process Agent...........................................       64
Section 15.17  Waiver of Jury Trial.............................................................       65
Section 15.18  Releases.........................................................................       65
</TABLE>

                                      -v-
<PAGE>

                                TABLE OF CONTENTS

LIST OF EXHIBITS

Exhibit A    -  Form of A Loan Agreement
Exhibit B    -  Form of B Note Indenture
Exhibit C    -  Form of Designated Proceeds Notice
Exhibit D    -  Form of DSRA Pledge Agreement
Exhibit E    -  Form of McKinley Pledge Agreement
Exhibit F    -  Form of Mexican Mortgage
Exhibit G    -  Form of Intercompany Note Pledge Agreement
Exhibit H    -  Form of Pipsamex Pledge Agreement
Exhibit I    -  Form of Secretary/Officers Certificate
Exhibit J    -  Form of Closing Certificate
Exhibit K-1  -  Form of Joinder Agreement (Guarantor)
Exhibit K-2  -  Form of Joinder Agreement (Subordination)
Exhibit L    -  Form of Intercompany Note
Exhibit M    -  Form of Assumption Agreement
Exhibit N    -  Form of C Note
Exhibit O    -  Form of Irrevocable Guarantee and Administration Trust Agreement
Exhibit P       Form of Procedures Letter

                                LIST OF SCHEDULES

Schedule 1.01(a)    -   Pre-Restructuring Principal and Interest Claims
Schedule 3.05       -   Ownership; Subsidiaries
Schedule 3.10       -   Real Property
Schedule 4.01       -   Form of Certificate to Accompany Audited Financials
Schedule 5.01(b)    -   Secured Indebtedness
Schedule 5.03       -   Investments Outstanding on Closing Date
Schedule 8.02       -   Form of DSRA Withdrawal Request
Schedule 15.10      -   Notices

<PAGE>

            This COMMON AGREEMENT, dated as of February 23, 2005 (this
"AGREEMENT"), is made among:

            CORPORACION DURANGO, S.A. DE C.V., a sociedad anonima de capital
variable organized under the laws of Mexico (the "COMPANY");

            COMPANIA PAPELERA DE ATENQUIQUE, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico, as a Guarantor;

            PONDEROSA INDUSTRIAL DE MEXICO, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico, as a Guarantor;

            EMPAQUES DE CARTON TITAN, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico, as a Guarantor;

            INDUSTRIAS CENTAURO, S.A. DE C.V., a sociedad anonima de capital
variable organized under the laws of Mexico, as a Guarantor;

            ENVASES Y EMPAQUES DE MEXICO, S.A. DE C.V., a sociedad anonima de
capital variable organized under the laws of Mexico, as a Guarantor;

            ADMINISTRACION CORPORATIVA DE DURANGO, S.A. DE C.V., a sociedad
anonima de capital variable organized under the laws of Mexico, as a Guarantor;

            CARTONPACK, S.A. DE C.V., a sociedad anonima de capital variable
organized under the laws of Mexico, as a Guarantor;

            COMPANIA NORTEAMERICANA DE INVERSIONES EN CELULOSA Y PAPEL, S.A. DE
C.V., a sociedad anonima de capital variable organized under the laws of Mexico,
as an Additional Guarantor;

            DURANGO INTERNACIONAL, S.A. DE C.V., a sociedad anonima de capital
variable organized under the laws of Mexico, as an Additional Guarantor;

            DURANGO INTERNATIONAL, INC., a New Mexico corporation, as an
Additional Guarantor;

            RECICLAJES CENTAURO, S.A. DE C.V., a sociedad anonima de capital
variable organized under the laws of Mexico, as an Additional Guarantor;

            PORTEADORES DE DURANGO, S.A. DE C.V., a sociedad anonima de capital
variable organized under the laws of Mexico, as an Additional Guarantor;

            BANCO NACIONAL DE MEXICO, SOCIEDAD ANONIMA, INTEGRANTE DEL GRUPO
FINANCIERO BANAMEX; CITIBANK INTERNATIONAL PLC; BANC OF AMERICA SECURITIES
LIMITED; JPMORGAN CHASE BANK, N.A.; CALIFORNIA COMMERCE BANK; and DEUTSCHE BANK,
A.G., NEW YORK BRANCH, as A Lenders

<PAGE>

            THE BANK OF NEW YORK, as administrative agent under the A Loan
Documents;

            LAW DEBENTURE TRUST COMPANY OF NEW YORK, as trustee under the B Note
Documents;

            DEUTSCHE BANK TRUST COMPANY AMERICAS, as collateral agent under the
McKinley Pledge Agreement

            DEUTSCHE BANK MEXICO, S.A., INSTITUCION DE BANCA MULTIPLE, TRUST
DIVISION, as collateral agent under the Security Documents (other than the
McKinley Pledge Agreement)

            DEUTSCHE BANK TRUST COMPANY AMERICAS, as Guarantor Paying Agent for
the A Loans and the B Notes;

            COMPANIA NORTEAMERICANA DE INVERSIONES EN CELULOSA Y PAPEL, S.A. DE
C.V., COMPANIA PAPELERA DE ATENQUIQUE, S.A. DE C.V., GRUPO PIPSAMEX, S.A. DE
C.V., DURANGO MCKINLEY PAPER COMPANY, ADMINISTRACION CORPORATIVA DE DURANGO,
S.A. DE C.V., PORTEADORES DE DURANGO, S.A. DE C.V., ENVASES Y EMPAQUES DE
MEXICO, S.A. DE C.V., EMPAQUES DE CARTON TITAN, S.A. DE C.V., DURANGO
INTERNACIONAL, S.A. DE C.V., and DURANGO INTERNATIONAL, INC., as Subordinating
Creditors.

                                    PREAMBLES

            WHEREAS, prior to giving effect to the Restructuring, the Company
and certain of its Subsidiaries were indebted to the Pre-Restructuring Creditors
under the Pre-Restructuring Documents;

            WHEREAS, the Company and certain of the Pre-Restructuring Creditors
agreed to a restructuring of the debt of the Company (the "RESTRUCTURING") in
accordance with a term sheet dated as of August 11, 2004, which agreement was
partially implemented by a Convenio Concursal constituting a plan of
reorganization (the "CONVENIO") in the Company's concurso mercantil proceeding
under the Mexican Business Reorganization Act;

            WHEREAS, the Convenio contemplates that the terms of the
restructured indebtedness of the Company will be set out in this Agreement, the
A Loan Agreement, the B Note Indenture, the Security Documents, and the other
Restructuring Documents;

            WHEREAS, each of the Guaranteeing Parties is a subsidiary of the
Company and will derive an economic benefit by virtue of the Restructuring;

            WHEREAS, the parties desire to set forth in this Agreement certain
of their agreements which are common to all of the Restructuring Documents; and

                                      -2-
<PAGE>

            WHEREAS, this is the Common Agreement referred to in the Convenio as
having been initialed by the parties for purposes of identification;

            NOW THEREFORE, in consideration of the foregoing and to facilitate
the Restructuring, each of the parties hereto agrees as follows:

                                   ARTICLE I
                      DEFINITIONS AND RULES OF CONSTRUCTION

            Section 1.01 Definitions. For all purposes of this Agreement,
capitalized terms used but not defined herein have the meanings set forth in
this Section 1.01.

            "A LENDER" means, at any time, any lender party to the A Loan
Agreement at such time.

            "A LOANS" means, at any time, the loans evidenced by the A Loan
Agreement at such time.

            "A LOAN AGREEMENT" means the Restructured Credit Agreement among the
Company, the A Lenders and the Administrative Agent, dated the Closing Date,
substantially in the form of Exhibit A.

            "A LOAN DOCUMENTS" mean the A Loan Agreement and each promissory
note issued to an A Lender under the A Loan Agreement.

            "A LOAN PERCENTAGE" means, at any time, the then outstanding
principal amount of A Loans divided by the sum of the then outstanding principal
amounts of the A Loans and the B Notes.

            "A LOAN PORTION OF MANDATORY PREPAYMENTS/REDEMPTIONS" means, at any
time, an amount equal to (a) the Mandatory Prepayment/Redemption Amount at such
time, multiplied by (b) the A Loan Percentage.

            "ACCEPTABLE BANK" means a bank or trust company (a) that is one of
the five largest banks (based upon assets as of last day of the immediately
preceding calendar year) organized under the laws of Mexico and is not under
intervention or controlled by the Mexican Instituto para la Proteccion al Ahorro
Bancario or any successor thereto, or (b) organized under the laws of the United
States of America or any State thereof and having capital, surplus and undivided
profits of at least $50,000,000.

            "ACD" means Administracion Corporativa de Durango, S.A. de C.V., a
sociedad anonima de capital variable organized under the laws of Mexico.

            "ACTUAL DAYS OF ACCOUNTS RECEIVABLE" means, as of the last day of
any fiscal quarter of the Company ending December 31, 2005 or after, the product
of (i) 365 and (ii) the quotient of (x) the amount of accounts receivable for
the Company and the Guarantors on such

                                      -3-
<PAGE>

date, measured in Dollars and (y) net sales for the Company and the Guarantors
for the period of four consecutive fiscal quarters ending on such date (taken as
one accounting period), measured in Dollars.

            "ACTUAL DAYS OF INVENTORY" means, as of the last day of any fiscal
quarter of the Company ending December 31, 2005 or after, the product of (i) 365
and (ii) the quotient of (x) the Measurement Inventory of the Company and the
Guarantors on such date, measured in Dollars and (y) the cost of goods sold for
the Company and the Guarantors for the period of four consecutive fiscal
quarters ending on such date (taken as one accounting period), measured in
Dollars.

            "ADDITIONAL GUARANTORS" means Compania Norteamericana de Inversiones
en Celulosa y Papel, S.A. de C.V.; Durango Internacional, S.A. de C.V.; Durango
International, Inc.; Porteadores de Durango, S.A. de C.V.; and Reciclajes
Centauro, S.A. de C.V.

            "ADMINISTRATIVE AGENT" means The Bank of New York, as administrative
agent under the A Loan Documents, and any successor in such role.

            "AFFILIATE" means, as to any specified Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person, provided, that for purposes of
Section 5.07, an Affiliate of the Company or any Guarantor shall include any
Person that beneficially owns or holds 10% or more of any class of Capital Stock
of such specified Person. For purposes of this definition, the term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of Capital
Stock or by contract or otherwise.

            "AGGREGATE COMPANY PORTION OF EXCESS CASH" means, at any time, the
difference between (i) the aggregate of the Company Portions of Excess Cash from
the Closing Date through such time and (ii) the aggregate amount of
consideration paid by the Company and the Guarantors from the Closing Date
through such time for purchases of Restructured Debt permitted under Section
5.10 (Purchases of Restructured Debt by the Company and Affiliates).

            "APPLICABLE LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

            "BBVA BANCOMER" means BBVA Bancomer, S.A., Institucion de Banca
Multiple, Integrante del Grupo Financiero BBVA Bancomer.

            "B NOTE DOCUMENTS" means the B Note Indenture and the B Notes.

                                      -4-
<PAGE>

            "B NOTE INDENTURE" means the Indenture among the Company and the
Trustee, dated as of the Closing Date, substantially in the form of Exhibit B.

            "B NOTE PERCENTAGE" means, at any time, the then outstanding
principal amount of B Notes divided by the sum of the then outstanding principal
amounts of the A Loans and the B Notes.

            "B NOTE PORTION OF MANDATORY PREPAYMENTS/REDEMPTIONS" means, at any
time, an amount equal to (a) the Mandatory Prepayment/Redemption Amount at such
time, multiplied by (b) the B Note Percentage.

            "B NOTES" means the "Series B Notes" issued pursuant to the B Note
Indenture.

            "B NOTEHOLDERS" means, collectively, at any time, each Person that
holds B Notes at such time.

            "BANAMEX" means Banco Nacional de Mexico, Sociedad Anonima,
Integrante del Grupo Financiero Banamex.

            "BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Mexico City are authorized or
required by law to close.

            "C NOTES" means the Tranche C Notes issued by the Company pursuant
to the Convenio.

            "C NOTEHOLDERS" means, Compania Norteamericana de Inversiones en
Celulosa y Papel, S.A. de C.V., Compania Papelera de Atenquique, S.A. de C.V.,
Grupo Pipsamex, S.A. de C.V., Durango McKinley Paper Company, Administracion
Corporativa de Durango, S.A. de C.V., Porteadores de Durango, S.A. de C.V.,
Envases y Empaques de Mexico, S.A. de C.V., Empaques de Carton Titan, S.A. de
C.V., Durango Internacional, S.A. de C.V., and Durango International, Inc.

            "CALCULATION RATE" means, at any time (i) a floating rate per annum
equal to LIBOR at such time plus 2.75% with respect to the A Loans, and (ii) a
fixed rate per annum equal to 7.50% with respect to the B Notes.

            "CAPITAL LEASE OBLIGATIONS" means, for any Person, all obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under Mexican GAAP, and, for purposes of this Agreement, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with Mexican GAAP.

            "CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) of capital stock (including
common or preferred stock) or other

                                      -5-
<PAGE>

equity participation rights or interests, including partnership interests,
whether general or limited, fixed or variable capital of a sociedad anonima,
membership or limited liability company interests in a limited liability company
and any rights, warrants or options to acquire such capital stock or other
equity participation rights or interests.

            "CARTONPACK" means Cartonpack, S.A. de C.V., a sociedad anonima de
capital variable organized under the laws of Mexico.

            "CASH EQUIVALENTS" means Investments permitted by clauses (h)
through (m) of Section 5.03.

            "CASUALTY EVENT" means, with respect to any Property of any Person,
any loss of or damage to, or any condemnation or other taking of, such Property
for which such Person receives insurance proceeds, or proceeds of a condemnation
award or other compensation.

            "CENTAURO" means Industrias Centauro, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of Mexico.

            "CHANGE OF CONTROL" means that (a) the Controlling Shareholders
collectively shall cease to have the power, directly or indirectly, to direct
the management or policies of the Company, whether through the exercise of
voting power, by contract, or otherwise, or (b) any Guarantor shall cease to be
a Subsidiary of the Company.

            "CHIEF FINANCIAL OFFICER" means the chief financial officer, or any
other officer having substantially the same authority and responsibility.

            "CLOSING CERTIFICATE" means a certificate substantially in the form
of Exhibit J.

            "CLOSING DATE" means February 23, 2005.

            "CNBV" means the Mexican National Banking and Securities Commission
(Comision Nacional Bancaria y de Valores).

            "COLLATERAL" means the collateral subject to the Security Documents.

            "COLLATERAL AGENT" has the meaning set forth in Section 11.01.

            "COMMON SHARES" means common shares (acciones comunes) of the
Company.

            "COMPANY" means Corporacion Durango, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of Mexico.

            "COMPANY PORTION OF EXCESS CASH" has the meaning set forth in
Section 7.01.

            "CONCURSO PROCEEDING" means the concurso mercantil proceeding filed
by the Company on May 18, 2004 in Durango, Mexico, under file number 3/2004.

                                      -6-
<PAGE>

            "CONSOLIDATED NET WORTH" means, at any date of determination, (a) as
to the Company, stockholders' equity as set forth on its most recently available
quarterly or annual balance sheet prepared on a Partially Consolidated basis,
determined in conformity with Mexican GAAP, (except to the extent that such
statements by their nature deviate from the consolidation methodology required
under Mexican GAAP), or (b) as to any Guarantor, stockholders' equity as set
forth on its most recently available quarterly or annual balance sheet prepared
on a consolidated basis, determined in conformity with Mexican GAAP.

            "CONSOLIDATED SUBSIDIARY" means, as to any Person, any Subsidiary of
such Person which is consolidated with such Person for financial reporting
purposes in accordance with Mexican GAAP.

            "CONTRACTUAL OBLIGATION" means, as to any Person, any applicable
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument,
document or agreement to which such Person is a party or by which it or any of
its property is bound.

            "CONTROLLING SHAREHOLDERS" means any of (a) Miguel Rincon Arredondo,
(b) Jose Antonio Rincon Arredondo, (c) Jesus Rincon Arredondo, (d) any spouse,
brother, sister or lineal descendent of any of the individuals listed in clauses
(a), (b) or (c) of this definition, and (e) any trust established for the
benefit of any of the individuals listed in clauses (a), (b), (c) or (d) of this
definition.

            "CONVENIO" is defined in the Preambles to this Agreement.

            "CONVENIO CONCURSAL" means that agreement dated December 23, 2004
implementing the Restructuring in the Company's concurso mercantil proceeding.

            "COPASA" means Compania Papelera de Atenquique, S.A. de C.V., a
sociedad anonima de capital variable organized under the laws of Mexico.

            "COURT" means the District Court of Durango, Mexico.

            "CREDITOR" means any A Lender or B Noteholder.

            "CREDITORS" means the A Lenders and the B Noteholders.

            "DEFAULT" means any act, condition or event that, with the giving of
notice or lapse of time, or both, would become an Event of Default.

            "DESIGNATED PROCEEDS" means Net Cash Proceeds realized upon (i) a
Disposition of assets by the Company pursuant to Section 5.05(a)(iii) or a
Guarantor pursuant to Section 5.05(b)(iii) or (ii) a Casualty Event, and
identified in a written notice (in the form of Exhibit C) to the Administrative
Agent, the Trustee and the Collateral Agent.

                                      -7-
<PAGE>

            "DISPOSITION" means any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) to any
other Person excluding any sale, assignment, transfer or other disposition of
inventory sold or disposed of in the ordinary course of business and on ordinary
business terms.

            "DOLLARS" or "$" means the lawful currency of the United States of
America.

            "DSRA" means a deposit account of the Company maintained with BBVA
Bancomer in Mexico pursuant to documentation that (i) contains, without
limitation, the terms set forth in Section 8.02, and (ii) is otherwise
acceptable to the Company and the Negotiating Creditors.

            "DSRA PLEDGE AGREEMENT" means that agreement substantially in the
form of Exhibit D, made by the Company in favor of (a) the A Lenders and (b) the
Trustee for the benefit of the B Noteholders.

            "EBITDA" means, with respect to any Person for any fiscal quarter,
the sum (calculated in Pesos and subsequently converted into Dollars) of:

            (a)   operating income during such period of such Person;

            (b)   to the extent deducted in determining such operating income
                  for such period, the sum of:

                  (i)   depreciation,

                  (ii)  amortization,

                  (iii) any other non-cash charges (including inflation
                        adjustments of the initial inventory included in the
                        determination of the cost of sales, reserves made for
                        doubtful accounts and for contingencies arising in
                        connection with litigation, and non-cash effect on sales
                        of fixed assets) other than any such non-cash charges
                        that represent accruals of, or reserves for, cash
                        disbursements to be made in any future accounting
                        period,

                  (iv)  the aggregate amount of all cash severance payments
                        actually made by such Person in cash,

                  (v)   taxes paid or payable by such Person, and

                  (vi)  non-cash charges incurred by such Person in connection
                        with pension plans; and

            (c)   the aggregate amount of interest income accrued during such
                  period by such Person.

                                      -8-
<PAGE>

            "EQUITY ISSUANCE" means any issuance or sale by any Person of any of
its Capital Stock, other than (i) warrants or options issued to directors,
officers or employees of such Person as part of the compensation of such
director, officer or employee, and (ii) Investments permitted by Section
5.03(b).

            "EVENT OF DEFAULT" means an "Event of Default" as defined in the A
Loan Agreement or the B Note Indenture.

            "EXCESS CASH" means, as of the last day of any fiscal quarter of the
Company ending after the Closing Date, the greater of (a) Minimum Excess Cash
and (b) the sum of (i) the Measurement Accounts Payable Deficiency at such date,
(ii) the Measurement Excess Inventory Level at such date, (iii) the Measurement
Excess Accounts Receivable Level at such date, (iv) the McKinley Excess Cash on
Hand and (v) the aggregate balance of all cash and Cash Equivalents (excluding
amounts on deposit in the DSRA) then held by the Company and the Guarantors in
excess of the amount shown below opposite such fiscal quarter:

<TABLE>
<CAPTION>
FISCAL QUARTER ENDING                                                      AMOUNT (US$)
---------------------                                                      ------------
<S>                                                                        <C>
December 31, 2005                                                          $32,000,000

March 31, 2006                                                             $65,200,000

June 30, 2006                                                              $65,200,000

September 30, 2006                                                         $65,200,000

December 31, 2006                                                          $35,200,000

March 31, 2007                                                             $61,000,000

June 30, 2007                                                              $61,000,000

September 30, 2007                                                         $61,000,000

December 31, 2007                                                          $31,000,000

March 31, 2008 and each of the first three fiscal
quarters of each fiscal year thereafter                                    $50,000,000

December 31, 2008 and each of the last fiscal quarters
of each fiscal year thereafter                                             $20,000,000
</TABLE>

            "EXCESS CASH PAYMENT DATE" means a date on or prior to the 31st day
(or, if such day is not a Business Day the next succeeding Business Day)
following each date quarterly financial statements are required to be delivered
pursuant to Section 4.01(a).

                                      -9-
<PAGE>

            "EYEMEX" means Envases y Empaques de Mexico, S.A. de C.V., a
sociedad anonima de capital variable organized under the laws of Mexico.

            "FITCH" means Fitch Ratings Ltd. or any successor to the rating
agency business thereof.

            "GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.

            "GUARANTEE" means, with respect to any Person, without duplication,
a guarantee, an endorsement, a contingent agreement to purchase or to furnish
funds for the payment or maintenance of, or otherwise to be or become
contingently liable under or with respect to, the Indebtedness, other
obligations, net worth, working capital or earnings of any other Person, or a
guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any other Person, or an agreement to purchase, sell or lease
(as lessee or lessor) Property, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of such debtor's
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank or other financial institution to issue a
letter of credit or other similar instrument for the benefit of another Person,
but excluding endorsements for collection or deposit entered into in the
ordinary course of business or agreements providing for indemnification,
adjustment of purchase price or similar obligations not constituting
Indebtedness. The terms "Guarantee" and "Guaranteed" used as verbs have the
correlative meanings.

            "GUARANTEEING PARTIES" means, the Guarantors and the Additional
Guarantors.

            "GUARANTOR" means COPASA, PIMSA, Titan, Centauro, EYEMEX, ACD and
Cartonpack, and each Person that executes a Joinder Agreement (Guarantor) as
required pursuant to Section 4.10 or 5.06(c).

            "GUARANTOR PAYING AGENT" means Deutsche Bank Trust Company Americas
as initial Guarantor Paying Agent for the A Loans and the B Notes, and any
successor thereto (subject to the requirements set forth in Section 12.05).

            "GUARANTOR PORTION OF CORPORATE OVERHEAD" means, with respect to any
fiscal year, an amount not to exceed the Guarantors' Ratable Share of the total
corporate overhead, Taxes, regulatory costs and audit fees of the Company and
its Consolidated Subsidiaries paid at the Company level for such fiscal year.
For purposes of this definition, "Ratable Share" for any fiscal year means the
quotient (expressed as a percentage) of (x) the gross revenue of the Company and
the Guarantors reflected in the Partially Consolidated financial statements
delivered pursuant to Section 4.01(b) for the fiscal year most recently ended
and (y) the gross revenue of the Company and its Consolidated Subsidiaries
reflected in the audited consolidated financial statements delivered pursuant to
Section 4.01(b) for the fiscal year most recently ended.

                                      -10-
<PAGE>

            "HACIENDA" means the Mexican Secretaria de Hacienda y Credito
Publico (the Ministry of Finance of Mexico).

            "HEDGING AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.

            "IMSS" means the Mexican Instituto Mexicano del Seguro Social
(Mexican Social Security Institute).

            "INDEBTEDNESS" means, for any Person, without duplication: (a)
obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of
Property to another Person subject to an understanding or agreement, contingent
or otherwise, to repurchase such Property from such Person); (b) obligations of
such Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable arising, and expenses incurred, in
the ordinary course of business so long as such trade accounts payable are no
more than 60 days past due (but, in any event, are payable no more than one year
after the date on which the respective goods are delivered or the respective
services are rendered); (c) obligations of others secured by a Lien on the
Property of such Person, whether or not the respective indebtedness so secured
has been assumed by such Person, provided that, if not assumed, the amount of
such Indebtedness shall be the lesser of (i) the fair market value of the
Property secured by such Lien at such date of determination and (ii) the amount
of the obligations secured; (d) obligations of such Person in respect of letters
of credit or similar instruments issued or accepted by banks and other financial
institutions for the account of such Person, net of any cash deposits securing
the same; (e) Capital Lease Obligations of such Person; and (f) obligations of
others of the type described in clauses (a) through (e) above Guaranteed by such
Person.

            The amount of Indebtedness of any Person at any date shall be the
outstanding principal balance at such date of all unconditional obligations as
described above and, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the obligation,
provided, that (i) the amount outstanding at any time of any Indebtedness issued
with original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with Mexican GAAP, and
(ii) Indebtedness shall not include (A) any liability of such Person for
federal, state, local or other Taxes of any jurisdiction or (B) agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or Guarantees or letters of credit, surety bonds, performance bonds
or similar arrangements securing any obligations of the Company or any Guarantor
pursuant to such agreements, in any case incurred in connection with any
Disposition (other than Guarantees of Indebtedness incurred by any Person
acquiring all or any portion of the Property subject to the Disposition for the
purpose of financing the acquisition of such Property), so long as the principal
amount does not to exceed the gross proceeds actually received by the Company
and the Guarantors in connection with such Disposition.

                                      -11-
<PAGE>

            For the purposes of computing the amount of Indebtedness outstanding
at any time, all items shall be excluded to the extent that they would be
eliminated as intercompany items for purposes of such Person's consolidated
financial statements.

            "INFONAVIT" means the Mexican Instituto del Fondo Nacional de la
Vivienda para los Trabajadores (Mexican National Worker's Housing Fund
Institute).

            "INTERCOMPANY LOAN" means any Indebtedness (other than Indebtedness
evidenced by a C Note) (a) from the Company to a Subsidiary of the Company, (b)
from a Subsidiary of the Company to the Company, or (c) from a Subsidiary of the
Company to another Subsidiary of the Company.

            "INDEVAL" means S. D. Indeval, S.A. de C.V.

            "INTERCOMPANY NOTE" means a note evidencing an Intercompany Loan
which is subordinated to the A Loans and the B Notes on the terms set forth in
Article XIV.

            "INTERCOMPANY NOTE PLEDGE AGREEMENT" means a pledge agreement
(contrato de prenda de cuentas por cobrar), substantially in the form of Exhibit
G.


            "INTERNATIONAL ACCOUNTING STANDARDS" means, as of any date of
determination, accounting standards promulgated by the International Accounting
Standards Board.

            "INVESTMENT" means, for any Person, without duplication: (a) the
acquisition (whether for cash, Property, services or securities or otherwise) of
Capital Stock, bonds, notes, debentures or other securities of any other Person
or any agreement to make any such acquisition (including, without limitation,
any "short sale" or any sale of any securities at a time when such securities
are not owned by the Person entering into such sale); (b) the making of any
deposit with, or advance, loan or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person), but excluding (i) any such advance, loan or extension of credit
(x) having a term not exceeding 90 days arising in connection with the sale of
inventory or supplies by such Person in the ordinary course of business or (y)
to suppliers in the ordinary course of business, (ii) endorsements for
collection or deposit in the ordinary course of business, (iii) Intercompany
Loans not prohibited by Section 5.07, (iv) payroll, travel and similar advances
to cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes, and (v) deposit accounts that
function solely as payroll accounts; or (c) the entering into of any Guarantee
(other than Guarantees permitted under Section 5.01) or (d) the entering into of
any Hedging Agreement.

            "IRREVOCABLE GUARANTEE AND ADMINISTRATION TRUST AGREEMENT" means a
guarantee and trust agreement substantially in the form of Exhibit O.

            "JOINDER AGREEMENT" means a joinder agreement to the Common
Agreement, substantially in the form of Exhibit K-1 or K-2 as the case may be.

                                      -12-
<PAGE>

            "LIEN" means, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Agreement and the other Restructuring Documents,
a Person shall be deemed to own subject to a Lien any Property that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
(other than an operating lease) relating to such Property.

            "MANDATORY PREPAYMENT/REDEMPTION AMOUNT" means any amounts arising
under Sections 7.01, 7.02, 7.03 and/or 7.04.

            "MANDATORY PREPAYMENT/REDEMPTION/REPURCHASE EVENT" means an event
that, with the giving of notice or passage of time, would result in the
application of amounts pursuant to Article VII.

            "MATERIAL ADVERSE EFFECT" means a material adverse effect with
respect to (a) the operations, business, properties, or condition (financial or
otherwise) of the Company and the Guarantors, taken as a whole; (b) the ability
of the Company or any Guarantor to perform its obligations under any
Restructuring Document; or (c) the legality, validity, binding effect or
enforceability against the Company or any Guarantor of any Restructuring
Document or the rights and remedies of the Administrative Agent, the Trustee,
the Collateral Agent, the A Lenders or the B Noteholders thereunder.

            "MCKINLEY" means Durango McKinley Paper Company, a New Mexico
corporation.

            "MCKINLEY EXCESS CASH ON HAND" means, as of the last day of any
fiscal quarter of the Company ending after December 31, 2005, the positive
difference, if any, between (i) actual cash and Cash Equivalents as reflected on
the Company's balance sheet at the end of such fiscal quarter at McKinley on
such date and (ii) $3,000,000. It is understood that if actual cash and Cash
Equivalents as reflected on the Company's balance sheet at the end of such
fiscal quarter at McKinley is less than or equal to $3,000,000, "McKinley Excess
Cash on Hand" shall be zero at such time.

            "MCKINLEY PLEDGE AGREEMENT" means a Stock Pledge Agreement
substantially in the form of Exhibit E.

            "MEASUREMENT ACCOUNTS PAYABLE DEFICIENCY" means, as of the last day
of any fiscal quarter of the Company ending after December 31, 2005, the
positive difference, if any, between (i) $53,500,000 and (ii) the aggregate
amount of accounts payable and accrued liabilities (excluding amounts relating
to interest and taxes) of the Company and the Guarantors (the "Measurement
Accounts Payable") on such date, measured in Dollars. It is understood that, as
of any date of determination, if the Measurement Accounts Payable equal or
exceed $53,500,000, the Measurement Accounts Payable Deficiency shall be zero.

                                      -13-
<PAGE>

            "MEASUREMENT EXCESS ACCOUNTS RECEIVABLE LEVEL" means, as of the last
day of any fiscal quarter of the Company ending after December 31, 2005, the
product of (i) the positive difference, if any, between (x) the Actual Days of
Accounts Receivable and (y) 120 and (ii) the quotient of (x) total accounts
receivable for the Company and the Guarantors on such date, measured in Dollars
and (y) the Actual Days of Accounts Receivable. It is understood that, as of any
date of determination, if the Actual Days of Accounts Receivable is less than or
equal to 120, the Measurement Excess Accounts Receivable Level shall be zero.

            "MEASUREMENT EXCESS INVENTORY LEVEL" means, as of the last day of
any fiscal quarter of the Company ending after December 31, 2005, the product of
(i) the positive difference, if any, between (x) Actual Days of Inventory and
(y) 75 and (ii) the quotient of (x) the Measurement Inventory of the Company and
the Guarantors on such date, measured in Dollars and (y) the Actual Days of
Inventory. It is understood that, as of any date of determination, if the Actual
Days of Inventory is less than or equal to 75, the Measurement Excess Inventory
Level shall be zero.

            "MEASUREMENT INVENTORY" means total inventory, excluding spare parts
to the extent included in determining total inventory.

            "MEXICO" means the United Mexican States (Estados Unidos Mexicanos).

            "MEXICAN GAAP" means, as of any date of determination, generally
accepted accounting principles that are applicable in Mexico as of such date of
determination.

            "MEXICAN MORTGAGE" means, collectively, the Mortgages (hipotecas),
substantially in the form of Exhibit F, made by the Company and certain of the
Guarantors in favor of (a) the A Lenders and (b) the Trustee for the benefit of
the B Noteholders.

            "MEXICAN STOCK EXCHANGE" means the Bolsa Mexicana de Valores.

            "MINIMUM EXCESS CASH" means (i) as of the end of each of the first
three fiscal quarters of each fiscal year, zero and (ii) as of the end of the
last fiscal quarter of each fiscal year, the product of (x) 2/3 and (y) the
positive difference, if any, between EBITDA of the Company and the Guarantors on
a Partially Consolidated Basis and $150,000,000. If EBITDA of the Company and
the Guarantors on a Partially Consolidated Basis is less than or equal to
$150,000,000 as of the end of any fiscal quarter, "Minimum Excess Cash" shall be
zero for such fiscal quarter.

            "MOODY'S" means Moody's Investors Service, Inc. or any successor to
the rating agency business thereof.

            "NEGOTIATING CREDITORS" means, at any time, Banamex, JPMorgan Chase
Bank and each member of the Steering Group, but only if such entity continues to
be an A Lender or a B Noteholder at such time.

                                      -14-
<PAGE>

            "NET CASH PROCEEDS" means, with respect to the Company or any
Guarantor

            (a)   in the case of any Equity Issuance, the aggregate amount of
                  all cash received in respect of such Equity Issuance net of
                  reasonable expenses incurred by the Company and such Guarantor
                  in connection therewith (including without, limitation, the
                  reasonable fees and disbursements of legal counsel);

            (b)   in the case of any Disposition, the amount of cash received in
                  connection with such Disposition net of (i) reasonable
                  expenses incurred by the Company or Guarantor, as the case may
                  be, in connection therewith (including without, limitation,
                  the reasonable fees and disbursements of legal counsel), (ii)
                  contractually required repayments of Indebtedness secured by a
                  Lien on such Property and any income and transfer taxes
                  payable by the Company or such Guarantor in respect of such
                  Disposition and (iii) appropriate amounts to be provided by
                  the Company or any Guarantor as a reserve against any
                  liabilities associated with such Disposition, including,
                  without limitation, pension and other post-employment benefit
                  liabilities, liabilities related to environmental matters and
                  liabilities under any indemnification obligations associated
                  with such Disposition, provided, that (x) such reserves are
                  required by contract, Applicable Law, US GAAP or Mexican GAAP,
                  (y) such reserves are held by a third party acceptable to the
                  Company and the Collateral Agent, subject to terms and
                  conditions acceptable to the Company and the Collateral Agent,
                  and (z) such amounts initially held in reserve and, at any
                  time, no longer required as a reserve shall at such time
                  become Net Cash Proceeds;

            (c)   in the case of any Casualty Event, the aggregate amount of
                  proceeds of insurance, condemnation awards and other
                  compensation received in respect of such Casualty Event net of
                  (i) reasonable expenses incurred by the Company or such
                  Guarantor in connection therewith (including without,
                  limitation, the reasonable fees and disbursements of legal
                  counsel), (ii) contractually required repayments of
                  Indebtedness secured by a Lien on such Property and any income
                  and transfer taxes payable by the Company or such Guarantor in
                  respect of such Casualty Event, and (iii) appropriate amounts
                  to be provided by the Company or any Guarantor as a reserve
                  against any liabilities associated with such Casualty Event
                  including, without limitation, pension and other
                  post-employment benefit liabilities, liabilities related to
                  environmental matters and liabilities under any
                  indemnification obligations associated with such Casualty
                  Event, provided, that (x) such reserves are required by
                  contract, Applicable Law, or US GAAP or Mexican GAAP, (y) such
                  reserves are held by a third party acceptable to the Company
                  and the Collateral Agent, subject to terms and conditions
                  acceptable to the Company and the Collateral Agent,

                                      -15-
<PAGE>

                  and (z) such amounts initially held in reserve and, at any
                  time, no longer required as a reserve shall at such time
                  become Net Cash Proceeds.

            "NET INCOME" means, as to any Person for any period, the aggregate
of all amounts (exclusive of all amounts in respect of any extraordinary gains
but including extraordinary losses) which would be included as net income on the
consolidated financial statements of such Person for such period.

            "OBLIGATIONS" means all debts, liabilities, obligations, covenants
and duties, including for principal, fees, interest (including before and after
judgment and during any insolvency proceeding), indemnities and all other
amounts, in each case arising under any Restructuring Document and owed by the
Company or any Guarantor to any A Lender, any B Noteholder, the Administrative
Agent, the Trustee, or the Guarantor Paying Agent, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.

            "OFFICER'S CERTIFICATE" means, with respect to any Person required
to deliver the same, a certificate signed by a Responsible Officer of such
Person.

            "ORGANIZATIONAL DOCUMENT" means (a) with respect to any corporation,
the estatutos sociales, the certificate or articles of incorporation, the
bylaws, any certificate of designation or instrument relating to the rights of
preferred shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the shareholders or the board of directors (or
any committee thereof) of such corporation and (b) with respect to any other
entity, as applicable to such type of entity, its certificate of formation or
limited liability company certificate, limited liability company agreement,
memorandum and articles of association, partnership agreement or similar
constitutive documents and including all agreements, voting trusts and similar
arrangements with or among the holders of such Person's Capital Stock.

            "PARTIALLY CONSOLIDATED" means, with respect to any financial
statements of the Company and the Guarantors, financial statements of such
Persons prepared on a consolidated basis in accordance with Mexican GAAP, but
with the assumptions that the Guarantors are the only Subsidiaries of the
Company that are consolidated, and that all other Subsidiaries are accounted for
as investments under the equity method.

            "PERMITTED INDEBTEDNESS" has the meaning set forth in Section 5.01.

            "PERMITTED LIENS" has the meaning set forth in Section 5.02.

            "PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, other entity or Governmental Authority.

            "PESOS" or "P$" means the lawful money of Mexico.

                                      -16-
<PAGE>

            "PIMSA" means Ponderosa Industrial de Mexico, S.A. de C.V., a
sociedad anonima de capital variable organized under the laws of Mexico.

            "PIPSAMEX" means Grupo Pipsamex, S.A. de C.V., a socidad anonima de
capital variable, organized under the laws of Mexico.

            "PIPSAMEX PLEDGE AGREEMENT" means that certain pledge agreement
(contrato de prenda), substantially in the form of Exhibit H hereto, made by the
Company and Pipsamex in favor of (a) the A Lenders and (b) the Trustee for the
benefit of the B Noteholders.

            "PONDEROSA" means Ponderosa Industrial de Mexico, S.A. de C.V., a
sociedad anonima de capital variable organized under the laws of Mexico.

            "PRE-RESTRUCTURING CLAIM" means, with respect to a Pre-Restructuring
Creditor, the aggregate amount of its Pre-Restructuring Principal Claim and its
Pre-Restructuring Interest Claim identified on Schedule 1.01(a).

            "PRE-RESTRUCTURING CREDITORS" means the Persons identified on
Schedule 1.01(a).

            "PRE-RESTRUCTURING DOCUMENTS" means the documents and instruments
identified on Schedule 1.01(a).

            "PRE-RESTRUCTURING INTEREST CLAIM" means, with respect to a
Pre-Restructuring Creditor, the aggregate amount of unpaid interest owed to such
Person pursuant to the Pre-Restructuring Documents, accrued through and
including August 24, 2004 at the non-default rate.

            "PRE-RESTRUCTURING PRINCIPAL CLAIM" means, with respect to a
Pre-Restructuring Creditor, the aggregate amount of principal owed to such
Person pursuant to the Pre-Restructuring Documents on August 25, 2004.

            "PRO-RATA A LOAN PREPAYMENT AMOUNT" has the meaning set forth in
Section 6.02.

            "PRO-RATA B NOTE REDEMPTION AMOUNT" has the meaning set forth in
Section 6.02.

            "PROPERTY" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.

            "QUALIFIED JUDGMENT" means a judgment or order against the Company
or a Guarantor in respect of a Referenced Claim that has been duly entered by
(i) a Mexican court of competent jurisdiction or (ii) a court of competent
jurisdiction outside of Mexico, and (x) such judgment has been duly and finally
recognized for enforcement in Mexico by a Mexican court of competent
jurisdiction or (y) a Mexican court of competent jurisdiction has granted a pre-

                                      -17-
<PAGE>

judgment attachment (embargo precautorio) of assets of the Company or a
Guarantor in Mexico in respect of such judgment.

            "REFERENCED CLAIM" means those claims filed by the Pension Benefit
Guaranty Corporation in Bankruptcy case No. 02-21669 before the United States
Bankruptcy Court for the Southern District of Georgia, Brunswick Division, and
any claims by the Pension Benefit Guaranty Corporation related thereto or
arising therefrom.

            "REINSTATEMENT EFFECTIVE DATE" means the date upon which a Mexican
court of competent jurisdiction renders a decision that the A Loans, the B
Notes, the Guarantee by the Guaranteeing Parties or any of the Security
Documents is unenforceable.

            "REQUIRED CREDITORS" means (a) the Trustee at any time when the B
Notes represent at least 66.66% of the principal amount of the Restructured Debt
outstanding at such time, (b) the Administrative Agent at any time when the A
Loans represent at least 66.66% of the principal amount of the Restructured Debt
outstanding at such time, (c) the Administrative Agent and the Trustee acting
together, or (d) any combination of A Lenders and/or B Noteholders representing
at least 66.66% of the principal amount of the Restructured Debt outstanding at
such time.

            "RESPONSIBLE OFFICER" means the chief executive officer, the
president, the Chief Financial Officer, the general counsel or any other officer
having substantially the same authority and responsibility.

            "RESTRICTED PAYMENT" means dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of Capital Stock of the Company or any Guarantor, but excluding dividends
payable solely in shares of Capital Stock of the Company or any Guarantor.

            "RESTRUCTURED DEBT" means the A Loans and B Notes.

            "RESTRUCTURING" is defined in the Preambles to this Agreement.

            "RESTRUCTURING DOCUMENTS" means this Common Agreement, the A Loan
Documents, the B Note Documents, the Security Documents, the Convenio Concursal,
each related document and each document executed pursuant to the provisions of
Section 4.09 and Section 5.06.

            "RESTRUCTURING EQUITY" means Common Shares of the Company in an
aggregate amount representing seventeen percent (17%) (less 3,071 shares) of the
issued and outstanding Common Shares of the Company on the Closing Date on a
fully diluted basis issued to each A Lender and B Noteholder in exchange for a
portion of such creditors' Pre-Restructuring Claim.

            "RESTRUCTURING EQUITY PERCENTAGE" means, for each Pre-Restructuring
Creditor, the quotient (expressed as a percentage) of (a) the sum of (x) such
Creditor's Pre-Restructuring

                                      -18-
<PAGE>

Interest Claim and (y) 15% of such Creditor's Pre-Restructuring Principal Claim,
and (b) the sum of (x) all Pre-Restructuring Interest Claims and (y) 15% of all
Pre-Restructuring Principal Claims.

            "RESTRUCTURING EXPENSES" means the reasonable and customary expenses
of (a) the Steering Group and (b) those A Lenders in existence on the Closing
Date, incurred in connection with the Restructuring, including the reasonable
fees and expenses of such parties' approved legal and financial advisors.

            "RESTRUCTURING PAYMENT" means, for each A Lender and B Noteholder,
an amount equal to the aggregate amount of interest that would have accrued at
the Calculation Rate (assuming a year of 360 days) on such A Lender's A Loans or
such B Noteholder's B Notes, as the case may be, from and including January 1,
2005 to and excluding the Closing Date.

            "SEC" means the U.S. Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.

            "SECRETARY CERTIFICATE" means a certificate substantially in the
form of Exhibit I.

            "SECURED INDEBTEDNESS" means the Indebtedness identified on Schedule
5.01(b).

            "SECURITY DOCUMENTS" means, collectively, the Mexican Mortgage, the
Intercompany Note Pledge Agreement, the Pipsamex Pledge Agreement, the DSRA
Pledge Agreement, the Irrevocable Guarantee and Administration Trust Agreement
and the McKinley Pledge Agreement.

            "SEGMENT DISCLOSURE" means (a) with respect to any quarterly
reporting period pursuant to Section 4.01(a)(ii), an unaudited report on the
volume, net sales, unit pricing, unit cost and EBITDA (unless prohibited by the
rules and regulations of the SEC), and (b) with respect to any annual reporting
period pursuant to Section 4.01(b)(ii), an unaudited report on the volume, net
sales, unit pricing, unit cost, EBITDA (unless prohibited by the rules and
regulations of the SEC), fixed assets, capital expenditures, and assets and
liabilities, in each case for each of the Company's segments described as "Paper
Division", "Packaging Division", and "Other" for such period.

            "SET ASIDE NOTICE" means a written notice delivered to the
Collateral Agent by the Company or a Guarantor that informs the Collateral Agent
that an identified amount of the funds delivered to the Collateral Agent with
such notice are to be held by the Collateral Agent for a period of 180 days
before distributing same to the Creditors.

            "S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., or any successor to the rating agency business thereof.

            "STEERING GROUP" means Gramercy Advisors LLC, EBF & Associates,
Inc., and Quadrangle Group LLC.

                                      -19-
<PAGE>

            "SUBORDINATING CREDITORS" means the C Noteholders.

            "SUBSIDIARY" means, with respect to any specified Person, any other
Person (other than an individual) of which more than fifty percent (50%) of the
voting power of the Capital Stock is owned directly or indirectly by such
specified Person, by one or more of the Subsidiaries of such specified Person,
or by a combination thereof.

            "TAX" or "TAXES" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, compulsory loans, withholdings
or similar charges, and all liabilities with respect thereto, and any and all
stamp, court or documentary taxes or any other excise or property taxes, charges
or similar levies.

            "TITAN" means Empaques de Carton Titan, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of Mexico.

            "TRANCHE" means Tranche A or Tranche B.

            "TRANCHE A" means the A Loans, collectively.

            "TRANCHE B" means the B Notes, collectively.

            "TRUSTEE" means Law Debenture Trust Company of New York, in its
capacity as trustee under the B Note Indenture, and any successor in such role.

            "UNITED STATES" or "US" shall mean the United States of America.

            "US DOLLARS" means the lawful currency of the United States.

            "US GAAP" means, as of any date of determination, generally accepted
accounting principles that are applicable in the United States as of the date of
determination.

            "WOOD PRODUCTS DIVISION" shall mean the Capital Stock of Ponderosa
or assets of Ponderosa constituting the Property, plant and equipment of
Ponderosa located at its facility in Chihuahua, Mexico.

            Section 1.02 Interpretation. In each Restructuring Document and each
appendix, schedule or exhibit thereto, unless a clear contrary intention
appears, (a) the singular number includes the plural number and vice versa; (b)
reference to any Person includes such Person's successors and assigns but, if
applicable, only if such successors and assigns are permitted by the
Restructuring Documents, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually; (c) reference to any
gender includes each other gender; (d) reference to any agreement (including any
Restructuring Document), document or instrument means such agreement, document
or instrument as amended, supplemented or modified and in effect from time to
time; (e) reference to any law (including any Applicable Law) means such law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated

                                      -20-
<PAGE>

thereunder, and reference to any section or other provision of any law means
that provision of such law from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or reenactment of
such section or other provision; (f) "hereunder", "hereof", "hereto" and words
of similar import shall be deemed references to such Restructuring Document as a
whole and not to any particular Article, Section or other provision thereof; (g)
headings are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision thereof; (h) "including" (and with
correlative meaning, the term "include") means including without limiting the
generality of any description preceding such term; (i) "or" is not exclusive;
(j) relative to the determination of any period of time, "from" means "from and
including" and "to" means "to but excluding"; (k) references to any amount as on
deposit or outstanding on any particular date means such amount at the close of
business on such day; and (l) "fiscal year" and "fiscal quarter" shall mean
"fiscal year of the Company" and "fiscal quarter of the Company", respectively.

            Section 1.03 Accounting Terms. In each Restructuring Document,
unless expressly otherwise provided, accounting terms shall be construed and
interpreted, accounting determinations and computations shall be made, and
financial statements will be presented, in accordance with Mexican GAAP and,
when Mexican GAAP does not provide guidance, International Accounting Standards
shall be looked to for guidance.

            Section 1.04 Exchange Rate Convention. With respect to accounting
terms required to be measured in Dollars but stated in a currency other than
Dollars, (i) balance sheet items shall be converted into Dollars at the exchange
rate in effect on the date as of which such balance sheet item was determined
and (ii) income statement items shall be converted into Dollars at the average
exchange rate in effect during each fiscal quarter for which such income
statement item was determined.

            Section 1.05 Conflict in Restructuring Documents. If there is any
conflict between this Common Agreement and any one or more of the A Loan
Documents, the B Loan Documents and the Security Documents, the Common Agreement
shall control.

                                   ARTICLE II
                              CONDITIONS SUBSEQUENT

            Section 2.01 Conditions. All conditions set forth in this Section
2.01 shall be satisfied or waived promptly (and in any event within fifteen (15)
Business Days) after publication of approval of the Convenio by the judge of the
First District Court of Durango.

            (a) Documentation. Each of the Restructuring Documents shall have
been duly executed and delivered by each party thereto, and each such document
shall be in full force and effect.

            (b) Mexican Mortgage. The Mexican Mortgage shall be in proper form
for filing and registration in the Public Registry of Property of each
jurisdiction where real property listed on Schedule 3.10 is located.

                                      -21-
<PAGE>

            (c) Grant of Equity. The Company shall have (i) informed all
Pre-Restructuring Creditors of the steps necessary to have the Restructuring
Equity credited to their respective accounts, (ii) issued a global certificate
to Indeval for the number of shares with respect to which it has appropriate
account information, and (iii) retained a qualified agent to assist
Pre-Restructuring Creditors in having their Restructuring Equity credited to
their respective accounts.

            (d) Restructuring Payment. The Restructuring Payment shall have been
paid.

            (e) Governmental and Third Party Approvals. All approvals, consents,
exemptions, authorizations, permits, licenses, consents, or other action by, or
notice to or filing with any Governmental Authority (including Hacienda) or
third party, in each case as may be required for the Company or any Guarantor to
execute, deliver or perform the Restructuring Documents to which it is a party,
shall have been obtained and be in full force and effect.

            (f) Delivery of Stock Certificates. Certificates evidencing all of
the shares subject to the McKinley Pledge Agreement and the Pipsamex Pledge
Agreement shall have been delivered to the Collateral Agent, duly endorsed in
pledge.

            (g) Delivery of C Notes and Intercompany Notes. All C Notes, and all
Intercompany Notes required to have been pledged, shall have been made subject
to an Intercompany Note Pledge Agreement and delivered to the Collateral Agent
duly endorsed in pledge; and all Intercompany Notes not required to have been
pledged shall have been delivered to the Collateral Agent duly endorsed.

            (h) Legal Opinions. The Administrative Agent, the Trustee and the
Collateral Agent shall have received the legal opinions required by the A Loan
Documents and the B Note Indenture.

            (i) Secretary Certificates and Officer Certificates. The
Administrative Agent, the Trustee and the Collateral Agent shall have received
(i) from the Company and each Guarantor, a Secretary Certificate in the form of
Exhibit I duly completed and executed by the corporate secretary of each such
corporation, and (ii) from the Company, a Closing Certificate in the form of
Exhibit J duly completed and executed by a Responsible Officer of the Company.

            (j) DSRA. The Company shall have established the DSRA, and the DSRA
shall have been made subject to the DSRA Pledge Agreement.

            (k) Translated Documents. The Company shall cause to be delivered to
the Administrative Agent, the Trustee and the Guarantor Paying Agent, (i) agreed
upon English translations of the DSRA Pledge Agreement, the Pipsamex Pledge
Agreement, the Mexican Mortgage and the Intercompany Note Pledge Agreement, and
(ii) agreed upon Spanish translations of the Common Agreement, the Restructured
Credit Agreement, the Indenture and the McKinley Pledge Agreement.

                                      -22-
<PAGE>

            (l) Powers of Attorney. The Company shall have duly executed and
delivered each power of attorney contemplated by the Restructuring Documents.

            (m) Restructuring Expenses. The Company shall have paid all
Restructuring Expenses, to the extent invoiced.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

            The Company and each of the Guarantors represents and warrants to
the Administrative Agent, the Trustee, the A Lenders, the B Noteholders and the
Collateral Agent as of the Closing Date, as follows, provided, that each
Guarantor represents and warrants as to itself only:

            Section 3.01 Corporate Existence and Power. The Company and each
Guarantor (a) is a sociedad anonima de capital variable, duly organized and
validly existing under the laws of Mexico; (b) has the requisite power and
authority and all licenses, authorizations, consents and approvals to own, lease
and operate its assets and to conduct its business (except to the extent, in
each such case, that the failure to have such licenses, authorizations, consents
or approvals could not reasonably be expected to have a Material Adverse Effect)
and to execute, deliver, and perform its obligations under each of the
Restructuring Documents to which it is a party; and (c) is duly qualified as a
foreign entity and is licensed and in good standing (or the equivalent, if any,
under Mexican law) under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license except to the extent that the failure to do so could
not reasonably be expected to have a Material Adverse Effect.

            Section 3.02 Corporate Authorization; Non-Contravention. The
execution, delivery and performance by the Company and each Guarantor of this
Agreement and each other Restructuring Document to which such Person is party
have been duly authorized by all necessary corporate action, and do not and will
not (a) contravene the terms of such Person's Organizational Documents; (b)
conflict with or result in any breach or contravention of, or the creation of
any Lien under, any document evidencing any Contractual Obligation to which such
Person is a party, or any order, injunction, writ or decree of any Governmental
Authority to which such Person or its property is subject (and neither the
Company nor any Guarantor is a party to any agreement which (x) requires that
the proceeds of any Equity Issuance be applied in a manner other than as
required by this Agreement, or (y) except with respect to Permitted Liens,
requires that the proceeds of any Disposition be applied in a manner other than
as required by this Agreement); or (c) violate any Applicable Law.

            Section 3.03 Binding Effect. This Agreement and each other
Restructuring Document to which the Company or any Guarantor is a party have
been duly executed and delivered by each such Person and constitute the legal,
valid and binding obligations of the Company and such Guarantor to the extent
such Person is a party thereto, enforceable against each such Person in
accordance with their respective terms, except as enforceability may be

                                      -23-
<PAGE>

limited by applicable bankruptcy, insolvency, or similar laws affecting
creditors' rights generally or by general principles of equity (whether applied
by a court of law or equity).

            Section 3.04 Financial Condition. Each of (a) the audited
consolidated balance sheet of the Company and its Consolidated Subsidiaries,
dated December 31, 2003, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for the fiscal year ended on
such date, and (b) the unaudited consolidated balance sheet of the Company and
its Consolidated Subsidiaries, dated September 30, 2004, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the fiscal quarter ended on that date included in Form 6-K filed with
the SEC (i) were prepared in accordance with Mexican GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein and (ii) fairly present, in all material respects, the financial
condition of the Company and its Consolidated Subsidiaries, as of the dates
thereof, and results of operations for the periods covered thereby, subject, in
the case of the financial statements at and for the period ended September 30,
2004, to ordinary year-end audit adjustments and the absence of footnotes.

            Section 3.05 Ownership; Subsidiaries. Except for the Restructuring
Equity, neither the Company nor any Guarantor has outstanding shares of Capital
Stock other than shares that (a) have been validly issued, (b) are fully paid
and non-assessable, and (c) are owned as indicated in Schedule 3.05.

            Section 3.06 Commercial Activity; Absence of Immunity.

            (a) The Company and each Guarantor is subject to civil and
commercial law with respect to its obligations under this Agreement and each
other Restructuring Document to which it is a party. The making and performance
by the Company and each Guarantor of this Agreement and each other Restructuring
Document to which it is a party constitute private and commercial acts rather
than public or governmental acts, and neither it, nor any of its Property is
entitled to any right of immunity in any jurisdiction from suit, court
jurisdiction, judgment, attachment (whether before or after judgment), set-off
or execution of a judgment or from any other legal process or remedy relating to
its obligations under this Agreement and each other Restructuring Document to
which it is a party.

            (b) It is not necessary (i) in order for the Administrative Agent,
the Trustee or any A Lender or any B Noteholder to enforce this Agreement or any
other Restructuring Document or (ii) solely by reason of the execution, delivery
and performance of this Agreement or any other Restructuring Document, that the
Administrative Agent, the Trustee or any A Lender or B Noteholder be licensed or
qualified with any Governmental Authority in Mexico or be entitled to carry on
business in Mexico.

            Section 3.07 Full Disclosure. The Company has disclosed to the
Creditors in writing any and all facts or circumstances not otherwise disclosed
in the financial statements referred to in Section 3.04 and the Company's public
filings that could reasonably be expected to have a Material Adverse Effect.

                                      -24-
<PAGE>

            Section 3.08 Guarantor Paying Agent. The Guarantor Paying Agent is
not an Affiliate of the Company or any Subsidiary thereof.

            Section 3.09 Secured Indebtedness. Except as set forth on Schedule
5.01(b), the Secured Indebtedness and all documentation relating to the Secured
Indebtedness has not been amended or modified in any respect after January 1,
2004.

            Section 3.10 Real Property. Except as set forth on Schedule 3.10,
there is no real property legally or beneficially owned by the Company or any
Guarantor.

                                   ARTICLE IV
                              AFFIRMATIVE COVENANTS

            The Company and each Guarantor agrees with (a) each A Lender that,
until all A Loans and other amounts owing to such A Lender under the A Loan
Documents have been paid in full, it shall comply with each of the following
covenants and (b) each B Noteholder that, until all B Notes and other amounts
owing to such B Noteholder under the B Note Documents have been paid in full, it
shall comply with each of the following covenants:

            Section 4.01 Financial Reporting.

            (a) Quarterly Financial Reporting. The Company shall deliver to the
Administrative Agent and the Trustee on a quarterly basis for each fiscal
quarter as soon as available but not more than sixty (60) days after the end of
such fiscal quarter:

                  (i) unaudited copies of (A) an unconsolidated balance sheet of
      the Company as at the end of such fiscal quarter, and the related
      unconsolidated statements of income and statement of changes in financial
      position of the Company for such fiscal quarter and the portion of the
      fiscal year ending with such quarter, (B) a consolidated balance sheet of
      the Company and its Consolidated Subsidiaries as at the end of such fiscal
      quarter, and the related consolidated statements of income and statement
      of changes in financial position for such fiscal quarter and the portion
      of the fiscal year ending with such quarter, and (C) a Partially
      Consolidated balance sheet of the Company and the Guarantors as at the end
      of such fiscal quarter, and the related Partially Consolidated statements
      of income and statement of changes in financial position for such quarter
      and the portion of the fiscal year ending with such quarter, each of which
      financial statements shall set forth in comparative form the figures for
      the corresponding periods in the previous fiscal year, all certified by
      the Chief Financial Officer of the Company, which certification shall
      include the representation of such Chief Financial Officer that to the
      best of his or her knowledge, the information presented in such financial
      statements presents fairly in all material respects the financial
      condition of (x) with respect to the financial statements delivered
      pursuant to clause (A), the Company on an unconsolidated basis, (y) with
      respect to the financial statements delivered pursuant to clause (B), the
      Company and its Consolidated Subsidiaries, on a consolidated basis, and
      (z) with respect to the financial statements delivered pursuant to clause
      (C), the Company

                                      -25-
<PAGE>
      and the Guarantors, on a Partially Consolidated basis, in each case
      subject to normal year-end audit adjustments;

                  (ii) Segment Disclosure for such fiscal quarter;

                  (iii) a certificate from the Chief Financial Officer of the
      Company that shall include (A) the basis for each of the calculations
      relating to any application of amounts pursuant to Article VII (Mandatory
      Prepayments and Redemptions) for such fiscal quarter, (B) a certification
      by such Chief Financial Officer that, to the best of his or her knowledge,
      each of such calculations is true and accurate in all material respects,
      and (C) a certification that, to the best of the knowledge of such Chief
      Financial Officer, no Default or Event of Default has occurred and is
      continuing, or if a Default or an Event of Default has occurred and is
      continuing, a description of the nature thereof and what action the
      Company is taking in respect thereto;

                  (iv) a certificate from a Responsible Officer of the Company
      attaching copies of any quarterly press releases of the Company; and

                  (v) a summary operating and financial review of the Company
      and its Subsidiaries, providing analysis of the financial statements set
      forth in clause (i)(B) above.

            (b) Annual Financial Reporting. The Company shall deliver to the
Administrative Agent and the Trustee such annual financial statements as may be
required to be filed with the CNBV within ten (10) Business Days after such
statements are required to be so filed but not later than one hundred-thirty
days after the end of each fiscal year. Also, the Company shall deliver to the
Administrative Agent and the Trustee, as soon as available but not more than six
months after the end of each fiscal year:

                  (i) copies of (A) the audited unconsolidated balance sheet of
      the Company as at the end of such fiscal year, the related audited
      unconsolidated statements of income and statement of changes in financial
      position of the Company for such fiscal year and the notes thereto, (B)
      the audited consolidated balance sheet of the Company and its Consolidated
      Subsidiaries as at the end of such fiscal year, the related audited
      consolidated statements of income and statement of changes in financial
      position for such fiscal year and the notes thereto, and (C) the unaudited
      Partially Consolidated balance sheet of the Company and the Guarantors as
      at the end of such fiscal year, the related Partially Consolidated
      statements of income and statement of changes in financial position for
      such fiscal year and the notes thereto, each of which financial statements
      shall set forth in comparative form the figures for the previous fiscal
      year and, (I) in the case of the financial statements delivered pursuant
      to clauses (i)(A) and (B), be accompanied by the opinion of an
      internationally recognized independent public accounting firm which shall
      state that such financial statements present fairly, in all material
      respects, the financial position of the Company or the Company and its
      Consolidated Subsidiaries, as the case may be, for the period indicated in
      conformity with

                                     - 26 -
<PAGE>

      Mexican GAAP applied on a basis consistent with prior years and shall
      contain a reconciliation under U.S. GAAP of net income and shareholders'
      equity (such opinions shall not be qualified or limited because of a
      restricted or limited examination by the independent auditor of any
      material portion of the Company's or (with respect to the consolidated
      financial statements) any of its Consolidated Subsidiary's records), and
      (II) in the case of the financial statements delivered pursuant to clause
      (i)(C), be accompanied by an agreed upon procedures letter, substantially
      in the form of Exhibit P, of an internationally recognized independent
      public accounting firm;

                  (ii) Segment Disclosure for such fiscal year;

                  (iii) a certificate from the Chief Financial Officer of the
      Company substantially in the form of Schedule 4.01, that shall include (A)
      the basis for each of the calculations relating to any application of
      amounts pursuant to Article VII (Mandatory Prepayments and Redemptions)
      for such fiscal year, (B) a certification by such Chief Financial Officer
      that, to the best of his or her knowledge, each of such calculations is
      true and accurate in all material respects, (C) a summary of all
      Indebtedness of the Company and the Guarantors, including with respect to
      interest rate, amortization and maturity and (D) a certification that, to
      the best of the knowledge of such Chief Financial Officer, no Default or
      Event of Default has occurred and is continuing, or if a Default or an
      Event of Default has occurred and is continuing, the nature thereof and
      what action the Company is taking in respect thereto;

                  (iv) a certificate from a Responsible Officer of the Company
      attaching copies of any annual press releases of the Company; and

                  (v) a management discussion and analysis of the Company and
      its Subsidiaries, providing an analysis of the financial statements
      delivered pursuant to clause (i)(B) above.

            (c) Reporting Criteria. Each financial statement referred to in
clauses (a) and (b) of this Section 4.01 shall (i) be prepared in constant
Pesos, as of the applicable period ending date, for the applicable period and
the same period of the immediately preceding fiscal year, (ii) disclose the
year-to-year factor for constant Pesos and the average and period-end exchange
rates between Pesos and US Dollars used in connection therewith and (iii)
provide an English translation of any text within such financial statements or
in the notes thereto, or in the accompanying opinions or agreed upon procedures
letters, that appear in a language other than English.

            (d) Public Reporting. Unless previously delivered pursuant to
clauses (a) and (b) of this Section 4.01, the Company shall deliver to the
Administrative Agent and the Trustee promptly, but in any event within ten (10)
Business Days after filing with the SEC or the CNBV, copies of all financial
statements and reports that the Company sends to its public shareholders, and
copies of all financial statements and regular, periodic or special reports
(including Forms 20-F and 6-K) that the Company or any Subsidiary may furnish
to, or file with, the SEC

                                     - 27 -
<PAGE>

or the CNBV. The Company shall furnish to the SEC the Partially Consolidated
financial statements delivered pursuant to clause (a)(i)(C) of this Section 4.01
under cover of Form 6-K simultaneously with the furnishing to the SEC of the
financial statements delivered pursuant to clause (a)(i)(B) under cover of Form
6-K. The Company shall furnish to the SEC the Partially Consolidated financial
statements delivered pursuant to clause (b)(i)(C) of this Section 4.01 under
cover of Form 6-K simultaneously with the filing of a Form 20-F including the
financial statements delivered pursuant to clause (b)(i)(B).

            (e) Voluntary Filing. Whether or not the Company is subject to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), or any successor provision thereto, the Company shall file or
furnish all reports and other information with the SEC which the Company would
have been required to file or furnish with the SEC pursuant to such Section
13(a) or 15(d) of the Exchange Act if the Company had a class of equity
securities registered pursuant to Section 12(g) under the Exchange Act. If the
SEC does not permit the filings described in the immediately preceding sentence,
the Company shall provide such reports and other information to the
Administrative Agent and the Trustee.

            Section 4.02 Certain Notices; Failure to Provide Lien Certification.
The Company shall notify the Administrative Agent and the Trustee (a) of the
occurrence of any Default or Event of Default within five (5) Business Days
after a Responsible Officer becomes aware of such occurrence; (b) promptly of
the occurrence of any Mandatory Prepayment/Redemption/Repurchase Event; and (c)
promptly after a Responsible Officer becomes aware of any fact that has resulted
or could reasonably be expected to result in a Material Adverse Effect. Each
notice under this Section 4.02 shall be accompanied by a written statement of a
Responsible Officer of the Company (i) setting forth details of the occurrence
referred to therein and stating what action the Company or the Guarantor
proposes to take with respect thereto and the time frames in which such actions
shall be taken, and (ii) describing any and all clauses or provisions of this
Agreement or other Restructuring Document that have been (or foreseeably will
be) breached or violated in connection therewith. The Company shall provide to
the Administrative Agent and the Trustee, on or prior to the Closing Date (or,
with respect to any parcel of real property the Lien on which is not required to
be duly perfected until a later date as contemplated by Section 4.12, such later
date) appropriate certificates from the applicable public registrars
demonstrating that each parcel of real property subject, or to be subject, to
the Mexican Mortgage is free and clear of all Liens, other than Liens securing
the Obligations and Liens securing obligations that have been satisfied in full.

            Section 4.03 Preservation of Existence. Except as otherwise
permitted under Section 5.05 or Section 5.06, each of the Company and the
Guarantors shall (a) preserve and maintain its existence in accordance with
Applicable Law, (b) do all other things necessary to preserve and maintain in
full force and effect (i) all of its concession rights material to its business
activities and operations and shall comply with all Applicable Laws and material
Contractual Obligations to which it is subject as a holder or beneficiary or
user of such concession rights, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect and (ii) its other
rights and franchises, permits, licenses, governmental authorizations and
privileges, except to the extent that the failure to do so could not reasonably

                                     - 28 -
<PAGE>

be expected to have a Material Adverse Effect and (c) use commercially
reasonable efforts, in the ordinary course of business, to preserve or renew its
registered patents, trademarks, trade names and service marks, except to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

            Section 4.04 Maintenance of Property. Each of the Company and the
Guarantors shall maintain all properties material to the conduct of its business
in good working order and condition, ordinary wear and tear excepted, except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

            Section 4.05 Insurance. Each of the Company and the Guarantors shall
maintain with financially sound and reputable independent insurers that are not
Affiliates of either the Company or any Guarantor, insurance with respect to its
properties and businesses against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar businesses in the same
jurisdiction, in such amounts as are customarily carried under similar
circumstances by such other Persons.

            Section 4.06 Payment of Taxes and other Governmental Charges. Each
of the Company and the Guarantors shall pay (a) all material taxes, assessments
and other governmental charges imposed upon it or any of its properties or
assets or in respect of any of its franchises, business, revenues, income or
profits before any penalty or interest accrues thereon, and (b) all lawful
claims (including claims for labor, services, materials and supplies) that have
become due and payable and that by law have or might become a Lien (other than a
Permitted Lien) upon any of its assets, property or revenues; provided, that no
such tax, assessment, charge or claim need be paid if (x) it is being contested
in good faith in appropriate legal proceedings with respect to which bonds have
been posted to the extent required by Applicable Law and any reserves or other
appropriate provisions required by Mexican GAAP as a result thereof have been
made therefor or (y) nonpayment of such claim could not reasonably be expected
to have a Material Adverse Effect.

            Section 4.07 Compliance with Laws. Each of the Company and the
Guarantors shall comply with all Applicable Laws (including applicable social
security, IMSS, Infonavit, Sistema de Ahorro para el Retiro and labor laws),
except to the extent that the failure to so comply could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

            Section 4.08 Maintenance of Books and Records/Fiscal Year. The
Company and each Guarantor shall maintain proper books of record and account, in
which full, true and correct entries shall be made in conformity with Mexican
GAAP. The Company and each Guarantor shall maintain the same fiscal year.

            Section 4.09 Further Assurances.

            (a) Each of the Company and the Guarantors agrees that from time to
time, at its own cost and expense, it will promptly prepare, execute and
deliver, and will cause to be

                                     - 29 -
<PAGE>

executed and delivered, all commercially reasonable further instruments and
documents submitted to it by the Administrative Agent, the Trustee or the
Collateral Agent, and will take or cause to be taken all commercially reasonable
further actions as may be necessary in order to preserve, perfect and protect
the valid and perfected Liens on the Collateral under, or to enable the
Administrative Agent, the Trustee and the Collateral Agent to exercise and
enforce its rights and remedies under, any Restructuring Document.

            (b) If the Company or any Guarantor shall (i) at any time acquire
any real property or tangible fixed assets that are not subject to the Lien
created under the Security Documents, then the Company or such Guarantor shall,
at its own cost and expense, notify the Administrative Agent, the Trustee and
the Collateral Agent, and take such action as may be reasonably requested by the
Collateral Agent to create and perfect a valid Lien on and security interest in
each such asset or (ii) if any industrial equipment (equipos industriales)
Collateral subject to the Irrevocable Guarantee and Administration Trust
Agreement (for purposes of this Section 4.09(b) the "GUARANTEE TRUST
COLLATERAL") shall be relocated from the properties on which it is located under
the Irrevocable Guarantee and Administration Trust Agreement to any real
property owned by the Company or any Guarantor, then the Company or such
Guarantor shall, at its own cost and expense, notify the Administrative Agent,
the Trustee and the Collateral Agent, and take such action as may be reasonably
requested by the Collateral Agent to make such Guarantee Trust Collateral
subject to a mortgage substantially in the form of the Mexican Mortgage. The
Company and each Guarantor hereby authorizes the Collateral Agent (and shall in
accordance with the Security Documents governed by Mexican law execute a power
of attorney valid under Mexican law empowering the Collateral Agent) to take all
such further action and execute all such further documents and instruments as
may be necessary or desirable in order to create, preserve, perfect and protect
such a valid and perfected Lien on any real property or tangible fixed assets
acquired after the Closing Date without the signature of the Company or any
Guarantor to the extent permitted by Applicable Law.

            (c) If any amount constituting Collateral shall be or become
evidenced by any promissory note or other instrument, the Company or any
Guarantor named as payee thereof shall promptly pledge such note or instrument
in favor of the Collateral Agent (or cause the same to be done), and any such
note or instrument shall be duly endorsed in pledge in favor of the A Lenders
and the Trustee. In no event shall either the Collateral Agent be under any duty
to examine or confirm the effectiveness of any such note or instrument or the
endorsement thereon.

            Section 4.10 New Subsidiaries; New Intercompany Notes

            (a) After the date hereof, the Company shall promptly notify the
Administrative Agent, the Trustee and the Collateral Agent of any acquisition or
formation of a new Subsidiary by any Guarantor. The Company shall cause any such
Subsidiary so identified, within ten (10) Business Days of acquisition or
formation, as the case may be, to execute and deliver opinions of legal counsel
covering such matters as the Administrative Agent, the Trustee, the Collateral
Agent may reasonably request in connection therewith.

                                     - 30 -
<PAGE>

            (b) Any Person identified pursuant to the first sentence of clause
(a) above shall become a party to this Agreement and the other relevant
Restructuring Documents by executing and delivering (i) to the Administrative
Agent, the Trustee and the Collateral Agent a Joinder Agreement (Guarantor),
(ii) to the Administrative Agent, a joinder agreement meeting the requirements
of Section 9.8 of the A Loan Agreement, and (iii) to the Collateral Agent any
documentation required under Section 4.09(b) or 5.01(j). Each Person that
executes and delivers the items set forth in this Section 4.10(b) by such
execution and delivery (x) shall be deemed to be a Guarantor for all purposes of
this Agreement and the other Restructuring Documents as of the effective date of
such items and (y) shall, following such effective date, be bound by all of the
terms, conditions and provisions of this Agreement and the other Restructuring
Documents which are applicable to a Guarantor.

            (c) After the date hereof, the Company shall promptly notify the
Administrative Agent, the Trustee and the Collateral Agent of the making of any
Intercompany Note by the Company or any Subsidiary, and (i) cause the payee of
such Intercompany Note to execute and deliver to the Collateral Agent a Joinder
Agreement (Subordination) substantially in the form of Exhibit K-2 together with
such Intercompany Note duly endorsed, and (ii) in addition, if the holder of
such Intercompany Note is a Guarantor, cause such holder to execute and deliver
to the Collateral Agent an Intercompany Note Pledge Agreement substantially in
the form of Exhibit G together with such Intercompany Note duly endorsed in
pledge. Each Person that executes and delivers a Joinder Agreement
(Subordination), by such execution and delivery, shall be bound by all of the
provisions of Article XIV of this Agreement with respect to the Indebtedness
owed to such Person under the Intercompany Note referred to therein.

            Section 4.11 Consultants. Within six (6) months following the
Closing Date, the Company shall retain a turnaround cash management consultant
and an engineering operational consultant, mutually acceptable in good faith to
the Company and the Negotiating Creditors.

            Section 4.12 Mortgage Registration. On or before the date set forth
in Schedule 3.10 for a given property subject to the Mexican Mortgage, the
Company shall have caused the Mexican Mortgage encumbering such property to have
been duly filed in the appropriate registry so as to constitute the Mexican
Mortgage a duly perfected lien upon such property. The Company shall deliver to
the Administrative Agent, the Collateral Agent and the Trustee evidence of each
such filing within 5 Business Days after the date of each such filing and shall
deliver to the Administrative Agent, the Trustee and the Collateral Agent
evidence of the registration of each lien no later than one year after the date
each such filing was made.

            Section 4.13 Listing of Restructuring Equity. The Company shall
cause the Common Shares constituting Restructuring Equity to be registered with
the Mexican Stock Registry (Registro Nacional de Valores) and listed on the
Mexican Stock Exchange (Bolsa Mexicana de Valores) and shall use commercially
reasonable efforts to cause such registration and listing to occur within 30
Business Days after the Closing Date; and in any event such registration and
listing shall be effected on or before June 30, 2005. The Company shall deliver

                                     - 31 -
<PAGE>

to the Administrative Agent and the Trustee evidence of such listing promptly
upon its being granted.

            Section 4.14 Distribution of Restructuring Equity. The Company shall
use commercially reasonable efforts (including the retention of a qualified
agent) to have the Restructuring Equity distributed promptly to each
Pre-Restructuring Creditor entitled thereto, either by crediting the Indeval
account of such creditor, facilitating the sale through the Mexican Stock
Exchange by such creditor of its Restructuring Equity or distributing a tangible
stock certificate. In no event shall any Person vote, or receive a distribution
on, any Restructuring Equity that has not been so distributed.

            Section 4.15 Filing of Definitive Documents. The Company shall,
promptly after publication of the Approval of the Convenio, file with the
Durango District Court executed copies of each of the Restructuring Documents
referred to in the Convenio. The Company shall deliver to the Administrative
Agent and the Trustee evidence of such filing within five days after it shall
have been made.

                                   ARTICLE V
                               NEGATIVE COVENANTS

            The Company and each Guarantor agrees with (a) each A Lender that,
until all A Loans and other amounts owing to such A Lender under the A Loan
Documents have been paid in full, it shall comply with each of the following
covenants, and (b) each B Noteholder that, until all B Notes and other amounts
owing to such B Noteholder under the B Note Documents have been paid in full, it
shall comply with each of the following covenants:

            Section 5.01 Indebtedness. Neither the Company nor any Guarantor
shall incur or permit to exist any Indebtedness other than Permitted
Indebtedness. "PERMITTED INDEBTEDNESS" means:

            (a) the A Loans and the B Notes, and any refinancings (or
replacements) thereof which do not exceed the principal amount refinanced,
provided that no refinancing (or replacement) thereof shall contain terms that
on the whole are less favorable to the remaining A Lenders or B Noteholders than
the terms of the A Loans or B Notes being refinanced.

            (b) the Secured Indebtedness, and any refinancings thereof, whether
or not secured, which do not (i) increase the principal amount thereof, (ii)
provide for the pledge of collateral by the Company or the Guarantors which is
not covered by the Lien securing such Secured Indebtedness immediately prior to
such refinancing, or (iii) provide for additional guaranties by the Company or
any Guarantor in connection therewith;

            (c) Indebtedness, including Capital Lease Obligations, evidencing
the deferred purchase price of, or capital lease payments with respect to,
tangible Property used (or to be used) in the revenue-generating business
operations or administrative operations of the Company or any Guarantor;
provided, that the aggregate principal amount of all such

                                     - 32 -
<PAGE>

Indebtedness outstanding shall not (i) for the period from the Closing Date to
the second anniversary of the Closing Date, exceed $20,000,000, (ii) for the
period from the second anniversary of the Closing Date to the fourth anniversary
of the Closing Date, exceed $40,000,000, and (iii) following the fourth
anniversary of the Closing Date, exceed $60,000,000; provided further, that at
no time shall the aggregate principal amount of such Indebtedness that is not a
Capital Lease Obligation exceed $20,000,000;

            (d) Indebtedness incurred to finance working capital needs of the
Company or any Guarantor in an aggregate principal amount not to exceed
$20,000,000 at any time;

            (e) Indebtedness incurred by any Guarantor (i) as a result of
acquisitions of Subsidiaries which have pre-existing Indebtedness that was not
created in contemplation of such acquisition, or (ii) as a result of the
acquisition of assets subject to pre-existing Liens that were not created in
contemplation of such acquisition, in an aggregate principal amount for all such
Indebtedness not to exceed $10,000,000 at any time;

            (f) Indebtedness incurred by the Company or any Guarantor in
connection with any Hedging Agreements entered into in the ordinary course of
the Company's or such Guarantor's financial planning and not for speculative
purposes;

            (g) Indebtedness incurred by the Company or any Guarantor in respect
of bid, reimbursement, performance, surety or appeal bonds and return-of-money
bonds or similar obligations incurred in the ordinary course of business,
including Guarantees and letters of credit functioning as (or supporting) such
bonds or obligations (in each case other than obligations for the payment of
borrowed money);

            (h) Indebtedness of the Company to any Guarantor arising after the
date hereof (i) as a result of payments by such Guarantor of amounts in
connection with the A Loans or B Notes; or (ii) in connection with loans to the
Company by such Guarantor in lieu of Restricted Payments which would have been
permitted by Section 5.04; provided, that in each case: (A) such Indebtedness is
documented pursuant to an Intercompany Note (and subordinated to the A Loans and
the B Notes on the terms set forth in Article XIV), (B) such Indebtedness is
unsecured, (C) the Intercompany Note evidencing such Indebtedness is pledged in
favor of the A Lenders and the Trustee pursuant to an Intercompany Note Pledge
Agreement, and (D) the payee of such Intercompany Note has delivered such note
to the Collateral Agent duly endorsed in pledge;

            (i) Indebtedness of the Company to a Subsidiary which is not a
Guarantor arising after the date hereof; provided, that (i) any such
Indebtedness is documented pursuant to an Intercompany Note (and subordinated to
the A Loans and the B Notes on the terms set forth in Article XIV), (ii) such
Indebtedness is unsecured, and (iii) the payee of such Intercompany Note has
delivered such Intercompany Note to the Collateral Agent duly endorsed;

            (j) Indebtedness of any Guarantor to the Company or any other
Guarantor arising after the date hereof; provided, that (i) any such
Indebtedness is documented pursuant to

                                     - 33 -
<PAGE>

an Intercompany Note (and subordinated to the A Loans and the B Notes on the
terms set forth in Article XIV),(ii) any such Indebtedness is unsecured, (iii)
the payee of such Intercompany Note has delivered such note to the Collateral
Agent duly endorsed; and (iv) if the payee is a Guarantor, the Intercompany Note
evidencing such Indebtedness is pledged in favor of the A Lenders and the
Trustee pursuant to an Intercompany Note Pledge Agreement;

            (k) Guarantees of Permitted Indebtedness of a Guarantor; and

            (l) the C Notes.

            Section 5.02 Liens. Neither the Company nor any Guarantor shall
make, create, incur, assume or suffer to exist any Lien, upon or with respect
to, any part of its Property or assets, including, but not limited to, the
Collateral, whether now owned or hereafter acquired, other than Permitted Liens.
"PERMITTED LIENS" means:

            (a) Liens created pursuant to the Security Documents and Liens
securing Indebtedness permitted under Section 5.01(a);

            (b) Liens which secure Indebtedness permitted pursuant to Section
5.01(b);

            (c) Liens on tangible Property securing Indebtedness permitted
pursuant to Section 5.01(c); provided, that such Liens encumber only the
tangible Property purchased or leased with the proceeds of such Indebtedness;

            (d) Liens on inventory, receivables or the proceeds thereof securing
Indebtedness permitted pursuant to Section 5.01(d);

            (e) Liens securing Indebtedness permitted pursuant to Section
5.01(e) that were not created in contemplation of the acquisition referred to
therein, so long as such Lien does not extend to any other or additional
Property;

            (f) Liens securing Indebtedness permitted pursuant to Section
5.01(f);

            (g) Liens for taxes, assessments, governmental charges or claims
that are being contested in good faith by appropriate legal proceedings promptly
instituted and diligently conducted and for which a reserve or other appropriate
provision, if any, as shall be required in conformity with applicable Mexican
GAAP shall have been made;

            (h) statutory and common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
Liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with
applicable Mexican GAAP shall have been made;

                                     - 34 -
<PAGE>

            (i) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of legal requirements;

            (j) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory or regulatory obligations, bankers'
acceptances, surety and appeal bonds, government contracts, performance and
return-of-money bonds and other obligations of a similar nature incurred in the
ordinary course of business (exclusive of obligations for the payment of
borrowed money) on an arms length basis;

            (k) easements, rights-of-way, municipal and zoning ordinances and
similar charges, encumbrances, title defects or other irregularities that do not
materially interfere with the ordinary course of business of the Company or any
Guarantor;

            (l) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the Company or any Guarantor;

            (m) any interest or title of a lessor in Property subject to a
capital lease or operating lease;

            (n) Liens arising from filing any applicable financing statements or
similar recording documents regarding leases;

            (o) Liens arising from the rendering of a final judgment or order
against the Company or any Guarantor that does not give rise to an Event of
Default;

            (p) Liens securing reimbursement obligations with respect to trade
letters of credit;

            (q) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;

            (r) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the
Company or any Guarantor in the ordinary course of business in accordance with
the past practices of the Company and the Guarantors prior to the Closing Date;

            (s) Liens arising by virtue of any statutory, regulatory,
contractual or warranty requirements of the Company or any Guarantor, including,
without limitation, provisions relating to rights of offset and set-off,
bankers' liens or similar rights and remedies; and

            (t) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of banker's
acceptance issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;

                                     - 35 -
<PAGE>

provided, that the term "Permitted Lien" shall not include any consensual Lien
upon or with respect to (i) any Property of the Company or any Guarantor
constituting intellectual property, including, without limitation, any
copyrights, patents, or trademarks, all rights relating thereto, or any other
Property of the Company or any Guarantor of similar import or (ii) the
Collateral (other than as provided for in Section 5.02(a)).

            Section 5.03 Investments. Neither the Company nor any Guarantor
shall make or permit to remain outstanding any Investments except:

            (a) Investments outstanding on the Closing Date and identified on
Schedule 5.03;

            (b) Investments by the Company and the Guarantors in their
respective Subsidiaries;

            (c) Hedging Agreements entered into in the ordinary course of the
Company's or such Guarantor's financial planning and not for speculative
purposes;

            (d) Investments consisting of pledges or deposits made in connection
with (i) the performance of tenders, bids, leases, statutory or regulatory
obligations (including, without limitation, workers' compensation, unemployment
insurance and other types of social security), letters of credit, bankers'
acceptances, surety and appeal bonds, government contracts, performance and
return-of-money bonds and other obligations of a similar nature incurred in the
ordinary course of business, (ii) continued obligations on surety or appeal
bonds and (iii) obligations owing to utilities and other like Persons made in
the ordinary course of business;

            (e) purchases permitted pursuant to Section 5.10;

            (f) Investments received in satisfaction of judgments or in
settlement of obligations owing to the Company or any Guarantor, or upon the
perfection, foreclosure or enforcement of a Lien in favor of the Company or any
Guarantor;

            (g) Investments received in connection with any Disposition
permitted under Section 5.05;

            (h) direct obligations of Mexico, the United States of America, or
of any agency thereof, or obligations guaranteed as to principal and interest by
Mexico, the United States of America, or of any agency thereof, which mature not
more than 360 days from the date of acquisition thereof;

            (i) deposit accounts, money market accounts, bankers acceptances and
certificates of deposit issued by an Acceptable Bank;

            (j) commercial paper rated A-1 or better by S&P or P-1 or better by
Moody's, maturing not more than 90 days from the date of acquisition thereof;

                                     - 36 -
<PAGE>

            (k) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above entered into
with an Acceptable Bank;

            (l) securities with maturities of six months or less from the date
of acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or
Moody's;

            (m) Investments in money market funds substantially all of whose
assets are comprised of securities of the types described in clauses (a) through
(l) above, including, without limitation, any mutual fund for which the Trustee
or an Affiliate of the Trustee serves as investment manager, administrator,
shareholder or servicing agent, and/or custodian or subcustodian; and

            (n) additional Investments up to but not exceeding $1,000,000 in the
aggregate.

            Section 5.04 Restricted Payments; Payments of Intercompany Loans.

            (a) Neither the Company nor any Guarantor shall declare or make any
Restricted Payment at any time; provided, that the Guarantors may declare and
make Restricted Payments (i) in cash to the Company in an aggregate amount for
each fiscal year which, when added to the principal amount loaned to the Company
pursuant to Section 5.01(h)(ii) for such fiscal year, does not to exceed the
Guarantor Portion of Corporate Overhead for such fiscal year, (ii) to the
Company in the form of payments on their respective guaranties of the A Loans
and B Notes, so long as the cash funds in connection therewith flow in
accordance with Section 12.02 and (iii) to any other Guarantor.

            (b) Neither the Company nor any Guarantor shall make any payment on
any Intercompany Note or any C Notes in violation of the subordination
provisions applicable thereto.

            Section 5.05 Sales of Assets.

            (a) The Company. The Company shall not make or commit to make any
Disposition other than (i) Dispositions of worn out or obsolete Property; (ii)
Dispositions of Property (other than Capital Stock of Subsidiaries) the
aggregate Net Cash Proceeds of which do not exceed, when combined with the Net
Cash Proceeds described in Section 5.05(b)(ii), $1,000,000 in any fiscal year;
(iii) Dispositions (other than Capital Stock of Subsidiaries), the Net Cash
Proceeds of which are applied in accordance with Sections 7.03(a)(i) and 7.05;
(iv) Dispositions of the Capital Stock of Subsidiaries which are not Guarantors,
the Net Cash Proceeds of which are applied in accordance with Sections
7.03(a)(ii) and 7.05; (v) Dispositions of the Capital Stock of Ponderosa; and
(vi) Dispositions of the Capital Stock of any Guarantor so long as the
transferee of such Disposition is another Guarantor.

                                     - 37 -
<PAGE>

            (b) The Guarantors. No Guarantor shall make or commit to make any
Disposition other than (i) Dispositions of worn out or obsolete equipment in the
ordinary course of business; (ii) Dispositions of Property (other than Capital
Stock of Subsidiaries) the aggregate Net Cash Proceeds of which do not exceed,
when combined with the Net Cash Proceeds described in Section 5.05(a)(ii),
$1,000,000 in any fiscal year; (iii) Dispositions (other than Capital Stock of
Subsidiaries), the Net Cash Proceeds of which are applied in accordance with
Sections 7.03(b) and 7.05; (iv) Dispositions of the Wood Products Division or
all or substantially all of the Property of Ponderosa; and (v) Dispositions of
the Capital Stock of any Guarantor so long as the transferee of such Disposition
is another Guarantor.

            (c) The Non-Guarantor Subsidiaries of the Company. The Company shall
not permit any of its Subsidiaries which is not a Guarantor to make any
Disposition of all or substantially all of its assets, except for Dispositions
the Net Cash Proceeds of which are applied in accordance with Sections 7.03(c)
and 7.05.

            Section 5.06 Consolidations, Mergers, Etc.

            (a) Neither the Company nor any Guarantor shall, either in a single
transaction or through a series of related transactions, merge, consolidate or
combine into or with any other Person; provided, that:

                  (i) any Guarantor may merge, consolidate or combine into or
      with any other Guarantor;

                  (ii) a Person may merge, consolidate or combine into or with
      the Company, provided, that (A) the surviving entity shall be the Company
      or, if not the Company, shall be a corporation organized and validly
      existing under the laws of Mexico, the United States of America or any
      jurisdiction thereof and shall expressly assume all of the Company's
      obligations hereunder and under the other Restructuring Documents to which
      the Company is a party as required by clause (b) below, (B) immediately
      after giving effect to such transaction, no Default or Event of Default
      shall have occurred and be continuing, (C) immediately after giving effect
      to such transaction on a pro forma basis, the Company or such other Person
      shall have a Consolidated Net Worth greater than the Consolidated Net
      Worth of the Company immediately prior to such transaction, (D)
      immediately prior to such transaction, either Moody's, S&P or Fitch shall
      have a current rating for the Company's long term debt in effect, and any
      and all such ratings shall be reaffirmed (or improved) by such rating
      agency or agencies after giving effect to such merger, consolidation or
      combination, and (E) the Company shall deliver to the Administrative Agent
      and the Trustee an Officer's Certificate stating that such transaction
      complies with the requirements of this clause (ii) and such certificate
      shall attach the arithmetic computations necessary to demonstrate
      compliance with clause (C) above, and the correspondence with the relevant
      rating agency or agencies necessary to comply with clause (D) above;

                                     - 38 -
<PAGE>

                  (iii) a Person may merge, consolidate or combine into or with
      a Guarantor, provided, that (A) the surviving entity shall be the
      Guarantor or, if not the Guarantor, shall be a corporation organized and
      validly existing under the laws of Mexico, the United States of America or
      any jurisdiction thereof and shall expressly assume all of the Guarantor's
      obligations hereunder and under the other Restructuring Documents to which
      such Guarantor is a party as required by clause (c) below, (B) immediately
      after giving effect to such transaction, no Default or Event of Default
      shall have occurred and be continuing, (C) immediately after giving effect
      to such transaction on a pro forma basis, such Guarantor or such other
      Person shall have a Consolidated Net Worth greater than the Consolidated
      Net Worth of the Guarantor immediately prior to such transaction, (D)
      immediately prior to such transaction, either Moody's, S&P or Fitch shall
      have a current rating for the Company's long term debt in effect, and any
      and all such ratings shall be reaffirmed (or improved) by such rating
      agency or agencies after giving effect to such merger, consolidation or
      combination, and (E) the Company shall deliver to the Administrative Agent
      and the Trustee an Officer's Certificate stating that such transaction
      complies with the requirements of this clause (iii) and such certificate
      shall attach the arithmetic computations necessary to demonstrate
      compliance with clause (C) above, and the correspondence with the relevant
      ratings agency or agencies necessary to comply with clause (D) above.

            (b) The continuing Person (if other than the Company) in any
transaction permitted under Section 5.06(a)(ii) shall expressly assume the
obligations of the Company under this Agreement and the other Restructuring
Documents to which the Company is a party by executing and delivering (i) to the
Administrative Agent, an assumption agreement substantially in the form of
Exhibit M, (ii) to the Trustee, a supplemental indenture meeting the
requirements of Section 7.01(a)(iii) of the B Note Indenture, and (iii) to the
Collateral Agent any documentation required under Section 4.09(b) and 5.01(j).
Any Person that executes and delivers the items set forth in this Section
5.06(b) by such execution and delivery (x) shall succeed to, and be substituted
for, and may exercise every right and power of, the Company for all purposes of
this Agreement and the other Restructuring Documents as of the effective date of
such items, with the same effect as if such successor Person had been named as
the Company herein and therein, and (y) shall, following such effective date, be
bound by all of the terms, conditions and provisions of this Agreement and the
other Restructuring Documents which are applicable to the Company.

            (c) The continuing Person (if other than a Guarantor) in any
transaction permitted under Section 5.06(a)(iii) shall expressly assume the
obligations of a Guarantor under this Agreement and the other relevant
Restructuring Documents by executing and delivering (i) to the Administrative
Agent and the Trustee, a Joinder Agreement (Guarantor), (ii) to the
Administrative Agent, a joinder agreement meeting the requirements of Section
9.8 of the A Loan Agreement, (iii) to the Trustee, a supplemental indenture
meeting the requirements of Section 7.01(a)(iii) of the B Note Indenture and
(iv) to the Collateral Agent any documentation required under Section 4.09(b)
and 5.01(j). Any Person that executes and delivers the items set forth in this
Section 5.06(c) by such execution and delivery (x) shall be deemed to be a

                                     - 39 -
<PAGE>

Guarantor for all purposes of this Agreement and the other Restructuring
Documents as of the effective date of such items and (y) shall, following such
effective date, be bound by all of the terms, conditions and provisions of this
Agreement and the other Restructuring Documents which are applicable to it as a
Guarantor.

            Section 5.07 Transactions with Affiliates. Neither the Company nor
any Guarantor shall, directly or indirectly, enter into any transaction with an
Affiliate (including, without limitation, Guarantees and assumptions of
obligations of an Affiliate); provided, that the foregoing restriction shall not
apply to any transaction (a) between any Guarantor and another Guarantor; (b)
between the Company or any Guarantor and an Affiliate providing for the leasing
of Property, the rendering or receipt of services or the purchase or sale of
inventory or other Property in the ordinary course of business if the monetary
or business consideration arising therefrom would be substantially no less
favorable to the Company or such Guarantor as the monetary or business
consideration that would be obtained in a comparable transaction with a Person
not an Affiliate; (c) between the Company and any Guarantor, so long as the
terms of such transaction are substantially no less favorable to such Guarantor
than the monetary or business consideration that such Guarantor would obtain in
a comparable transaction with a Person not an Affiliate. Notwithstanding
anything to the contrary in this Section 5.07, (x) the Guarantors may make loans
or Restricted Payments to the Company to the extent permitted by Section
5.01(h)(ii), Section 5.01(j) and Section 5.04 and (y) the Company may enter into
any transaction permitted by Section 5.05(a)(vi) and any Guarantor may enter
into any transaction permitted by Section 5.05(b)(v).

            Section 5.08 Change in Business. Neither the Company nor any
Guarantor shall engage in a line of business substantially different from those
lines of business carried on by the Company and the Guarantors on the Closing
Date and any business substantially related or ancillary thereto.

            Section 5.09 Equity Issuances. Neither the Company nor any Guarantor
shall effect any Equity Issuance; provided that an Equity Issuance will be
permitted to the extent that (a) the consideration received by the issuer in
consideration for such Equity Issuance is at least fair market value; (b) the
Net Cash Proceeds from such Equity Issuance are applied in accordance with
Section 7.02, and (c) with respect to any Equity Issuance by a Guarantor, no
Change of Control shall occur.

            Section 5.10 Purchases of Restructured Debt by the Company and
Affiliates. The Company or any Affiliate of the Company may purchase
Restructured Debt provided that all such purchased debt shall be promptly
retired or pledged (and if pledged, shall be pledged with an irrevocable voting
proxy or such other documentation as shall be acceptable to the A Lenders, the B
Noteholders and their respective counsel), and provided further that the
consideration paid for any such purchase shall not exceed the Aggregate Company
Portion of Excess Cash immediately prior to giving effect to such purchase.
Restructured Debt purchased by the Company or any Affiliate of the Company shall
have no voting rights, whether in bankruptcy, a concurso mercantil, or
otherwise. All offers to purchase Restructured Debt by the Company or

                                     - 40 -
<PAGE>

an Affiliate of the Company shall be made via a pro-rata offer (or pursuant to a
tender offer) to all holders of Restructured Debt, or anonymously in a
recognized trading market.

            Section 5.11 Conflicting Agreements. Neither the Company nor any
Guarantor shall enter into any agreement which requires that the proceeds of any
Equity Issuance or any Disposition be applied in a manner other than as required
by this Agreement.

            Section 5.12 Indebtedness of Pipsamex and McKinley. The Company
shall not permit:

            (a) Pipsamex. Pipsamex to incur or become liable in respect of any
Indebtedness other than (i) Indebtedness existing on the Closing Date and
refinancings thereof which do not increase the principal amount thereof, and
(ii) additional Indebtedness not to exceed $15,000,000 in aggregate principal
amount outstanding at any one time.

            (b) McKinley. McKinley to incur or become liable in respect of any
Indebtedness other than (i) Indebtedness existing on the Closing Date and
refinancings thereof which do not increase the principal amount thereof, and
(ii) additional Indebtedness not to exceed $10,000,000 in aggregate principal
amount outstanding at any one time.

            Section 5.13 Removal of Collateral. The Company shall not permit any
removal of industrial equipment (equipos industriales) Collateral from real
property that is subject to the Mexican Mortgage ("ENCUMBERED REAL PROPERTY") to
real property that is not so encumbered; provided, however, that the Company
may, at any time, and from time to time, so remove industrial equipment (equipos
industriales) Collateral from Encumbered Real Property if all of the following
conditions are met:

            (a) immediately after giving effect to such removal, the aggregate
fair market value of the industrial equipment (equipos industriales) Collateral
located upon Encumbered Real Property is not less than the aggregate fair market
value of the industrial equipment (equipos industriales) Collateral located upon
Encumbered Real Property on the Closing Date;

            (b) the aggregate fair market value of all industrial equipment
(equipos industriales) Collateral removed from Encumbered Real Property since
the Closing Date does not exceed $10,000,000; and

            (c) the Collateral so transferred is made subject to a guarantee
trust substantially in the form of Exhibit O.

                                     - 41 -
<PAGE>

                                   ARTICLE VI
                   OPTIONAL PREPAYMENTS OF A LOANS AND B NOTES

            Section 6.01 Limitations on Optional Prepayments of A Loans and
Optional Redemptions of B Notes Prior to December 31, 2005. Notwithstanding any
provision to the contrary specified in any Restructuring Document, from the
Closing Date to December 31, 2005, optional prepayments of A Loans and optional
redemptions of B Notes are prohibited.

            Section 6.02 Pro-Rata Treatment of A Loans and B Notes. From and
after December 31, 2005, the Company may (a) make optional prepayments of A
Loans, provided that it simultaneously pays the Pro-Rata B Note Redemption
Amount, or (b) make optional redemptions of B Notes, provided that it
simultaneously pays the Pro-Rata A Loan Prepayment Amount. For purposes of this
Section 6.02, (i) "Pro-Rata B Note Redemption Amount" means, at any time, a
principal amount of B Notes equal to the product of (x) the B Note Percentage
multiplied by (y) a fraction, the numerator of which is the principal of the A
Loans prepaid at such time, and the denominator of which is the A Loan
Percentage, and (ii) "Pro-Rata A Loan Prepayment Amount" means, at any time, a
principal amount of A Loans equal to the product of (x) the A Loan Percentage
multiplied by (y) a fraction, the numerator of which is the principal amount B
Notes to be redeemed at such time, and the denominator of which is the B Note
Percentage.

                                  ARTICLE VII
                      MANDATORY PREPAYMENTS AND REDEMPTIONS

            Section 7.01 Excess Cash. On each Excess Cash Payment Date, the
Company shall (i) deliver to the Administrative Agent and the Trustee an
Officer's Certificate stating (and showing in reasonable detail the basis of
calculation thereof) the amount of Excess Cash on hand at the close of business
on the final day of such immediately preceding fiscal quarter, and (ii) apply
such Excess Cash as follows:

            First, 100% of Excess Cash shall be used to fund the DSRA until the
amount on deposit in the DSRA is equal to the aggregate amount of scheduled
principal and interest payments due on the Restructured Debt during the period
of six months immediately following such Excess Cash Payment Date (determined
assuming that the LIBOR rate on such date will remain constant throughout such
period); and

            Second, to the extent that Excess Cash remains after so funding the
DSRA, 80% thereof shall be distributed to the holders of the Restructured Debt
on a pro rata basis (based on then outstanding principal amounts), with such
prepayments to be applied to reduce remaining installments of principal in
inverse order of maturity and (b) 20% of such excess amounts shall be retained
by the Company (such amount, for any fiscal quarter, the "Company Portion of
Excess Cash").

            Section 7.02 Equity Issuances. In the event the Company receives
proceeds from any Equity Issuance by the Company, the Company shall (x) deliver
to the Administrative

                                     - 42 -
<PAGE>

Agent and the Trustee an Officer's Certificate stating (and showing in
reasonable detail the basis of calculation thereof) the amount of the Net Cash
Proceeds of such Equity Issuance, and (y) apply 85% of such Net Cash Proceeds in
accordance with Section 7.05. In the event the Company or any Guarantor receives
proceeds from any Equity Issuance by a Guarantor, the Company shall (x) deliver
to the Administrative Agent and the Trustee an Officer's Certificate stating
(and showing in reasonable detail the basis of calculation thereof) the amount
of the Net Cash Proceeds of such Equity Issuance, and (y) apply 85% of such Net
Cash Proceeds in accordance with Section 7.05.

            Section 7.03 Dispositions. Proceeds of certain Dispositions
permitted by Section 5.05 shall be treated in accordance with this Section 7.03.

            (a) Dispositions by the Company. Proceeds of Dispositions by the
Company permitted by Sections 5.05(a)(iii) or 5.05(a)(iv) shall be treated as
follows:

                  (i) Dispositions of Assets. If the Company receives Net Cash
      Proceeds from a Disposition permitted pursuant to Section 5.05(a)(iii),
      then (x) the Company shall deliver to the Administrative Agent and the
      Trustee an Officer's Certificate stating (and showing in reasonable detail
      the basis of calculation thereof) the amount of the Net Cash Proceeds of
      such Disposition, (y) 15% of such Net Cash Proceeds may be retained by the
      Company, and (z) the Company shall apply 85% of such Net Cash Proceeds in
      accordance with Section 7.05. Notwithstanding the foregoing clause (z), in
      any fiscal year the Company may apply up to $20,000,000 of Designated
      Proceeds received in such fiscal year (and otherwise required to be
      applied in accordance with Section 7.05) to finance one or more capital
      expenditures permitted by the A Loan Documents and the B Note Documents,
      provided that the Company has delivered a notice, substantially in the
      form of Exhibit C, with respect thereto and such Designated Proceeds are
      in fact so applied (or contractually committed to be applied) to such
      capital expenditures within 180 days of such Disposition (it being
      understood that Net Cash Proceeds shall be deemed to be utilized in the
      same order in which they are received). Any Net Cash Proceeds subject to
      clause (z) which are not applied (or contractually committed to be
      applied) within 180 days as required by the immediately preceding sentence
      shall forthwith be applied by the Company in accordance with Section 7.05.

                  (ii) Dispositions of Capital Stock of Non-Guarantor
      Subsidiaries. If the Company receives proceeds from a Disposition
      permitted pursuant to Section 5.05(a)(iv), then the Company shall (x)
      deliver to the Administrative Agent and the Trustee an Officer's
      Certificate stating (and showing in reasonable detail the basis of
      calculation thereof) the amount of the Net Cash Proceeds of such
      Disposition, and (y) apply 100% of such Net Cash Proceeds in accordance
      with Section 7.05.

            (b) Dispositions of Assets by a Guarantor (other than Ponderosa). If
there are Net Cash Proceeds from a Disposition permitted pursuant to Section
5.05(b)(iii), then (w) such Net Cash Proceeds shall (if not paid to the
Collateral Agent directly by the purchaser) be promptly remitted to Collateral
Agent, (x) the Company shall deliver to the Administrative

                                     - 43 -
<PAGE>

Agent and the Trustee an Officer's Certificate stating (and showing in
reasonable detail the basis of calculation thereof) the amount of the Net Cash
Proceeds of such Disposition, (y) 15% of such Net Cash Proceeds shall be applied
as directed by the Company, and (z) 85% of such Net Cash Proceeds shall be
applied in the manner set forth in Section 7.05. Notwithstanding the foregoing
clause (z), in any fiscal year the Company may apply up to $20,000,000 of
Designated Proceeds received in such fiscal year (and otherwise required to be
applied in accordance with Section 7.05) to finance one or more capital
expenditures permitted by the A Loan Documents and the B Note Documents,
provided that the Company has delivered a notice, substantially in the form of
Exhibit C, with respect thereto and such Designated Proceeds are deposited with
the Collateral Agent subject to a Set Aside Notice and the Collateral Agent
receives evidence satisfactory to it that such funds have been actually utilized
for capital expenditures (or contractually committed to be so utilized) within
180 days of the Collateral Agent's receipt of such funds. Such evidence may be
in the form of an Officer's Certificate from the Company. Any Net Cash Proceeds
subject to clause (z) which are not utilized (or contractually committed to be
utilized) within 180 days as required by the immediately preceding sentence
shall forthwith be applied in accordance with Section 7.05.

            (c) Dispositions of Substantially All Assets by a Non-Guarantor
Subsidiary. If a Subsidiary of the Company which is not a Guarantor receives
proceeds from a Disposition permitted pursuant to Section 5.05(c), the Company
shall (x) deliver to the Administrative Agent and the Trustee an Officer's
Certificate stating (and showing in reasonable detail the basis of calculation
thereof) the amount of the Net Cash Proceeds of such Disposition, and (y) apply
100% of such Net Cash Proceeds in the manner set forth in Section 7.05.

            Section 7.04 Casualty Insurance Proceeds. If Net Cash Proceeds are
received in any fiscal year as the result of a Casualty Event, (a) 85% of any
such Net Cash Proceeds received by the Company or any Guarantors shall be paid
to the Collateral Agent and applied in accordance with Section 7.05, and (b) 15%
of such Net Cash Proceeds shall be paid to the Company. Notwithstanding the
foregoing sentence, the Company shall be entitled to the first $40,000,000 of
Net Cash Proceeds that would otherwise be payable during any fiscal year to the
Collateral Agent (the "CASUALTY CUSHION"); provided that the Company has
delivered a notice, substantially in the form of Exhibit C, with respect thereto
and all of such amounts are utilized for replacement assets (or committed to be
so utilized) within 180 days. At the end of such 180 day period, the Company
shall deliver to the Collateral Agent an Officer's Certificate demonstrating
that the Casualty Cushion has been so utilized, such certificate to be
accompanied by appropriate invoices or other documentation. Any of the Casualty
Cushion not so invested or committed within 180 days shall be returned to the
Collateral Agent and applied in accordance with Section 7.05.

            Section 7.05 Application of Certain Net Cash Proceeds to Mandatory
Prepayments and Redemptions. All Net Cash Proceeds required to be applied in
accordance with this Article VII at any time shall be applied to A Loans and the
B Notes, pro rata, in accordance with the A Loan Portion of Mandatory
Prepayments/Redemptions and the B Note Portion of Mandatory
Prepayments/Redemptions.

                                     - 44 -
<PAGE>

            Section 7.06 Payments By Company/Guarantors. Unless otherwise
specifically provided, when the Company or any Guarantor is required to pay any
Net Cash Proceeds to the Administrative Agent or the Trustee pursuant to Article
VII, the Company or such Guarantor shall make such payment in immediately
available funds within three (3) Business Days after it receives such Net Cash
Proceeds.

                                  ARTICLE VIII
                        THE DEBT SERVICE RESERVE ACCOUNT

            Section 8.01 Funding the DSRA.

            (a) On or prior to the 30th day (or if such day is not a Business
Day, the next succeeding Business Day) following each date quarterly financial
statements are required to be delivered pursuant to Section 4.01(a), the Company
will, and will cause the Guarantors to, deposit into the DSRA the aggregate
amount of cash and Cash Equivalents (excluding amounts already held in the DSRA)
held by the Company and the Guarantors at the close of business on final day of
the most recently ended fiscal quarter, but only to the extent that such amount
is greater than $20,000,000; provided that neither the Company nor any Guarantor
shall have any obligation to deposit any cash or Cash Equivalents into the DSRA
on any date if the amount on deposit in the DSRA on such date is at least equal
to the aggregate scheduled amount of principal and interest due on the
Restructured Debt during the six month period immediately following such date
(determined assuming that the LIBOR rate on such date will remain constant
throughout such six month period).

            (b) On each Excess Cash Payment Date, the Company will, and will
cause the Guarantors to, deposit into the DSRA 100% of Excess Cash; provided
that neither the Company nor any Guarantor shall have any obligation to deposit
any Excess Cash into the DSRA on any date if the amount on deposit in the DSRA
on such date is at least equal to the aggregate scheduled amount of principal
and interest due on the Restructured Debt during the six month period
immediately following such date (determined assuming that the LIBOR rate on such
date will remain constant throughout such six month period).

            Section 8.02 Withdrawals from the DSRA.

The DSRA shall be pledged in favor of the A Lenders and the Trustee as security
for the Restructured Debt pursuant to the DSRA Pledge Agreement. Such
documentation shall contain, without limitation, the following terms:

                        1) the Company and the Guarantors may (whether or not an
            Event of Default then exists) withdraw funds from the DSRA upon
            delivery to the Collateral Agent of an Officer's Certificate,
            substantially in the form of Schedule 8.02, stating that one or more
            scheduled debt service payments on the Restructured Debt are due
            within five Business Days, and that the funds to be withdrawn
            constitute the minimum amount needed to make such debt service
            payments and to restore the aggregate cash balance of the Company
            and the

                                     - 45 -
<PAGE>

            Guarantors (not including the DSRA) to $20,000,000 after giving
            effect to such payments;

                        2) the Company and the Guarantors may (whether or not an
            Event of Default then exists, but, in any event, no more than once
            per calendar month) withdraw funds from the DSRA upon the delivery
            to the Collateral Agent of an Officer's Certificate, substantially
            in the form of Schedule 8.02, stating that the aggregate amount of
            cash and Cash Equivalents then held by the Company and the
            Guarantors outside of the DSRA is less than $20,000,000 and that the
            amount to be withdrawn is the minimum amount necessary to restore
            such aggregate amount to $20,000,000; and

                        3) the Collateral Agent may apply funds on deposit in
            the DSRA to payment of the Restructured Debt only upon a payment
            default on the Restructured Debt (other than a payment default
            caused solely by an acceleration of any of the Restructured Debt).

                                   ARTICLE IX
                          CERTAIN INTERCREDITOR ISSUES

            Section 9.01 Equal and Ratable Enhancement of A Loans and B Notes.

            (a) If the Administrative Agent or any A Lender shall receive from
the Company or any of the Company's Affiliates, in connection with any
modification, amendment, waiver or consent granted under the A Loan Documents,
any (i) fees (howsoever denominated), (ii) additional collateral as security for
such Obligations or (iii) additional guarantees securing such Obligations (any
consideration of the type described in clauses (i), (ii) or (iii), for purposes
of this clause (a), an "Enhancement"), then in each such case the Company or
such Affiliate shall grant to the B Noteholders, concurrently, the same
Enhancement on an equal and ratable basis with respect to any outstanding
Obligations of the Company and the Guarantors under the B Note Documents, based
on the aggregate principal amount of Restructured Debt outstanding at the time
such Enhancement is received.

            (b) If the Trustee or any B Noteholder shall receive from the
Company or any of the Company's Affiliates, in connection with any modification,
amendment, waiver or consent granted under the B Note Documents, any (i) fees
(howsoever denominated), (ii) additional collateral as security for such
Obligations or (iii) additional guarantees securing such Obligations (any
consideration of the type described in clauses (i), (ii) or (iii), for purposes
of this clause (b), an "Enhancement"), then in each such case, the Company or
such Affiliate shall grant to the A Lenders, concurrently, the same Enhancement
on an equal and ratable basis with respect to any outstanding Obligations of the
Company and the Guarantors under the A Loan Documents, based on the aggregate
principal amount of Restructured Debt outstanding at the time such Enhancement
is received.

                                     - 46 -
<PAGE>

            Section 9.02 Payments. If the Administrative Agent, the Trustee or
any A Lender shall receive, whether individually or on behalf of the A Lenders
or the B Noteholders, any amount in excess of the amounts to be received by such
Person pursuant to the terms of this Agreement (including, without limitation,
pursuant to Article VI or Article VII) the Administrative Agent, the Trustee, or
such A Lender, as the case may be, shall immediately (a) notify the
Administrative Agent, the Trustee, each A Lender and the Company in writing of
such fact, and (b) such parties shall promptly determine what adjustments and
payments are necessary so that each of the Creditors receive the proper amounts
in accordance with the terms of this Agreement (including, without limitation,
pursuant to Article VI or Article VII).

            Section 9.03 Collateral Voting Issues. Notwithstanding any provision
in any Restructuring Document to the contrary, the Collateral Agent shall not
take any action to (a) foreclose on the Collateral or (b) exercise any other
rights and remedies of the A Lenders or the B Noteholders, as applicable, under
the Security Documents, unless the Collateral Agent shall have received
instruction from the Required Creditors.

            Section 9.04 Sharing of Recoveries. Any amount recovered in respect
of the Obligations by any one or more of the Administrative Agent and the A
Lenders, on the one hand, or the Trustee and the B Noteholders, on the other, as
the result of any enforcement action whether by setoff or otherwise, shall be
shared with the other in accordance with Section 11.09 (b)(i) or Section
11.09(b)(ii), as the case may be.

                                   ARTICLE X
                        GUARANTEE OF A LOANS AND B NOTES

            Section 10.01 Guaranty. The Guaranteeing Parties hereby jointly and
severally guarantee to each Creditor, the Administrative Agent and the Trustee
(each, a "GUARANTEED PARTY" and, collectively, the "GUARANTEED PARTIES") the
prompt payment in full when due (whether at stated maturity, by acceleration or
otherwise) to such Guaranteed Party of the principal of and interest on the
Restructured Debt and all other amounts from time to time owing to such
Guaranteed Party by the Company under the Restructuring Documents (such
obligations being herein collectively called the "GUARANTEED OBLIGATIONS"). The
Guaranteeing Parties further jointly and severally agree that at the time any
Guaranteed Obligation becomes due (whether at stated maturity, by acceleration
or otherwise), the Guaranteeing Parties will promptly pay the same, in
accordance with Article XII and without any demand or notice to the Guaranteeing
Parties or the Company.

            Section 10.02 Obligations Unconditional. The obligations of the
Guaranteeing Parties under Section 10.01 are absolute and unconditional, joint
and several, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Company under this Agreement or any
other agreement or instrument referred to herein, or any substitution, release
or exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 10.02 that the obligations of the
Guaranteeing

                                     - 47 -
<PAGE>

Parties hereunder shall be absolute and unconditional, joint and several, under
any and all circumstances. Without limiting the generality of the foregoing, it
is agreed that the occurrence of any one or more of the following shall not
alter or impair the liability of the Guaranteeing Parties hereunder, which shall
remain absolute and unconditional as described above:

                  (i) at any time or from time to time, without notice to the
      Guaranteeing Parties, the time for any performance of or compliance with
      any of the Guaranteed Obligations shall be extended, or such performance
      or compliance shall be waived (other than, with respect to a Guaranteeing
      Party, the extension or waiver of an obligation of such Guaranteeing
      Party);

                  (ii) any of the acts mentioned in any of the provisions of
      this Agreement or any other agreement or instrument referred to herein
      shall be done or omitted;

                  (iii) the maturity of any of the Guaranteed Obligations shall
      be accelerated, or any of the Guaranteed Obligations shall be modified,
      supplemented or amended in any respect, or any right under this Agreement
      or any other agreement or instrument referred to herein shall be waived
      (other than, with respect to any Guaranteeing Party, the waiver,
      termination or release of an obligation of such Guaranteeing Party); or
      any other guarantee of any of the Guaranteed Obligations or any security
      therefor shall be released or exchanged in whole or in part or otherwise
      dealt with; or

                  (iv) any lien or security interest granted in favor of the
      Creditors as security for any of the Guaranteed Obligations shall fail to
      be perfected.

The Guaranteeing Parties hereby expressly waive (x) diligence, presentment,
demand of payment, protest and all notices whatsoever, and any requirement that
the Administrative Agent, the Trustee, or the Collateral Agent exhaust any
right, power or remedy or proceed against the Company under this Agreement or
any other agreement or instrument referred to herein, or against any other
Person under any other guarantee of, or security for, any of the Guaranteed
Obligations and (y) any right or benefit of orden, division and excusion that
might be available to it under Articles 2813, 2814, 2815, 2817, 2818, 2820,
2821, 2822, 2823, 2827, 2840, 2842, 2844, 2845, 2846, 2847, 2848, 2849 and other
related articles of the Codigo Civil Federal of Mexico and of the Codigo Civil
para el Distrito Federal and all other similar articles in the civil codes of
all the States of Mexico and agrees that the term "Guaranteed Obligations" shall
not be affected by the application of any such provisions of Mexican law.

            Section 10.03 Reinstatement. The obligations of the Guaranteeing
Parties under this Article X shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of the Company in respect
of the Guaranteed Obligations is rescinded or must be otherwise restored by any
holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and the Guaranteeing
Parties jointly and severally agree that they will indemnify each Guaranteed
Party or demand for

                                     - 48 -
<PAGE>

all reasonable costs and expenses (including, without limitation, the reasonable
fees of counsel) incurred by such Guaranteed Party in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law, provided that no Guaranteeing Party shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of such Guaranteed Party.

            Section 10.04 Subrogation. The Guaranteeing Parties hereby jointly
and severally agree with the Guaranteed Parties that until the payment and
satisfaction in full of all Guaranteed Obligations they shall not exercise any
right or remedy arising by reason of any performance by them of their guarantee
in Section 10.01, whether by subrogation or otherwise, against the Company or
any other guarantor of any of the Guaranteed Obligations or any security for any
of the Guaranteed Obligations.

            Section 10.05 Remedies. The Guaranteeing Parties jointly and
severally agree with the Guaranteed Parties that, as between the Guaranteeing
Parties and the Creditors, the obligations of the Company under this Agreement
may be declared to be forthwith due and payable as provided in the Restructuring
Documents for purposes of Section 10.01 notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Company and that, in the event of
such declaration (or such obligations being deemed to have become automatically
due and payable), such obligations (whether or not due and payable by the
Company) shall forthwith become due and payable by the Guaranteeing Parties for
purposes of Section 10.01.

            Section 10.06 Instrument for the Payment of Money. Each Guaranteeing
Party hereby acknowledges that the guarantee in this Article X constitutes an
instrument for the payment of money, and consents and agrees that any Guaranteed
Party, at its sole option, in the event of a default by such Guaranteeing Party
in the payment of any moneys due hereunder, shall have the right to move under
New York CPLR Section 3213.

            Section 10.07 Continuing Guarantee. The guarantee in this Article X
is a continuing guarantee, and shall apply to all Guaranteed Obligations
whenever arising.

            Section 10.08 General Limitation on Guarantee Obligations. In any
action or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Guaranteeing Party under Section
10.01 would otherwise be held or determined to be void, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under Section 10.01, then, notwithstanding any
other provision hereof to the contrary, the amount of such liability shall,
without any further action by such Guaranteeing Party, any Guaranteed Party or
any other Person, be automatically limited and reduced to the highest amount
that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.

                                     - 49 -
<PAGE>

                                   ARTICLE XI
                              THE COLLATERAL AGENT

            Section 11.01 Appointment of Collateral Agent, Powers and
Immunities. Each of the Administrative Agent, the A Lenders and the Trustee
hereby appoints and authorizes Deutsche Bank Trust Company Americas to act as
collateral agent with respect to Collateral located in the US, and Deutsche Bank
Mexico, S.A., Institucion de Banca Multiple, Trust Division, to act as
collateral agent with respect to all Collateral located in Mexico. References
herein to the "Collateral Agent" shall mean either or both of such collateral
agents, as the context may require. The Collateral Agent is hereby authorized
and instructed to (i) execute the Security Documents which have been negotiated
and/or prepared by the Administrative Agent, the A Lenders, the Trustee, the B
Noteholders or their respective counsel and (ii) act as the agent of the
Administrative Agent, the A Lenders, the Trustee and the B Noteholders hereunder
and under the Security Documents, with such powers as are conferred upon any one
or more of such Persons by the terms of this Agreement and the Security
Documents. The Collateral Agent (which term as used in this sentence and in
Section 11.05 shall include reference to the Collateral Agent's Affiliates and
its own and its Affiliates' officers, directors, employees and agents): (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Restructuring Documents, and shall not by reason
of this Agreement or any other Restructuring Document be a trustee for any
Creditor; (b) shall not be responsible to any Creditor for any recitals,
statements, representations or warranties contained in this Agreement or in any
other Restructuring Document, or in any certificate or other document referred
to or provided for in, or received by any of them under, this Agreement or any
other Restructuring Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Restructuring Document or any other document referred to or provided for herein
or therein or for any failure by the Company, any Guaranteeing Party or any
other Person to perform any of its obligations hereunder or thereunder; (c)
shall not, except to the extent expressly instructed by the Required Creditors
in writing be required to initiate or conduct any litigation or collection
proceedings hereunder or under the Security Documents; and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder or under
any other Restructuring Document or under any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith in good faith in reliance upon an officer certificate or opinion of
counsel, unless taking such action or omitting to take such action was grossly
negligent or constituted willful misconduct.

            Section 11.02 Duties.

            (a) The Collateral Agent shall not take any action to exercise any
rights or remedies that may be available to it under the Security Documents or
to foreclose or otherwise realize upon the Collateral for which it is agent
unless instructed to do so by the Required Creditors. Upon receiving such an
instruction the Collateral Agent shall take the actions requested and any other
actions reasonably incidental thereto. No enforcement action shall be withdrawn
or discontinued without authorization by the Required Creditors. The Collateral
Agent shall inform the Trustee and the Administrative Agent of any circumstance
materially and adversely affecting any Collateral, promptly after becoming aware
of such circumstance, and

                                     - 50 -
<PAGE>

may (but shall not be obligated to) undertake corrective action without
instruction from the Trustee and the Administrative Agent if it deems timely
action is required to address such adverse circumstance.

            (b) The Collateral Agent may not, without the prior consent of the
Administrative Agent and the Trustee, release any Lien or consent to any
modification, supplement or waiver under any of the Security Documents. The
Collateral Agent shall release any Lien encumbering Property that is the subject
of a Disposition (i) permitted by Section 5.05(a)(i), Section 5.05(a)(ii),
Section 5.05(b)(i) or Section 5.05(b)(ii) if it receives from the Company an
Officer's Certificate stating that such release is permitted by such sections at
such time, or (ii) permitted by Section 5.05(a)(iii), Section 5.05(a)(v),
Section 5.05(b)(iii) or Section 5.05(b)(iv) provided that it receives (x) from
the Company, an Officer's Certificate stating that the applicable requirements
of such provisions have been complied with in respect of such Disposition, and
(y) reasonable evidence verifying such compliance. Each of the Collateral Agent,
the Administrative Agent and the Trustee will from time to time duly execute and
deliver appropriate powers of attorney or other documents or instruments
necessary to release any Lien permitted to be released under this subsection
11.02(b) as promptly as possible after any permitted request by the Company or
any Guarantor.

            Section 11.03 Reliance by Collateral Agent. The Collateral Agent
shall be entitled to rely upon any written certification, notice or other
communication (including, without limitation, any thereof given by email or
telecopy) reasonably believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
of legal counsel, independent accountants and other experts selected by the
Collateral Agent. The Collateral Agent need not look into the authorization of
the Administrative Agent or the Trustee to give any instruction, but shall be
entitled to assume that such authorization exists, unless it has actual
knowledge to the contrary. As to any matters not expressly provided for by this
Agreement or any other Restructuring Document, the Collateral Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
thereunder in accordance with instructions given by the Required Creditors.

            Section 11.04 Defaults. The Collateral Agent shall be deemed not to
have knowledge or notice of the occurrence of a Default or an Event of Default
unless the Collateral Agent has received notice from the Administrative Agent,
the Trustee, the Company or any Guarantor specifying such a Default or an Event
of Default and stating that such notice is a "Notice of Default". In the event
that the Collateral Agent receives a notice of the occurrence of a Default or an
Event of Default, the Collateral Agent shall give prompt notice thereof to the
Administrative Agent and the Trustee. The Collateral Agent shall take such
action with respect to such Default or Event of Default as shall be directed by
the Required Creditors.

            Section 11.05 Rights as a Creditor. The Person at any time acting as
Collateral Agent may, in its individual capacity (but not as Collateral Agent),
hold Restructured Debt. With respect to any such holdings, such Person (a) shall
have the same rights and powers as any other Creditor and may exercise the same
as though it were not acting as the Collateral Agent (b) may accept deposits
from, lend money to, make investments in and generally engage in any kind of

                                     - 51 -
<PAGE>

banking, trust or other business with the Company or any Guarantor (and any of
their Subsidiaries or Affiliates) as if it were not acting as the Collateral
Agent and (c) may accept fees and other consideration from the Company and the
Guarantors for services in connection with this Agreement or otherwise without
having to account for the same to the Trustee or the Administrative Agent.

            Section 11.06 Resignation or Removal of Collateral Agent. The
Collateral Agent may resign at any time by giving notice thereof to the
Administrative Agent, the Trustee, and the Company. The Collateral Agent may be
removed at any time with or without cause by the Required Creditors. Upon any
such resignation or removal, the Required Creditors shall have the right to
appoint a successor Collateral Agent , with the consent of the Company (which
consent shall not be unreasonably withheld or delayed). Such resignation or
removal shall become effective on the earlier of (a) such time as the Required
Creditors appoint a successor agent as provided for above in this Section 11.06
and (b) the date 180 days after the date on which the Collateral Agent shall
have furnished notice of its resignation to the Administrative Agent, the
Trustee and the Company as provided above in this Section 11.06. Any Collateral
Agent that shall resign as contemplated by this Section 11.06 shall remit to the
successor Collateral Agent a pro rata portion of the fees that the resigning
Collateral Agent shall have been paid with respect to the year in which such
resignation shall have become effective for the period of such year that has not
yet elapsed. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring (or retired) Collateral Agent, and the retiring
Collateral Agent shall be discharged from its duties and obligations hereunder
(if not already discharged therefrom as provided above in this Section 11.06).
The fees payable by the Company to a successor Collateral Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Company and such successor. After any retiring Collateral Agent's resignation or
removal hereunder, the provisions of this Article XI shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Collateral Agent.

            Section 11.07 Fees of Collateral Agent. Without limiting the
provisions of Sections 14.02 and 14.03, the Company and each Guarantor shall be
liable, jointly and severally, for all fees of the Collateral Agent to the
extent separately agreed in writing.

            Section 11.08 Enforcement Proceeds Account. The Collateral Agent
shall create an account in the US (to be denominated an "Enforcement Proceeds
Account") and shall cause to be deposited therein all amounts realized by it as
a result of a foreclosure or other enforcement action brought with respect to
some or all of the Collateral for which it acts as agent. Funds in each such
account shall be invested, in the discretion of the Collateral Agent, in short
term obligations backed by the full faith and credit of the United States of
America or money market funds which invest solely in such obligations. The
Collateral Agent shall distribute funds in the Enforcement Proceeds Account (in
accordance with Section 11.09) not less often than quarterly; provided, that the
Collateral Agent shall not be required to distribute funds at any time if the
aggregate amount of funds in the Enforcement Proceeds Accounts and available for
distribution is less than $10,000,000 at such time. Notwithstanding the
foregoing, the Collateral Agent may

                                     - 52 -

<PAGE>

retain in its Enforcement Proceeds Account such reserves of the type
described in Section 11.09(a) as it reasonably deems necessary or appropriate to
the performance of its duties.

            Section 11.09 Distribution of Proceeds of Collateral.

            (a) The Collateral Agent shall distribute funds in its Enforcement
Proceeds Account in the following order of priority:

                  (i) First, to the Collateral Agent, to pay all amounts due to
      it hereunder and under the Security Documents for which it acts as agent,
      including payment of all fees and other compensation, all expenses and
      liabilities incurred, all advances made by it, and all costs of preserving
      or protecting the Collateral for which it acts as agent and of collection,
      including reasonable reserves to cover anticipated future costs of such
      nature;

                  (ii) Second, to pay any applicable taxes, in consultation with
      the Administrative Agent and the Trustee;

                  (iii) Third, ratably to the Administrative Agent and the
      Trustee to pay all amounts due and unpaid in respect of principal,
      premium, and interest, on the Restructured Debt, without preference or
      priority of any kind;

                  (iv) Fourth, ratably to the Administrative Agent and the
      Trustee to pay any other amounts owing to the Creditors under the
      Restructuring Documents; and

                  (v) Fifth, to the Company or such other party as a court of
      competent jurisdiction shall direct.

            (b) For purposes of such distributions, (i) any amounts received by
any holder of A Loans as a result of any enforcement action brought by it or the
Administrative Agent, whether by setoff or otherwise, shall be deemed to have
been distributed prematurely to such Person pursuant to clause (a)(iii) above
and the amount so recovered shall be deducted from the next distributions
otherwise payable to the Administrative Agent pursuant to Section 11.09(a) and
paid over to the Trustee so that the benefit of any such recovery shall be
shared ratably by all holders of Restructured Debt, and (ii) any amounts
received by any holder of B Notes as a result of any enforcement action brought
by it or the Trustee, whether by setoff or otherwise, shall be deemed to have
been distributed prematurely to such Person pursuant to clause (a)(iii) above
and the amount so recovered shall be deducted from the next distributions
otherwise payable to the Trustee pursuant to Section 11.09(a) and paid over to
the Administrative Agent, so that the benefit of any such recovery shall be
shared ratably by all holders of Restructured Debt.

            (c) The Collateral Agent shall give notice to the Administrative
Agent, the Trustee and the Guarantor Paying Agent of the time and amount of each
distribution made pursuant to this Section 11.09 or Section 7.06 to the extent
such distributions are received by the Collateral Agent.

                                     - 53 -
<PAGE>

                                  ARTICLE XII
                        GUARANTOR PAYING AGENT PROVISIONS

            Section 12.01 Appointment, Powers and Immunities. Each of the
Guaranteeing Parties hereby appoints and authorizes the Guarantor Paying Agent
to act as its paying agent hereunder and under the A Loan Documents and the B
Note Documents, with such powers as are specifically delegated to the Guarantor
Paying Agent by the terms of this Agreement and such other powers as are
reasonably incidental thereto. The Guarantor Paying Agent (which term as used in
this sentence shall include reference to its Affiliates' officers, directors,
employees and agents): (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Restructuring Documents,
and shall not by reason of this Agreement or any other Restructuring Document be
a trustee for any Guaranteeing Party; (b) shall not be responsible to the
Guaranteeing Parties for any recitals, statements, representations or warranties
contained in this Agreement or in any other Restructuring Document, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any other Restructuring Document, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Restructuring Document or any other document
referred to or provided for herein or therein or for any failure by the Company,
any Guarantor or any other Person to perform any of its obligations hereunder or
thereunder; and (c) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other Restructuring Document or under any
other document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own negligence or willful
misconduct.

            Section 12.02 Direct Payment; Allocation. Without limiting any
obligation of the Company to pay any amounts outstanding under the A Loans, the
B Notes and the other Restructuring Documents, the Guaranteeing Parties shall
make all scheduled principal and interest payments on the A Loans and the B
Notes, directly to the Guarantor Paying Agent (in such allocation among
themselves as the Guaranteeing Parties may determine from time to time) without
any requirement of demand, notice or presentment of any kind by the Guarantor
Paying Agent, the Administrative Agent, the Trustee, any A Lender or any B
Noteholder. Such amounts shall be paid by the Guaranteeing Parties to the
Guarantor Paying Agent at least one Business Day prior to the date each
scheduled payment is due, in immediately available funds; provided, however,
that the Guaranteeing Parties' obligation to pay such amounts under the A Loans
and the B Notes is not discharged until such amounts are delivered to the
Administrative Agent and to the Trustee in accordance with the next sentence
hereof. The Guarantor Paying Agent shall remit the amount of the respective
scheduled payments to the Administrative Agent and to the Trustee, as the case
may be, on the day such payments are due.

            Section 12.03 Reliance by Guarantor Paying Agent. The Guarantor
Paying Agent shall be entitled to rely upon any written certification, notice or
other communication (including, without limitation, any telecopy or e-mail)
reasonably believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper Person or Persons, and upon advice of legal
counsel, independent accountants and other experts selected by the Guarantor
Paying Agent.

                                     - 54 -
<PAGE>

            Section 12.04 Rights as a Creditor. The Person at any time acting as
Guarantor Paying Agent may, in its individual capacity (but not as Guarantor
Paying Agent), hold Restructured Debt. With respect to any such holdings, such
Person (a) shall have the same rights and powers as any other Creditor and may
exercise the same as though it were not acting as the Guarantor Paying Agent,
(b) may accept deposits from, lend money to, make investments in and generally
engage in any kind of banking, trust or other business with the Company or any
Guarantor (and any of their Subsidiaries or Affiliates) as if it were not acting
as the Guarantor Paying Agent and (c) may accept fees and other consideration
from the Company and the Guarantors for services in connection with this
Agreement or otherwise without having to account for the same to the Trustee or
the Administrative Agent, or any Guaranteeing Party.

            Section 12.05 Replacement of Guarantor Paying Agent. Any replacement
Guarantor Paying Agent shall be selected by the Guaranteeing Parties, but shall
be reasonably acceptable to the Administrative Agent and the Trustee, provided,
that any subsequent Guarantor Paying Agent shall not be an A Lender or a Person
that is an Affiliate (as such term is used for purposes of Section 5.07) of the
Company. Each of the Guaranteeing Parties agrees that for so long as any
Restructured Debt shall remain outstanding, it shall maintain a Guarantor Paying
Agent in accordance with this Article XII.

            Section 12.06 Fees of Guarantor Paying Agent. Without limiting the
provisions of sections 14.02 and 14.03, each Guaranteeing Party shall be liable,
jointly and severally, for all fees of the Guarantor Paying Agent incurred in
connection with this Agreement and the performance of its duties hereunder, to
the extent separately agreed in writing between the Guarantor Paying Agent and
the Guaranteeing Parties.

                                  ARTICLE XIII
                            SUBORDINATION OF C NOTES

            Section 13.01 Defined Terms. As used in this Article XIII, "Senior
Debt" shall mean all obligations created or evidenced by the A Loan Documents
and the B Note Documents, including any subsequent notes, instruments or
agreements of Indebtedness of any type or form whatsoever relating thereto; and
"Subordinated Debt" shall mean all Indebtedness evidenced or created by the C
Notes or the documents pursuant to which the C Notes were issued, and any
subsequent notes, instruments or agreements of Indebtedness of any type or form
whatsoever relating thereto.

            Section 13.02 General. The Subordinated Debt shall be and hereby is
subordinated and the payment of any principal, interest or other amount thereof
is deferred until the full and final payment in cash of the Senior Debt;
provided, however, that the following shall not be considered to be a payment of
Subordinated Debt for purposes of this Article XIII:

            (a) cancellation caused by the netting or return of capital of all
or a portion of the Subordinated Debt owed to a Subordinating Creditor which is
a Guarantor against Indebtedness that such Subordinating Creditor owes to the
Company; and

                                     - 55 -
<PAGE>

            (b) cancellation caused by the netting of the Subordinated Debt owed
to either Pipsamex or McKinley against Indebtedness that either Pipsamex or
McKinley owed to the Company immediately prior to the Closing Date; provided
that such netting (i) is completed within ten (10) Business Days after the
Closing Date and (ii) the aggregate principal amount of the netting of such
Subordinated Debt shall not exceed $5,000,000.

            Section 13.03 Remedies. The Subordinating Creditors will not take or
omit to take any action or assert any claim with respect to the Subordinated
Debt or otherwise which is inconsistent with the provisions of this Agreement.
Without limiting the foregoing, the Subordinating Creditors will not attempt to
assert, collect or enforce the Subordinated Debt or any part thereof until the
Senior Debt has been finally paid in full in cash. Until the Senior Debt has
been finally paid in full in cash, the Subordinating Creditors shall not have
any right of subrogation, reimbursement, restitution, contribution or indemnity
whatsoever from any assets of the Company or any guarantor of or provider of
collateral security for the Senior Debt. The Subordinating Creditors further
waive any and all rights with respect to marshalling.

            Section 13.04 Hold in Trust. The Subordinating Creditors will hold
in trust and immediately pay over to the Administrative Agent and the Trustee,
in the same form of payment received, with appropriate endorsements, for
application to the Senior Debt, any cash amount that the Subordinating Creditors
receive as a payment with respect to the Subordinated Debt, or any property
received as collateral for the Subordinated Debt.

            Section 13.05 Payments in Bankruptcy or Liquidation. In the event of
any case or proceeding, voluntary or involuntary, for the distribution, division
or application of all or part of the assets of the Company, whether such case or
proceeding be for the liquidation, dissolution or winding up of the Company, a
receivership, insolvency or bankruptcy case or proceeding, an assignment for the
benefit of creditors, or a concurso mercantil proceeding, the Administrative
Agent and the Trustee are each hereby irrevocably authorized to receive and
collect for the benefit of the Creditors any cash or other assets of the Company
distributed, divided or applied by way of dividend or payment, or any securities
issued on account of any Subordinated Debt, and apply such cash to, or to hold
such other assets or securities as collateral for, the Senior Debt, until all of
the Senior Debt shall have been paid in full in cash, rendering to the
Subordinating Creditors any surplus to which the Subordinating Creditors are
then entitled.

            Section 13.06 Subordinated Debt Voting Rights. By endorsing and
delivering its C Note to the Collateral Agent, each Subordinating Creditor
irrevocably conveys to the Collateral Agent all voting rights associated with
the C Notes, including, in the event of any proceeding, voluntary or
involuntary, for the distribution, division or application of all or part of the
assets of the Company (whether such case or proceeding be for the liquidation,
dissolution or winding up of the Company, a receivership, insolvency or
bankruptcy case or proceeding, an assignment for the benefit of creditors, or a
concurso mercantil proceeding), the right to file a proof of claim on behalf of
such Subordinating Creditor and to vote to accept or reject any plan of partial
or complete liquidation, reorganization, arrangement, composition or extension,
and such rights shall remain in full force and effect until all of the Senior
Debt shall have been paid in full in cash.

                                     - 56 -
<PAGE>

            Section 13.07 Further Assurances. Each Subordinating Creditor hereby
agrees, upon request of the Administrative Agent or the Trustee at any time and
from time to time, to execute such other documents or instruments, or take such
actions, as may be requested by the Administrative Agent or the Trustee further
to effectuate the terms of this Article XIII.

            Section 13.08 Modification or Sale of Subordinated Debt. The
Subordinating Creditors will not modify any of the terms of any of the
Subordinated Debt in a way that is adverse to the interests of the holders of
the Senior Debt. Except for the netting and capitalization referred to in
Section 13.02, no Subordinating Creditor will sell, transfer, pledge, assign,
hypothecate or otherwise dispose of any or all of the Subordinated Debt to any
Person.

            Section 13.09 Termination of Subordination. The terms of this
Article XIII shall continue in full force and effect, and the obligations and
agreements of the Subordinating Creditors and the Company hereunder shall
continue to be fully operative, until all of the Senior Debt shall have been
paid and satisfied in full in cash and such full payment and satisfaction shall
be final and not avoidable.

                                  ARTICLE XIV
                       SUBORDINATION OF INTERCOMPANY NOTES

            Section 14.01 Defined Terms. As used in this Article XIV, "Senior
Debt" shall mean all obligations created or evidenced by the A Loan Documents
and the B Note Documents, including any subsequent notes, instruments or
agreements of Indebtedness of any type or form whatsoever relating thereto; and
"Subordinated Debt" shall mean all Indebtedness evidenced or created by an
Intercompany Note.

            Section 14.02 General. The Subordinated Debt shall be and hereby is
subordinated and the payment of any principal, interest or other amount thereof
is deferred until the full and final payment in cash of the Senior Debt;
provided, however, that the following shall not be considered to be a payment of
Subordinated Debt for purposes of this Article XIV:

            (a) the payment of (i) non-cash interest to the Company or a
non-Guarantor, or (ii) principal, interest or other amounts to a Guarantor;

            (b) the cancellation by any Guarantor, by netting, return of capital
or capitalization, of all or a portion of the Subordinated Debt owed to another
Guarantor; and

            (c) the cancellation by the Company, by netting, return of capital
or capitalization, of all or a portion of the Subordinated Debt owed to the
Company by a Guarantor.

            Section 14.03 Remedies. The Subordinating Creditors will not take or
omit to take any action or assert any claim with respect to the Subordinated
Debt or otherwise which is inconsistent with the provisions of this Agreement.
Without limiting the foregoing, the Subordinating Creditors will not attempt to
assert, collect or enforce the Subordinated Debt or any part thereof until the
Senior Debt has been finally paid in full in cash. Until the Senior Debt

                                     - 57 -
<PAGE>

has been finally paid in full in cash, the Subordinating Creditors shall not
have any right of subrogation, reimbursement, restitution, contribution or
indemnity whatsoever from any assets of the Company or any guarantor of or
provider of collateral security for the Senior Debt. The Subordinating Creditors
further waive any and all rights with respect to marshalling.

            Section 14.04 Hold in Trust. The Subordinating Creditors will hold
in trust and immediately pay over to the Administrative Agent and the Trustee,
in the same form of payment received, with appropriate endorsements, for
application to the Senior Debt, any cash amount that the Subordinating Creditors
receive as a payment with respect to the Subordinated Debt, or any property
received as collateral for the Subordinated Debt.

            Section 14.05 Payments in Bankruptcy or Liquidation. In the event of
any case or proceeding, voluntary or involuntary, for the distribution, division
or application of all or part of the assets of the Company, whether such case or
proceeding be for the liquidation, dissolution or winding up of the Company, a
receivership, insolvency or bankruptcy case or proceeding, an assignment for the
benefit of creditors, or a concurso mercantil proceeding, the Administrative
Agent and the Trustee are each hereby irrevocably authorized to receive and
collect for the benefit of the Creditors any cash or other assets of the Company
distributed, divided or applied by way of dividend or payment, or any securities
issued on account of any Subordinated Debt, and apply such cash to, or to hold
such other assets or securities as collateral for, the Senior Debt, until all of
the Senior Debt shall have been paid in full in cash, rendering to the
Subordinating Creditors any surplus to which the Subordinating Creditors are
then entitled.

            Section 14.06 Subordinated Debt Voting Rights. By endorsing and
delivering its Intercompany Notes to the Collateral Agent, each Subordinating
Creditor conveys to the Collateral Agent all voting rights associated with such
Intercompany Notes, including, in the event of any proceeding, voluntary or
involuntary, for the distribution, division or application of all or part of the
assets of the Company (whether such case or proceeding be for the liquidation,
dissolution or winding up of the Company, a receivership, insolvency or
bankruptcy case or proceeding, an assignment for the benefit of creditors, or a
concurso mercantil proceeding), the right to file a proof of claim on behalf of
such Subordinated Creditor and to vote to accept or reject any plan of partial
or complete liquidation, reorganization, arrangement, composition or extension,
and such rights shall remain in full force and effect until all of the Senior
Debt shall have been paid in full in cash.

            Section 14.07 Further Assurances. Each Subordinating Creditor hereby
agrees, upon request of the Administrative Agent or the Trustee at any time and
from time to time, to execute such other documents or instruments, or take such
actions, as may be requested by the Administrative Agent or the Trustee further
to effectuate the terms of this Article XIV.

            Section 14.08 Modification or Sale of Subordinated Debt. The
Subordinating Creditors will not modify any of the terms of any of the
Subordinated Debt in a way that is adverse to the interests of the holders of
the Senior Debt. Except for the netting and capitalization referred to in
Section 14.02, no Subordinating Creditor will sell, transfer, pledge, assign,
hypothecate or otherwise dispose of any or all of the Subordinated Debt to any
Person.

                                     - 58 -
<PAGE>

            Section 14.09 Termination of Subordination. The terms of this
Article XIV shall continue in full force and effect, and the obligations and
agreements of the Subordinating Creditors and the Company hereunder shall
continue to be fully operative, until all of the Senior Debt shall have been
paid and satisfied in full in cash and such full payment and satisfaction shall
be final and not avoidable.

                                   ARTICLE XV
                                  MISCELLANEOUS

            Section 15.01 Reinstatement of Pre-Restructuring Claims. If, in
connection with any appeal of the approval of the Convenio, the A Loans, the B
Notes, the Guarantee by the Guaranteeing Parties, or any of the Security
Documents is determined to be unenforceable,

            (a) the A Loan Documents and the B Note Documents shall immediately
be deemed null and void ab initio, and all of the Pre-Restructuring Claims, the
Pre-Restructuring Documents and all Guarantees thereof shall be reinstated, and
shall immediately be in full force and effect (as between the Pre-Restructuring
Creditors, the Company and the Guaranteeing Parties that are parties thereto) as
if this Agreement and the other Restructuring Documents had never been signed,
and

            (b) each payment received by a Creditor under this Agreement, the A
Loan Documents and the B Note Documents, and the fair market value of the
Restructuring Equity received by such Creditor determined as of the
Reinstatement Effective Date, shall be applied by such Creditor to amounts owed
to it under the Pre-Restructuring Documents (in accordance with the terms of the
Pre-Restructuring Documents).

            Section 15.02 Amendments and Waivers. No amendment, modification or
waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by the Company, each Guaranteeing Party, the
Administrative Agent and the Trustee, (and, with respect to any matters
affecting the rights or obligations of the Collateral Agent or the Guarantor
Paying Agent, the affected party), and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Prior to the execution of any amendment, modification or waiver by the
Administrative Agent or the Trustee, the Administrative Agent and the Trustee
shall have received a written direction from the requisite A Lenders or relevant
B Noteholders, as applicable, to execute such amendment, modification, or
waiver, as required pursuant to the relevant provisions of the A Loan Documents
or B Note Documents, as applicable. Notwithstanding any provision in any
Restructuring Document to the contrary, Section 5.02 shall only be amended,
modified, or waived upon receipt by the Administrative Agent and the Trustee of
instructions from the Creditors representing 75% of the aggregate principal
amount of Restructured Debt then outstanding.

            Section 15.03 Costs and Expenses. The Company and each Guaranteeing
Party, jointly and severally, shall:

                                     - 59 -
<PAGE>

            (a) without duplication of the payment required by Section 2.01(m),
pay or reimburse the Administrative Agent, the Trustee, the Collateral Agent,
the Guarantor Paying Agent, each A Lender and each Steering Group member for all
reasonable and documented fees, costs and expenses (including any registration
or notary fees, costs and expenses) charged by or incurred by such Person in
connection with or arising out of the development, negotiation, preparation,
delivery and execution of (in each case, whether or not consummated) this
Agreement, the other Restructuring Documents or any other document prepared in
connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby (whether before or after Closing), including
reasonable fees and disbursements of counsel and financial advisors; and

            (b) pay or reimburse the Administrative Agent, the Trustee, the
Collateral Agent, the Guarantor Paying Agent, each A Lender, and one US and one
Mexican legal counsel for a committee representing a majority in outstanding
principal amount of the B Notes, all reasonable and documented fees, costs and
expenses (including any registration or notary fees, costs and expenses)
incurred by or charged to such Person in connection with or arising out of any
amendment, supplement, consent, waiver or modification of this Agreement, any
other Restructuring Document and any other documents prepared in connection
herewith or therewith (in each case, whether or not consummated), including
reasonable fees and disbursements of counsel and financial advisors to each A
Lender, the Administrative Agent, the Trustee and the Collateral Agent; provided
that no amounts shall be payable to any counsel to a committee of B Noteholders
in connection with an amendment or waiver where consent of the B Noteholders was
not required; and

            (c) pay or reimburse the Administrative Agent, the Trustee, the
Collateral Agent, the Guarantor Paying Agent, each A Lender, and one US and one
Mexican legal counsel for a committee representing a majority in outstanding
principal amount of the B Notes, all reasonable and documented costs and
expenses (including reasonable fees and disbursements of counsel and financial
advisors to each A Lender, the Administrative Agent, the Trustee and the
Collateral Agent and including any registration or notary fees, costs and
expenses) incurred by any such Person in connection with or arising out of the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Restructuring Document and the protection or
preservation of any right or claim by any such Person against the Company or any
Guaranteeing Party arising out of this Agreement or any other Restructuring
Document during the existence of an Event of Default or after acceleration of
any of the Restructured Debt (including in connection with any proposed or
actual "workout" or restructuring of the Restructured Debt).

            Section 15.04 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company and each Guaranteeing Party,
jointly and severally, shall indemnify and hold harmless the Administrative
Agent, the Trustee, the Collateral Agent, the Guarantor Paying Agent, each A
Lender, each Steering Group member and their respective Affiliates, directors,
officers, employees, counsel, financial advisors, agents and attorneys-in-fact
(each, an "INDEMNIFIED PERSON") from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, charges, expenses and

                                     - 60 -
<PAGE>

disbursements (including the current payment of all reasonable fees and
disbursements of counsel) of any kind or nature whatsoever that may at any time
be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of or in connection with (a) the execution, delivery,
enforcement or performance of this Agreement or any other Restructuring Document
or any other agreement, letter or instrument delivered in connection with the
transactions contemplated hereby or thereby or the consummation of the
transactions contemplated hereby or thereby, or (b) any actual or alleged
violation of any Applicable Law (including environmental laws) by or from any
Property subject to the Security Documents currently or formerly owned or
operated by the Company or any Guarantor (except to the extent pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
are first placed or released on such Property after the date on which the
Company or such Guarantor ceases to hold legal title to such property), or any
investigations or proceedings related in any way to such laws binding on the
Company or any Guarantor or any of such Property, or (c) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory (including
any investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"); provided, that such indemnity shall not, as to any
Indemnified Person, be available to the extent that such liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, charges, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnified Person (or its
Affiliates, directors, officers, employees, counsel, agents or
attorneys-in-fact). All amounts due under this Section 15.04 shall be payable
within 10 Business Days after demand therefor. The agreements in this Section
15.04 shall survive the resignation of the Administrative Agent, the Collateral
Agent, the Trustee or the Guarantor Paying Agent or the replacement of any A
Lender or Steering Group member (in each case, with respect to periods prior to
such resignation or replacement), the termination of any Restructuring Document
and the repayment, satisfaction or discharge of all other obligations under the
Restructuring Documents.

            Section 15.05 Limitation of Rights; No Waiver. No failure by the
Administrative Agent, the Trustee, the Collateral Agent, any A Lender or any B
Noteholder to exercise, and no delay by any such Person in exercising, any
right, remedy or power under this Agreement or any other Restructuring Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement or any other
Restructuring Document preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

            Section 15.06 Sharing of Information.

            (a) each of the Administrative Agent and the Trustee shall, from
time to time upon request, advise the other and the Collateral Agent of the
outstanding principal amount of A Loans or B Notes (as the case may be) and
accrued interest thereon, and

                                     - 61 -
<PAGE>

            (b) the Collateral Agent shall, from time to time upon request,
advise each of the Administrative Agent and the Trustee of the aggregate credit
balance of the DSRA.

            Section 15.07 Judgment Currency. The Company and each Guaranteeing
Party agrees that Dollars are the sole currency for the payment of all sums
payable in respect of the Restructured Debt. All indemnities to be paid under
this Agreement, shall be payable immediately when due in Dollars in the full
amount due, without deduction for any variation in any Rate of Exchange (as
defined below). The Company and the Guaranteeing Parties agree to indemnify any
Creditor against any losses incurred by such Creditor as a result of any
judgment or order being given or made for the amount due hereunder and such
judgment or order being expressed and paid in a currency (the "JUDGMENT
CURRENCY") other than Dollars and as a result of any variation as between (i)
the rate of exchange at which the Dollar amount is converted into Judgment
Currency (the "RATE OF EXCHANGE") and (ii) the Rate of Exchange at which the
Creditor is then able to purchase Dollars with the amount of the Judgment
Currency actually received by such Creditor. The indemnity set forth in this
Section 15.07 shall constitute a separate and independent obligation of the
Company and each Guaranteeing Party and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid.

            Section 15.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

            Section 15.09 Payments Set Aside. To the extent that the Company or
a Guaranteeing Party makes a payment to the Administrative Agent, the Trustee or
any Creditor, or the Administrative Agent, the Trustee, or any Creditor
exercises a right of set-off, and such payment or the proceeds of such set-off
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or otherwise required to be repaid to a trustee,
receiver or any other party in connection with any insolvency or similar
proceeding, then to the extent of any amounts recovered from the Administrative
Agent, the Trustee, or any Creditor or repaid to a trustee, receiver or other
party, the obligation or part thereof originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment had not
been made or such set-off had not occurred.

            Section 15.10 Notices.

            (a) Unless otherwise expressly provided herein, all notices,
directions, requests and other communications provided for hereunder shall be in
writing (including by facsimile transmission). All such written notices,
directions, requests and other communications shall be mailed, faxed or
delivered to the applicable address or facsimile number to the address or
facsimile number specified for such Person on Schedule 15.10 or to such other
address or facsimile number as shall be designated by such party in a notice to
the other parties.

            (b) All such notices, directions, requests and other communications
shall be deemed to be given or made upon the earlier to occur of (i) actual
receipt by the relevant party hereto, and (ii) (A) if delivered by hand or by
courier, when signed for by or on behalf of the

                                     - 62 -
<PAGE>

relevant party hereto, (B) if delivered by facsimile, when sent and receipt has
been confirmed by telephone or in writing.

            (c) The Administrative Agent and the Trustee shall be entitled to
rely and act upon any notice, direction, request or other communication believed
in good faith by such Person to have been given by or on behalf of the Company
or any Guaranteeing Party.

            Section 15.11 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that neither the Company nor
any Guaranteeing Party may assign or transfer any of its rights or obligations
under this Agreement or any other Restructuring Document without the prior
written consent of the Administrative Agent, the Trustee, the Collateral Agent
and the Guarantor Paying Agent.

            Section 15.12 Counterparts; Severability. This Agreement may be
executed in any number of separate counterparts, each of which, when so
executed, shall be deemed an original, and all of such counterparts taken
together shall be deemed to constitute one and the same instrument. If any
provision of this Agreement or any other Restructuring Document is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Agreement or such other Restructuring
Document shall not be affected or impaired thereby, and (b) the parties shall
endeavor in good faith to replace the illegal, invalid or unenforceable
provisions with valid provisions the same economic effect as such illegal,
invalid or unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

            Section 15.13 Waiver of Immunity. Each of the Company and each
Guaranteeing Party hereby irrevocably and unconditionally waives and agrees, not
to plead or claim in any legal action, suit or proceedings, from jurisdiction of
any court or from set-off or any legal process (whether service or notice,
attachment prior to judgment, attachment in aid of execution of a judgment,
execution of a judgment or otherwise) with respect to itself or any of its
property, whether or not held for its own account, immunity in respect of its
obligations under this Agreement and each other Restructuring Document. Without
limiting the foregoing, the Company and each Guaranteeing Party agrees that the
foregoing waiver shall be to the fullest extent permitted under the Foreign
Sovereign Immunities Act of 1976 of the United States and is intended to be
irrevocable for the purposes of such Act.

            Section 15.14 Use of English Language.

            (a) This Agreement, the A Loan Documents, the B Loan Documents and
the McKinley Pledge Agreement are made in the English language. One Spanish
language translation of each such Restructuring Document has been prepared at
the Company's expense and delivered pursuant to Section 2.01(k), and shall be
the agreed Spanish language translation thereof for all purposes. Such
translations and no other may be filed in one or more public registries in
Mexico or used in any proceedings in Mexico. For all purposes, the English
language version hereof and of the A Loan Documents, the B Loan Documents and
the

                                     - 63 -
<PAGE>

McKinley Pledge Agreement shall be the original instrument, and in all cases of
conflict between the English and the Spanish versions, the English version shall
control; provided, that with respect to the proceedings brought before a Mexican
court, the Spanish language version shall control.

            (b) All certificates, reports, notices, documents, financial
statements and other communications (excluding Mexican estatutos sociales and
powers-of-attorney) given or delivered pursuant to the Restructuring Documents
(other than the Security Documents) shall be in the English language only,
except as required by Mexican law (in which event English translations thereof
certified by a Responsible Officer of the Person delivering such certificate,
report, notice, document, financial statement or other communication shall be
provided upon which all parties hereto shall have the right to rely for all
purposes of the Restructuring Documents).

            Section 15.15 Survival. The obligations of the Company and the
Guaranteeing Parties under Sections 10.03, 11.05, 15.03, 15.04 and this Section
15.15 shall survive the repayment of the Restructured Debt and the termination
of the Restructuring Documents. In addition, each representation and warranty
made herein or pursuant hereto shall survive the making of such representation
and warranty. Such representations and warranties (to the extent made to such
Person) have been or will be relied upon by the Administrative Agent, the
Trustee, the Guarantor Paying Agent, and each Creditor, regardless of any
investigation made by the Administrative Agent, the Trustee, the Guarantor
Paying Agent, or any Creditor on their behalf.

            Section 15.16 Consent to Jurisdiction; Process Agent. Each of the
parties hereto hereby agrees that any suit, action or proceeding with respect to
this Agreement or any other Restructuring Document (other than those governed by
Mexican law) or any judgment entered by any court in respect of any thereof may
be brought in the Supreme Court of the State of New York, County of New York or
in the United States District Court for the Southern District of New York, as
the party commencing such suit, action or proceeding may elect in its sole
discretion; and each of the parties hereto hereby irrevocably submits to the
jurisdiction of such courts for the purpose of any such suit, action or
proceeding. Each of the parties hereto further submits, for the purpose of any
such suit, action, proceeding or judgment to the appropriate courts of its
domicile and to the appropriate courts located in the national capital of the
jurisdiction of the law under which such party is organized. In addition, the
Company and each Guaranteeing Party hereby further submits, for the purpose of
any such suit, action, proceeding or judgment, to the courts of the Federal
District of the United Mexican States. The Company and each Guaranteeing Party
hereby irrevocably appoint CT Corporation System (the "PROCESS AGENT"), with an
office on the Closing Date at 111 Eighth Avenue, 13th Floor, New York, New York
10011, U.S.A., as its agent to receive on its behalf service of copies of the
summons and complaint and any other process that may be served in any action or
proceeding brought in any New York state or federal court. Such service, to the
extent permitted by Applicable Law, may be made by mailing by certified mail or
delivering a copy of such process to the Company or Guaranteed Party, as the
case may be, in care of the Process Agent at the address specified above for the
Process Agent, and the Company and each Guaranteeing Party hereby irrevocably
authorizes and directs the Process Agent to accept such service on its behalf.
The Company and

                                     - 64 -
<PAGE>

each Guaranteeing Party also irrevocably consents, to the extent permitted by
Applicable Law, to such service upon it by the mailing by certified mail of
copies thereof by U.S. airmail to its address set forth in Schedule 15.10. So
long as the Company or any Guaranteeing Party is obligated under any
Restructuring Document, it will maintain a duly appointed agent in New York City
for the service of such process or summons. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by Applicable
Law. The parties hereto agree that a final judgment in any suit, 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 Applicable Law. Each of
the parties hereto irrevocably waive, to the fullest extent permitted by
Applicable Law, (a) any objection that any such party may now or hereafter have
to the laying of venue of any action or proceeding with respect to the
Restructuring Documents (other than the Security Documents) in the Federal
Courts of the United States for the Southern District of New York, or the
Supreme Court of the State of New York, County of New York, (b) any claim that
any such action or proceeding brought in any such court has been brought in an
inconvenient forum and (c) their rights to bring an action or proceeding in any
other jurisdiction to which they might be entitled. The Company and each
Guaranteeing Party hereby also irrevocably waives, to the fullest extent
permitted by Applicable Law, the right to demand that the Administrative Agent,
the Trustee, the Guarantor Paying Agent, or a Creditor post a performance bond
or guaranty in any action or proceeding initiated against the Company or any
Guaranteeing Party.

            Section 15.17 Waiver of Jury Trial. EACH OF THE PARTIES HERETO
EXPRESSLY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER RESTRUCTURING DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.

            Section 15.18 Releases. The Company and each Guaranteeing Party, on
behalf of itself and its Subsidiaries and Affiliates hereby releases and forever
discharges each Creditor, each of their respective Affiliates, and each member
of any steering or similar committee of creditors of the Company and each of
their respective individual, joint or mutual, past, present, and future
Affiliates, stockholders, controlling persons, directors, officers, employees,
counsel, subsidiaries, successors and assigns, in each case from any and all
claims, demands, proceedings, causes of action, orders, obligations, contracts,
agreements, debts, Liens, and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, which each of such parties
now has, has ever had or may hereafter have against any Person so released and
discharged on account of or arising out of any matter, cause or event occurring
contemporaneously with or prior to the Closing Date, relating to, arising out
of, or in connection with, the Pre-Restructuring Claims, the Pre-Restructuring
Documents or the Company and its Affiliates. Each Creditor, on behalf of itself
and its Affiliates, hereby releases and forever discharges the Company, the
Guaranteeing Parties and each member of any steering or similar committee of
creditors of the Company and each of their respective individual, joint or
mutual, past, present, and future Affiliates, stockholders, controlling persons,
directors, officers, employees, counsel, subsidiaries, successors and assigns,
in each case from any and all claims, demands, proceedings, causes of action,
orders, obligations, contracts, agreements, debts, Liens,

                                     - 65 -
<PAGE>

and liabilities whatsoever, whether known or unknown, suspected or unsuspected,
both at law and in equity, which each of such parties now has, has ever had or
may hereafter have against any Person so released and discharged on account of
or arising out of any matter, cause or event occurring contemporaneously with or
prior to the Closing Date, relating to, arising out of, or in connection with,
the Pre-Restructuring Claims, the Pre-Restructuring Agreements or the Company
and its Affiliates. Notwithstanding the foregoing, nothing contained in this
Agreement shall operate to release any obligations of any party under the
Restructuring Documents.

      [Remainder of page intentionally blank; next page is signature page.]

                                     - 66 -
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Common
Agreement to be duly executed and delivered by their proper and duly executed as
of the date first written above.

                                 CORPORACION DURANGO, S.A. DE C.V.



                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Chief Financial Officer



                                 COMPANIA PAPELERA DE ATENQUIQUE, S.A. DE C.V.,
                                 as Guarantor and Subordinating Creditor


                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact



                                 PONDEROSA INDUSTRIAL DE MEXICO, S.A. DE C.V.,
                                 as Guarantor



                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact



                                 EMPAQUES DE CARTON TITAN, S.A. DE C.V.,
                                 as Guarantor and Subordinating Creditor

                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact



                                 INDUSTRIAS CENTAURO, S.A. DE C.V.,
                                 as Guarantor

                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact




<PAGE>

                                 ENVASES Y EMPAQUES DE MEXICO, S.A., DE C.V.,
                                 as Guarantor and Subordinating Creditor



                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact




                                 ADMINISTRACION CORPORATIVA DE DURANGO, S.A.
                                 DE C.V., as Guarantor and Subordinating
                                 Creditor



                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact


                                 CARTONPACK, S.A. DE C.V., as Guarantor




                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact



                                 COMPANIA NORTEAMERICANA DE INVERSIONES EN
                                 CELULOSA Y PAPEL, S.A. DE C.V., as Additional
                                 Guarantor and Subordinating Creditor



                                 By: /s/ Teresa Fernandez Escarzaga
                                     ------------------------------------
                                     Name:  Teresa Fernandez Escarzaga
                                     Title: Attorney in Fact



                                 DURANGO INTERNACIONAL, S.A. DE C.V., as
                                 Additional Guarantor and Subordinating Creditor


                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact

<PAGE>

                                 DURANGO INTERNATIONAL, INC., as Additional
                                 Guarantor and Subordinating Creditor



                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Chief Financial Officer



                                 RECICLAJES CENTAURO, S.A. DE C.V., as
                                 Additional Guarantor



                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact



                                 PORTEADORES DE DURANGO, S.A. DE C.V., as
                                 Additional Guarantor and Subordinating Creditor



                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Chief Financial Officer


                                 GRUPO PIPSAMEX, S.A. DE C.V., as Subordinating
                                 Creditor



                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Attorney in Fact



                                 DURANGO MCKINLEY PAPER COMPANY, as
                                 Subordinating Creditor


                                 By: /s/ Mayela Rincon de Velasco
                                     ------------------------------------
                                     Name:  Mayela Rincon de Velasco
                                     Title: Treasurer

<PAGE>

                                 LAW DEBENTURE TRUST COMPANY OF NEW YORK, as
                                 Trustee



                                 By: /s/ Patrick J. Healy
                                     ------------------------------------
                                     Name:  Patrick J. Healy
                                     Title: Vice President
<PAGE>

                                 DEUTSCHE BANK TRUST COMPANY AMERICAS, as
                                 Collateral Agent



                                 By: /s/ Wanda Camacho
                                     ------------------------------------
                                     Name:  Wanda Camacho
                                     Title: Vice President
<PAGE>

                                 DEUTSCHE BANK MEXICO, S.A., INSTITUCION DE
                                 BANCA MULTIPLE, DIVISION FIDUCIARIA, as
                                 Collateral Agent



                                 By: /s/ Jesus Miguel Escudero Basurto
                                     ------------------------------------
                                     Name:  Jesus Miguel Escudero Basurto
                                     Title: Trustee Delegate

<PAGE>

                                 DEUTSCHE BANK TRUST COMPANY AMERICAS, as
                                 Guarantor Paying Agent



                                 By: /s/ Wanda Camacho
                                     ------------------------------------
                                     Name:  Wanda Camacho
                                     Title: Vice President

<PAGE>

                                 THE BANK OF NEW YORK, as Administrative Agent




                                 By: /s/ Walter Salvatori
                                     ------------------------------------
                                     Name:  Walter Salvatori
                                     Title: Vice President
<PAGE>

                                 BANCO NACIONAL DE MEXICO, SOCIEDAD ANONIMA,
                                 INTEGRANTE DEL GRUPO FINANCIERO BANAMEX, as
                                 an A Lender



                                 By: /s/ Leonor Cues
                                     ------------------------------------
                                     Name:  Leonor Cues
                                     Title: Apoderado



                                 By: /s/ Gerardo Hernandez Amero
                                     ------------------------------------
                                     Name:  Gerardo Hernandez Amero
                                     Title: Apoderado

<PAGE>

                                 CITIBANK INTERNATIONAL PLC, as an A Lender


                                 By: /s/ [Illegible]
                                     ------------------------------------
                                     Name:  [Omitted]
                                     Title: [Omitted]
<PAGE>

                                 BANC OF AMERICA SECURITIES LIMITED, as an A
                                 Lender


                                 By: /s/ Eric Clause
                                     -----------------------------------------
                                 Name:  Eric Clause
                                 Title: Principal

<PAGE>

                                 JPMORGAN CHASE BANK, N.A., as an A Lender

                                 By: /s/ Monochere V. Alamgar
                                     -----------------------------------------
                                 Name:  Monochere V. Alamgar
                                 Title: Vice President


<PAGE>

                                 CALIFORNIA COMMERCE BANK, as an A Lender



                                 By: /s/ Martin K. Breidspecher
                                     -----------------------------------------
                                 Name:  Martin K. Breidspecher
                                 Title: Senior Vice President



                                 By: /s/ Jorge A. Figueroa
                                     -----------------------------------------
                                 Name:  Jorge A. Figueroa
                                 Title: Senior Vice President

<PAGE>

                                 DEUTSCHE BANK, A.G., NEW YORK BRANCH, as an A
                                 Lender

                                 By: /s/ Jay Hopkins
                                     -----------------------------------------
                                 Name:  Jay Hopkins
                                 Title: Assistant Vice President


                                 By: /s/ John Pineiro
                                     -----------------------------------------
                                 Name:  John Pineiro
                                 Title: Director