Document:

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                                                                    EXHIBIT 10.2

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                             GENESEE & WYOMING INC.

                  $75,000,000 4.85% Series 2004-A Senior Notes,
                              due November 1, 2011

                                ----------------

                             NOTE PURCHASE AGREEMENT

                                ----------------

                          DATED AS OF NOVEMBER 12, 2004

================================================================================

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                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION                                            HEADING                                                     PAGE
<S>                    <C>                                                                                     <C>
SECTION 1.             AUTHORIZATION OF NOTES; DESCRIPTION OF NOTES.........................................     1

SECTION 2.             SALE AND PURCHASE OF NOTES...........................................................     1
       Section 2.1.    Series 2004-A Notes..................................................................     1
       Section 2.2.    Additional Series of Notes...........................................................     2
       Section 2.3.    Subsidiary Guaranty..................................................................     3

SECTION 3.             CLOSING..............................................................................     4

SECTION 4.             CONDITIONS TO CLOSING................................................................     4
       Section 4.1.    Representations and Warranties.......................................................     5
       Section 4.2.    Performance; No Default..............................................................     5
       Section 4.3.    Compliance Certificates..............................................................     5
       Section 4.4.    Opinions of Counsel..................................................................     5
       Section 4.5.    Purchase Permitted by Applicable Law, Etc............................................     6
       Section 4.6.    Related Transactions.................................................................     6
       Section 4.7.    Payment of Special Counsel Fees......................................................     6
       Section 4.8.    Private Placement Number.............................................................     6
       Section 4.9.    Changes in Corporate Structure.......................................................     6
       Section 4.10.   Subsidiary Guaranty..................................................................     7
       Section 4.11.   Proceedings and Documents............................................................     7
       Section 4.12.   Funding Instructions.................................................................     7
       Section 4.13.   Bank Credit Agreement................................................................     7

SECTION 5.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................     7

       Section 5.1.    Organization; Power and Authority....................................................     7
       Section 5.2.    Authorization, Etc...................................................................     7
       Section 5.3.    Disclosure...........................................................................     8
       Section 5.4.    Organization and Ownership of Shares of Subsidiaries; Affiliates.....................     8
       Section 5.5.    Financial Statements.................................................................     9
       Section 5.6.    Compliance with Laws, Other Instruments, Etc.........................................     9
       Section 5.7.    Governmental Authorizations, Etc.....................................................     9
       Section 5.8.    Litigation; Observance of Agreements, Statutes and Orders............................     9
       Section 5.9.    Taxes................................................................................    10
       Section 5.10.   Title to Property; Leases............................................................    10
       Section 5.11.   Licenses, Permits, Etc...............................................................    10
       Section 5.12.   Compliance with ERISA................................................................    11
       Section 5.13.   Private Offering by the Company......................................................    11
</TABLE>

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<TABLE>
<S>                    <C>                                                                                     <C>
       Section 5.14.   Use of Proceeds; Margin Regulations..................................................    12
       Section 5.15.   Existing Debt; Future Liens..........................................................    12
       Section 5.16.   Foreign Assets Control Regulations, Etc..............................................    12
       Section 5.17.   Status under Certain Statutes........................................................    13
       Section 5.18.   Environmental Matters................................................................    13
       Section 5.19.   Notes Rank Pari Passu................................................................    13

SECTION 6.             REPRESENTATIONS OF THE PURCHASER.....................................................    13

       Section 6.1.    Purchase for Investment..............................................................    13
       Section 6.2.    Accredited Investor..................................................................    14
       Section 6.3.    Source of Funds......................................................................    14

SECTION 7.             INFORMATION AS TO COMPANY............................................................    15

       Section 7.1.    Financial and Business Information...................................................    15
       Section 7.2.    Officer's Certificate................................................................    18
       Section 7.3.    Inspection...........................................................................    18

SECTION 8.             PAYMENT OF THE NOTES.................................................................    19

       Section 8.1.    Required Prepayments.................................................................    19
       Section 8.2.    Optional Prepayments with Make-Whole Amount..........................................    19
       Section 8.3.    Allocation of Partial Prepayments....................................................    19
       Section 8.4.    Maturity; Surrender, Etc.............................................................    19
       Section 8.5.    Purchase of Notes....................................................................    20
       Section 8.6.    Make-Whole Amount for the Series 2004-A Notes........................................    20

SECTION 9.             AFFIRMATIVE COVENANTS................................................................    21

       Section 9.1.    Compliance with Law..................................................................    21
       Section 9.2.    Insurance............................................................................    22
       Section 9.3.    Maintenance of Properties............................................................    22
       Section 9.4.    Payment of Taxes and Claims..........................................................    22
       Section 9.5.    Corporate Existence, Etc.............................................................    22
       Section 9.6.    Designation of Subsidiaries..........................................................    22
       Section 9.7.    Notes to Rank Pari Passu.............................................................    23
       Section 9.8.    Additional Subsidiary Guarantors.....................................................    23

SECTION 10.            NEGATIVE COVENANTS...................................................................    24

       Section 10.1.   Consolidated Debt to Consolidated Total Capitalization...............................    24
       Section 10.2.   Priority Debt........................................................................    24
       Section 10.3.   Fixed Charges Coverage Ratio.........................................................    24
       Section 10.4.   Limitation on Liens..................................................................    24
       Section 10.5.   Sales of Asset.......................................................................    26
       Section 10.6.   Merger and Consolidation.............................................................    27
       Section 10.7.   Transactions with Affiliates.........................................................    28
       Section 10.8.   Nature of Business...................................................................    28
</TABLE>

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<TABLE>
<S>                    <C>                                                                                     <C>
SECTION 11.            EVENTS OF DEFAULT....................................................................    28

SECTION 12.            REMEDIES ON DEFAULT, ETC.............................................................    31

       Section 12.1.   Acceleration.........................................................................    31
       Section 12.2.   Other Remedies.......................................................................    31
       Section 12.3.   Rescission...........................................................................    31
       Section 12.4.   No Waivers or Election of Remedies, Expenses, Etc....................................    32

SECTION 13.            REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................................    32

       Section 13.1.   Registration of Notes................................................................    32
       Section 13.2.   Transfer and Exchange of Notes.......................................................    32
       Section 13.3.   Replacement of Notes.................................................................    33

SECTION 14.            PAYMENTS ON NOTES....................................................................    33

       Section 14.1.   Place of Payment.....................................................................    33
       Section 14.2.   Home Office Payment..................................................................    34

SECTION 15.            EXPENSES, ETC........................................................................    34

       Section 15.1.   Transaction Expenses.................................................................    34
       Section 15.2.   Survival.............................................................................    35

SECTION 16.            SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.........................    35

SECTION 17.            AMENDMENT AND WAIVER.................................................................    35

       Section 17.1.   Requirements.........................................................................    35
       Section 17.2.   Solicitation of Holders of Notes.....................................................    36
       Section 17.3.   Binding Effect, Etc..................................................................    36
       Section 17.4.   Notes Held by Company, Etc...........................................................    36

SECTION 18.            NOTICES..............................................................................    36

SECTION 19.            REPRODUCTION OF DOCUMENTS............................................................    37

SECTION 20.            CONFIDENTIAL INFORMATION.............................................................    37

SECTION 21.            SUBSTITUTION OF PURCHASER............................................................    39

SECTION 22.            MISCELLANEOUS........................................................................    39

       Section 22.1.   Successors and Assigns...............................................................    39
       Section 22.2.   Payments Due on Non-Business Days....................................................    39
</TABLE>

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<TABLE>
<S>                    <C>                                                                                     <C>
       Section 22.3.   Severability.........................................................................    39
       Section 22.4.   Construction.........................................................................    40
       Section 22.5.   Counterparts.........................................................................    40
       Section 22.6.   Governing Law.........................................................................   40
</TABLE>

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<TABLE>
<S>                       <C>
SCHEDULE A           --   INFORMATION RELATING TO PURCHASERS

SCHEDULE B           --   DEFINED TERMS

SCHEDULE 4.9         --   Changes in Corporate Structure

SCHEDULE 5.4         --   Subsidiaries of the Company, Ownership of Subsidiary Stock

SCHEDULE 5.5         --   Financial Statements

SCHEDULE 5.11        --   Licenses, Permits, Etc.

SCHEDULE 5.15        --   Existing Debt

SCHEDULE 10.4        --   Existing Liens

SCHEDULE 10.7        --   Affiliate Transactions

EXHIBIT 1            --   Form of 4.85% Series 2004-A Senior Notes, due November 1, 2011

EXHIBIT 2.3          --   Form of Subsidiary Guaranty

EXHIBIT 4.4(a)       --   Form of Opinion of General Counsel to the Company

EXHIBIT 4.4(b)       --   Form of Opinion of Special Counsel to the Company

EXHIBIT 4.4(c)       --   Form of Opinion of Special Counsel to the Purchasers

EXHIBIT S            --   Form of Supplement to Note Purchase Agreement
</TABLE>

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<PAGE>

                             GENESEE & WYOMING INC.
                               66 FIELD POINT ROAD
                          GREENWICH, CONNECTICUT 06830

                  $75,000,000 4.85% SERIES 2004-A SENIOR NOTES,
                              DUE NOVEMBER 1, 2011

                                                                     Dated as of
                                                               November 12, 2004

TO THE PURCHASERS LISTED IN
      THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

      GENESEE & WYOMING INC., a Delaware corporation (the "Company"), agrees
with the Purchasers listed in the attached SCHEDULE A (the "Purchasers") to this
Note Purchase Agreement (this "Agreement") as follows:

SECTION 1. AUTHORIZATION OF NOTES; DESCRIPTION OF NOTES.

      The Company will authorize the issue and sale of the following Senior
Notes:

<TABLE>
<CAPTION>
                                        Aggregate Principal
    Issue               Series                 Amount                 Interest Rate             Maturity Date
------------        -------------       -------------------           -------------            ----------------
<S>                 <C>                 <C>                           <C>                      <C>
Senior Notes        Series 2004-A            $75,000,000                  4.85%                November 1, 2011
</TABLE>

      The Senior Notes described above (the "Series 2004-A Notes") together with
each Series of Additional Notes which may from time to time be issued pursuant
to the provisions of SECTION 2.2 are collectively referred to as the "Notes"
(such term shall also include any such notes issued in substitution therefor
pursuant to SECTION 13 of this Agreement). The Series 2004-A Notes shall be
substantially in the form set out in EXHIBIT 1, with such changes therefrom, if
any, as may be approved by the Purchasers and the Company. Certain capitalized
terms used in this Agreement are defined in SCHEDULE B; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement.

SECTION 2. SALE AND PURCHASE OF NOTES.

      Section 2.1. Series 2004-A Notes. Subject to the terms and conditions of
this Agreement, the Company will issue and sell to each Purchaser and each
Purchaser will purchase from the Company, at the Closing provided for in SECTION
3, the Series 2004-A Notes in the principal amount specified opposite such
Purchaser's name in SCHEDULE A at the purchase price

<PAGE>

of 100% of the principal amount thereof. The obligations of each Purchaser
hereunder are several and not joint obligations and each Purchaser shall have no
obligation and no liability to any Person for the performance or nonperformance
by any other Purchaser hereunder.

      Section 2.2. Additional Series of Notes. The Company may, from time to
time, in its sole discretion but subject to the terms hereof, issue and sell one
or more additional Series of its senior unsecured promissory notes under the
provisions of this Agreement pursuant to a supplement (a "Supplement")
substantially in the form of EXHIBIT S. Each additional Series of Notes (the
"Additional Notes") issued pursuant to a Supplement shall be subject to the
following terms and conditions:

            (i) each Series of Additional Notes, when so issued, shall be
      differentiated from all previous Series by sequential alphabetical
      designation inscribed thereon;

            (ii) Additional Notes of the same Series may consist of more than
      one different and separate tranches and may differ with respect to
      outstanding principal amounts, maturity dates, interest rates and
      premiums, if any, and price and terms of redemption or payment prior to
      maturity, but all such different and separate tranches of the same Series
      shall vote as a single class and constitute one Series;

            (iii) each Series of Additional Notes shall be dated the date of
      issue, bear interest at such rate or rates, mature on such date or dates,
      be subject to such mandatory and optional prepayment on the dates and at
      the premiums, if any, have such additional or different conditions
      precedent to closing, such representations and warranties and such
      additional covenants as shall be specified in the Supplement under which
      such Additional Notes are issued and upon execution of any such
      Supplement, this Agreement shall be amended (a) to reflect such additional
      covenants without further action on the part of the holders of the Notes
      outstanding under this Agreement, provided, that any such additional
      covenants shall inure to the benefit of all holders of Notes so long as
      any Additional Notes issued pursuant to such Supplement remain
      outstanding, and (b) to reflect such representations and warranties as are
      contained in such Supplement for the benefit of the holders of such
      Additional Notes in accordance with the provisions of SECTION 16;

            (iv) each Series of Additional Notes issued under this Agreement
      shall be in substantially the form of EXHIBIT 1 to EXHIBIT S hereto with
      such variations, omissions and insertions as are necessary or permitted
      hereunder;

            (v) the minimum principal amount of any Note issued under a
      Supplement shall be $100,000, except as may be necessary to evidence the
      outstanding amount of any Note originally issued in a denomination of
      $100,000 or more;

            (vi) all Additional Notes shall constitute Senior Debt of the
      Company and shall rank pari passu with all other outstanding Notes; and

                                      -2-
<PAGE>

            (vii) no Additional Notes shall be issued hereunder if at the time
      of issuance thereof and after giving effect to the application of the
      proceeds thereof, any Default or Event of Default shall have occurred and
      be continuing.

      The obligations of the Additional Purchasers to purchase any Additional
Notes shall be subject to the following conditions precedent, in addition to the
conditions specified in the Supplement pursuant to which such Additional Notes
may be issued:

            (a) Compliance Certificate. A duly authorized Senior Financial
      Officer of the Company shall execute and deliver to each Additional
      Purchaser and each holder of Notes an Officer's Certificate of the Company
      dated the date of issue of such Series of Additional Notes stating that
      such officer has reviewed the provisions of this Agreement (including any
      Supplements hereto) and setting forth the information and computations (in
      sufficient detail) required in order to establish whether after giving
      effect to the issuance of the Additional Notes and after giving effect to
      the application of the proceeds thereof, the Company is in compliance with
      the requirements of SECTIONS 10.1 through 10.5, inclusive, on such date
      (based upon the financial statements for the most recent fiscal quarter
      ended prior to the date of such certificate).

            (b) Execution and Delivery of Supplement. The Company and each such
      Additional Purchaser shall execute and deliver a Supplement substantially
      in the form of EXHIBIT S hereto.

            (c) Representations of Additional Purchasers. Each Additional
      Purchaser shall have confirmed in the Supplement that the representations
      set forth in SECTION 6 hereof are true with respect to such Additional
      Purchaser on and as of the date of issue of the Additional Notes.

            (d) Execution and Delivery of Guaranty Ratification. Provided a
      Collateral Release shall not have occurred, each Subsidiary Guarantor
      shall execute and deliver a Guaranty Ratification in the form attached to
      the Subsidiary Guaranty.

      Section 2.3. Subsidiary Guaranty. (a) The payment by the Company of all
amounts due with respect to the Notes and the performance by the Company of its
obligations under this Agreement will be absolutely and unconditionally
guaranteed by the Subsidiary Guarantors pursuant to the Subsidiary Guaranty
Agreement dated as of even date herewith, which shall be substantially in the
form of EXHIBIT 2.3 attached hereto, and otherwise in accordance with the
provisions of SECTION 9.8 hereof (the "Subsidiary Guaranty").

      (b) The holders of the Notes agree to discharge and release any Subsidiary
Guarantor from the Subsidiary Guaranty upon the written request of the Company,
provided that (i) such Subsidiary Guarantor has been released and discharged (or
will be released and discharged concurrently with the release of such Subsidiary
Guarantor under the Subsidiary Guaranty) as an obligor and guarantor under and
in respect of the Bank Credit Agreement and all other Debt of the Company that
ranks pari passu with the Notes and the Company so certifies to the holders of
the Notes in a certificate of a Responsible Officer, (ii) at the time of such
release and discharge,

                                      -3-
<PAGE>

the Company shall deliver a certificate of a Responsible Officer to the holders
of the Notes stating that no Default or Event of Default exists, and (iii) if
any fee or other form of consideration is given to any holder of Debt of the
Company expressly for the purpose of such release, holders of the Notes shall
receive equivalent consideration (a "Collateral Release").

      (c) If at any time the Company or any Subsidiary shall grant to the Bank
Lenders security of any kind or provide the Bank Lenders additional guaranties
or other credit support of any kind pursuant to the requirements of the Bank
Credit Agreement, then the Company or such Subsidiary shall grant to the holders
of the Notes the same security or guaranty so that the holders of the Notes
shall at all times be secured on an equal and pro rata basis with the Bank
Lenders. All such additional guaranties shall be given to the holders of the
Notes pursuant to SECTION 9.8 of this Agreement.

SECTION 3. CLOSING.

      The sale and purchase of the Series 2004-A Notes to be purchased by each
Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe
Street, Chicago, Illinois 60603 at 10:00 a.m. Chicago time, at a closing (the
"Closing") on November 12, 2004 or on such other Business Day thereafter on or
prior to November 30, 2004 as may be agreed upon by the Company and the
Purchasers (the "Closing Date"). On the Closing Date, the Company will deliver
to each Purchaser the Series 2004-A Notes to be purchased by such Purchaser in
the form of a single Series 2004-A Note (or such greater number of Series 2004-A
Notes in denominations of at least $100,000 as such Purchaser may request) dated
the date of the Closing Date and registered in such Purchaser's name (or in the
name of such Purchaser's nominee), against delivery by such Purchaser to the
Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available funds for the
account of the Company to Account Number 005125-7936, at Fleet Bank, Boston,
Massachusetts, ABA Number 011000138, in the Account Name of "Genesee & Wyoming
Inc." If, on the Closing Date, the Company shall fail to tender such Series
2004-A Notes to a Purchaser as provided above in this SECTION 3, or any of the
conditions specified in SECTION 4 shall not have been fulfilled to a Purchaser's
reasonable satisfaction, such Purchaser shall, at such Purchaser's election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
nonfulfillment.

SECTION 4. CONDITIONS TO CLOSING.

      The obligation of each Purchaser to purchase and pay for the Series 2004-A
Notes to be sold to such Purchaser at the Closing Date is subject to the
fulfillment to such Purchaser's reasonable satisfaction, prior to or on the
Closing Date, of the following conditions applicable to the Closing Date:

                                      -4-
<PAGE>

   Section 4.1. Representations and Warranties.

      (a) Representations and Warranties of the Company. The representations and
warranties of the Company in this Agreement shall be correct in all material
respects when made and at the time of the Closing Date.

      (b) Representations and Warranties of the Subsidiary Guarantors. The
representations and warranties of the Subsidiary Guarantors in the Subsidiary
Guaranty shall be correct in all material respects when made and at the time of
the Closing Date.

   Section 4.2. Performance; No Default. The Company and each Subsidiary
Guarantor shall have performed and complied with all agreements and conditions
contained in this Agreement and the Subsidiary Guaranty required to be performed
or complied with by the Company and each such Subsidiary Guarantor prior to or
on the Closing Date, and after giving effect to the issue and sale of the Series
2004-A Notes (and the application of the proceeds thereof as contemplated by
SECTION 5.14), no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by
SECTION 10 hereof had such Sections applied since such date.

   Section 4.3. Compliance Certificates.

      (a) Officer's Certificate of the Company. The Company shall have delivered
to such Purchaser an Officer's Certificate of the Company, dated the Closing
Date, certifying that the conditions specified in SECTIONS 4.1(a), 4.2 and 4.9
have been fulfilled.

      (b) Secretary's Certificate of the Company. The Company shall have
delivered to such Purchaser a certificate, dated the Closing Date, certifying as
to the resolutions attached thereto and other corporate proceedings relating to
the authorization, execution and delivery of the Series 2004-A Notes and this
Agreement.

      (c) Officer's Certificate of the Subsidiary Guarantors. Each Subsidiary
Guarantor shall have delivered to such Purchaser an Officer's Certificate of
such Subsidiary Guarantor, dated the Closing Date, certifying that the
conditions specified in SECTIONS 4.1(b), 4.2 and 4.9 have been fulfilled.

      (d) Secretary's Certificate of the Subsidiary Guarantors. Each Subsidiary
Guarantor shall have delivered to such Purchaser a certificate, dated the
Closing Date, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Subsidiary Guaranty.

   Section 4.4. Opinions of Counsel. Such Purchaser shall have received opinions
in form and substance satisfactory to such Purchaser, dated the Closing Date (a)
from Adam B. Frankel, Senior Vice President and General Counsel of the Company
and the Subsidiary Guarantors, covering the matters set forth in EXHIBIT 4.4(a)
and covering such other matters incident to the transactions contemplated hereby
as such Purchaser or such Purchaser's counsel may reasonably

                                      -5-
<PAGE>

request (and the Company hereby instructs its counsel to deliver such opinion to
such Purchaser), (b) from Simpson Thacher & Bartlett LLP, special counsel for
the Company and the Subsidiary Guarantors, covering the matters set forth in
EXHIBIT 4.4(b) and covering such other matters incident to the transactions
contemplated hereby as such Purchaser or such Purchaser's counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such opinion to
such Purchaser), and (c) from Chapman and Cutler LLP, the Purchasers' special
counsel in connection with such transactions, substantially in the form set
forth in EXHIBIT 4.4(c) and covering such other matters incident to such
transactions as such Purchaser may reasonably request. An opinion of local
counsel to the Company shall be provided only with respect to any Subsidiary
Guarantor that (i) is incorporated in a jurisdiction other than New York or
Delaware and (ii) is a Material Subsidiary; such opinion to be substantially in
the form of paragraphs 3, 4 and 5 of each of EXHIBITS 4.4(a) and (b) hereto.

      Section 4.5. Purchase Permitted by Applicable Law, Etc. On the Closing
Date, each purchase of Series 2004-A Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which each Purchaser is subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject any
Purchaser to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date hereof.
If requested by any Purchaser, such Purchaser shall have received an Officer's
Certificate from the Company certifying as to such matters of fact as such
Purchaser may reasonably specify to enable such Purchaser to determine whether
such purchase is so permitted.

      Section 4.6. Related Transactions. The Company shall have consummated the
sale of the entire principal amount of the Series 2004-A Notes scheduled to be
sold on the Closing Date pursuant to this Agreement.

      Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of SECTION 15.1, the Company shall have paid on or before the Closing
Date, the reasonable fees, reasonable charges and reasonable disbursements of
Chapman and Cutler LLP to the extent reflected in a statement of such counsel
rendered to the Company at least one (1) Business Day prior to the Closing Date.

      Section 4.8. Private Placement Number. A Private Placement Number issued
by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Series 2004-A Notes.

      Section 4.9. Changes in Corporate Structure. Neither the Company nor any
Subsidiary Guarantor shall have changed its jurisdiction of organization or,
except as reflected in SCHEDULE 4.9, been a party to any merger or
consolidation, or shall have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in SCHEDULE 5.5.

                                      -6-
<PAGE>

      Section 4.10. Subsidiary Guaranty. The Subsidiary Guaranty shall have been
duly authorized, executed and delivered by each Subsidiary Guarantor, shall
constitute the legal, valid and binding contract (subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law)) and agreement of each Subsidiary Guarantor
and such Purchaser shall have received a true, correct and complete copy
thereof.

      Section 4.11. Proceedings and Documents. All corporate or other
organizational proceedings in connection with the transactions contemplated by
this Agreement and all documents and instruments incident to such transactions
shall be satisfactory to such Purchaser and such Purchaser's special counsel,
and such Purchaser and such Purchaser's special counsel shall have received all
such counterpart originals or certified or other copies of such documents as
such Purchaser or such Purchaser's special counsel may reasonably request.

      Section 4.12. Funding Instructions. At least three (3) Business Days prior
to the date of the Closing, such Purchaser shall have received written
instructions executed by a Responsible Officer of the Company directing the
manner of the payment of funds and setting forth (a) the name and address of the
transferee bank, (b) such transferee bank's ABA number, (c) the account name and
number into which the purchase price for the Series 2004-A Notes is to be
deposited, and (d) the name and telephone number of the account representative
responsible for verifying receipt of such funds.

        Section 4.13. Bank Credit Agreement. The Bank Credit Agreement shall
have been duly authorized, executed and delivered by each party thereto and
shall be in full force and effect and such Purchaser shall have received a copy
of the Bank Credit Agreement, certified as true and correct by a Responsible
Officer of the Company.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      The Company represents and warrants to each Purchaser that:

      Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Series
2004-A Notes and to perform the provisions hereof and thereof.

      Section 5.2. Authorization, Etc. This Agreement and the Series 2004-A
Notes to be issued on the Closing Date have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof

                                      -7-
<PAGE>

each such Note will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by (i) applicable bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

      Section 5.3. Disclosure. The Company, through its agent, Banc of America
Securities LLC, has delivered to each Purchaser a copy of a Private Placement
Memorandum, dated October, 2004 (the "Memorandum"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business of the Company and its Subsidiaries. This
Agreement, the Memorandum, the documents, certificates or other writings
delivered to the Purchasers by or on behalf of the Company in connection with
the transactions contemplated hereby and the financial statements listed in
SCHEDULE 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made. Since December 31, 2003, there has been no change in the financial
condition, operations, business or properties of the Company or any of its
Restricted Subsidiaries except changes that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect. There is no
fact known to any Senior Financial Officer of the Company that would reasonably
be expected to have a Material Adverse Effect that has not been set forth herein
or in the Memorandum or in the other documents, certificates and other writings
delivered to each Purchaser by or on behalf of the Company specifically for use
in connection with the transactions contemplated hereby.

      Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) SCHEDULE 5.4 contains (except as noted therein) complete and
correct lists of the Company's Restricted Subsidiaries and Unrestricted
Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of
its capital stock or similar equity interests outstanding owned by the Company
and each other Subsidiary. The Company's Material Affiliates (other than
Subsidiaries) and the Company's directors and senior officers are set forth in
Section III of the Memorandum.

      (b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in SCHEDULE 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except Liens permitted under SECTION 10.4).

      (c) Each Subsidiary identified in SCHEDULE 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

                                      -8-
<PAGE>

      (d) No Restricted Subsidiary is a party to, or otherwise subject to, any
legal restriction or any agreement (other than this Agreement, the Bank Credit
Agreement and customary limitations imposed by corporate law statutes)
restricting the ability of such Restricted Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Company or any
of its Subsidiaries that owns outstanding shares of capital stock or similar
equity interests of such Subsidiary.

      Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on SCHEDULE 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such financial statements and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments).

      Section 5.6. Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Agreement and the Series 2004-A
Notes will not (a) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any other
material agreement or instrument to which the Company or any Subsidiary is bound
or by which the Company or any Subsidiary or any of their respective properties
may be bound or affected, (b) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or any
Subsidiary, or (c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.

      Section 5.7. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Series 2004-A Notes.

      Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits or proceedings pending or, to the knowledge of
the Company, threatened in writing against or affecting the Company or any
Restricted Subsidiary or any property of the Company or any Restricted
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.

      (b) Neither the Company nor any Restricted Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental

                                      -9-
<PAGE>

Laws) of any Governmental Authority, which default or violation, individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect.

      Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) the amount
of which is not individually or in the aggregate Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
federal, state or other taxes for all fiscal periods are adequate. The federal
income tax liabilities of the Company and its Subsidiaries have been audited by
the Internal Revenue Service and paid for all years up to and including the year
ended December 31, 1996. The statute of limitations has expired for all federal
income tax returns filed for all years up to and including the year ended
December 31, 2000.

      Section 5.10. Title to Property; Leases. The Company and its Restricted
Subsidiaries have good and sufficient title to their respective properties which
the Company and its Restricted Subsidiaries own or purport to own that
individually or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in SECTION 5.5 or
purported to have been acquired by the Company or any Restricted Subsidiary
after said date (except as sold or otherwise disposed of in the ordinary course
of business), in each case free and clear of Liens prohibited by this Agreement.
All leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.

      Section 5.11. Licenses, Permits, Etc. Except as disclosed in SCHEDULE
5.11,

            (a) the Company and its Restricted Subsidiaries own or possess all
      licenses, permits, franchises, authorizations, patents, copyrights,
      service marks, trademarks and trade names, or rights thereto, that
      individually or in the aggregate are Material, without known conflict with
      the rights of others, except for those conflicts that, individually or in
      the aggregate, would not have a Material Adverse Effect;

            (b) to the best knowledge of the Company, no product or service of
      the Company or any of its Restricted Subsidiaries infringes in any
      Material respect any license, permit, franchise, authorization, patent,
      copyright, service mark, trademark, trade name or other right owned by any
      other Person; and

            (c) to the best knowledge of the Company, there is no Material
      violation by any Person of any right of the Company or any of its
      Restricted Subsidiaries with respect to any patent, copyright, service
      mark, trademark, trade name or other right owned or used by the Company or
      any of its Restricted Subsidiaries.

                                      -10-
<PAGE>

      Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan and each employee benefit
plan as defined in Section 3(2) of ERISA (other than any Multiemployer Plan) in
compliance with all applicable laws except for such instances of noncompliance
as have not resulted in and would not reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3(3) of ERISA) and no event, transaction or condition has occurred or
exists that would reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect.

      (b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $500,000 in the aggregate for
all Plans. The term "benefit liabilities" has the meaning specified in Section
4001 of ERISA and the terms "current value" and "present value" have the meaning
specified in Section 3 of ERISA.

      (c) The Company and its ERISA Affiliates have not incurred any withdrawal
liabilities that remain unsatisfied (and are not subject to contingent
withdrawal liabilities) under Section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.

      (d) The expected post-retirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Company and its Subsidiaries is not Material.

      (e) The execution and delivery of this Agreement and the issuance and sale
of the Series 2004-A Notes hereunder will not involve a non-exempt prohibited
transaction under Section 406(a) of ERISA or in connection with which a tax
would be imposed pursuant to Section 4975(c)(1)(a)-(d) of the Code. The
representation by the Company in the first sentence of this SECTION 5.12(e) is
made in reliance upon and subject to the accuracy of each Purchaser's
representation in SECTION 6.3 as to the Source of the funds to be used to
acquire the Series 2004-A Notes by such Purchaser.

      Section 5.13. Private Offering by the Company. Neither the Company nor
anyone acting on the Company's behalf has offered the Series 2004-A Notes or the
Subsidiary Guaranty or any similar securities for sale to, or solicited any
offer to buy any of the same from, or otherwise approached or negotiated in
respect thereof with, any Person other than the Purchasers and not more than 30
other Institutional Investors, each of which has been offered the Series 2004-A
Notes and the Subsidiary Guaranty in connection with a private sale for
investment. Neither the

                                      -11-
<PAGE>

Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Series 2004-A Notes or the Subsidiary
Guaranty to the registration requirements of Section 5 of the Securities Act.

      Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Series 2004-A Notes to refinance existing
indebtedness of the Company and for general corporate purposes of the Company.
No part of the proceeds from the sale of the Series 2004-A Notes hereunder will
be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 5% of the value of the consolidated assets
of the Company and its Subsidiaries and the Company does not have any present
intention that margin stock will constitute more than 5% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.

      Section 5.15. Existing Debt; Future Liens. (a) Except as described
therein, SCHEDULE 5.15 sets forth a complete and correct list of all outstanding
Debt of the Company and its Restricted Subsidiaries as of September 30, 2004,
since which date there has been no Material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Debt of the
Company or its Restricted Subsidiaries. Neither the Company nor any Restricted
Subsidiary is in default, and no waiver of default is currently in effect, in
the payment of any principal or interest on any Debt of the Company or such
Restricted Subsidiary, and no event or condition exists with respect to any Debt
of the Company or any Restricted Subsidiary, that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to cause
such Debt to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.

      (b) Except as disclosed in SCHEDULE 5.15, neither the Company nor any
Restricted Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
SECTION 10.4.

      Section 5.16. Foreign Assets Control Regulations, Etc. Neither the sale of
the Series 2004-A Notes by the Company hereunder nor its use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto, or is in violation of any federal statute or
Presidential Executive Order, including without limitation Executive Order 13224
66 Fed. Reg. 49079 (September 25, 2001) (Blocking Property and Prohibiting
Transactions with Persons who Commit, Threaten to Commit or Support Terrorism).
The Company and its Subsidiaries are in compliance, in all material respects,
with the USA Patriot Act.

                                      -12-
<PAGE>

      Section 5.17. Status under Certain Statutes. Neither the Company nor any
Restricted Subsidiary is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, or is subject
to regulation under the Public Utility Holding Company Act of 1935, as amended,
or the Federal Power Act, as amended.

      Section 5.18. Environmental Matters. The Company does not have knowledge
of any liability and has not received any notice of any liability, and no
proceeding has been instituted raising any liability against the Company or any
of its Restricted Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them, or other assets, alleging
damage to the environment or any violation of any Environmental Laws, except, in
each case, such as would not reasonably be expected to result in a Material
Adverse Effect. Except as otherwise disclosed to each Purchaser in writing:

            (a) the Company does not have knowledge of any facts which would
      give rise to any liability, public or private, for violation of
      Environmental Laws or damage to the environment emanating from, occurring
      on or in any way related to real properties or to other assets now or
      formerly owned, leased or operated by the Company or its Restricted
      Subsidiaries or their use, except, in each case, such as would not
      reasonably be expected to result in a Material Adverse Effect;

            (b) neither the Company nor any of its Restricted Subsidiaries has
      stored any Hazardous Materials on real properties now or formerly owned,
      leased or operated by the Company or its Restricted Subsidiaries or has
      disposed of any Hazardous Materials in each case in a manner contrary to
      any Environmental Laws and in any manner that would reasonably be expected
      to result in a Material Adverse Effect; and

            (c) all buildings on all real properties now owned, leased or
      operated by the Company or any of its Restricted Subsidiaries are in
      compliance with applicable Environmental Laws, except where failure to
      comply would not reasonably be expected to result in a Material Adverse
      Effect.

      Section 5.19. Notes Rank Pari Passu. The obligations of the Company under
this Agreement and the Notes rank pari passu in right of payment with all other
senior unsecured Debt (actual or contingent) of the Company, including, without
limitation, all senior unsecured Debt of the Company described in SCHEDULE 5.15
hereto.

SECTION 6. REPRESENTATIONS OF THE PURCHASER.

      Section 6.1. Purchase for Investment. Each Purchaser represents that it is
purchasing the Series 2004-A Notes for its own account or for one or more
separate accounts maintained by it or for the account of one or more pension or
trust funds and not with a view to the distribution thereof, provided that the
disposition of such Purchaser's or such pension or trust funds' property shall
at all times be within such Purchaser's or such pension or trust funds' control.
Each Purchaser understands that the Series 2004-A Notes have not been registered
under the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such

                                      -13-
<PAGE>

registration nor such an exemption is required by law, and that the Company is
not required to register the Series 2004-A Notes.

      Section 6.2. Accredited Investor. Each Purchaser represents that it is an
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act acting for its own account (and not for
the account of others) or as a fiduciary or agent for others (which others are
also "accredited investors"). Each Purchaser further represents that such
Purchaser has had the opportunity to ask questions of the Company and received
answers concerning the terms and conditions of the sale of the Series 2004-A
Notes.

      Section 6.3. Source of Funds. Each Purchaser represents that at least one
of the following statements is an accurate representation as to each source of
funds (a "Source") to be used by it to purchase the Series 2004-A Notes to be
purchased by it hereunder:

            (a) the Source is an "insurance company general account" within the
      meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
      95-60 (issued July 12, 1995) and there is no employee benefit plan,
      treating as a single plan all plans maintained by the same employer (or
      affiliate thereof as defined in PTE 95-60) or employee organization, with
      respect to which the amount of the general account reserves and
      liabilities for all contracts held by or on behalf of such plan, exceeds
      ten percent (10%) of the total reserves and liabilities of such general
      account (exclusive of separate account liabilities) plus surplus as of the
      Closing Date, as set forth in the NAIC Annual Statement for such Purchaser
      most recently filed with such Purchaser's state of domicile; or

            (b) the Source is either (i) an insurance company pooled separate
      account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
      a bank collective investment fund, within the meaning of the PTE 91-38
      (issued July 12, 1991) and, except as such Purchaser prior to the
      execution and delivery of this Agreement has disclosed to the Company in
      writing pursuant to this paragraph (b), no employee benefit plan or group
      of plans maintained by the same employer or employee organization
      beneficially owns more than 10% of all assets allocated to such pooled
      separate account or collective investment fund; or

            (c) the Source constitutes assets of an "investment fund" (within
      the meaning of Part V of the QPAM Exemption) managed by a "qualified
      professional asset manager" or "QPAM" (within the meaning of Part V of the
      QPAM Exemption), no employee benefit plan's assets that are included in
      such investment fund, when combined with the assets of all other employee
      benefit plans established or maintained by the same employer or by an
      affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
      such employer or by the same employee organization and managed by such
      QPAM, exceed 20% of the total client assets managed by such QPAM, the
      conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
      neither the QPAM nor a person controlling or controlled by the QPAM
      (applying the definition of "control" in Section V(e) of the QPAM
      Exemption) owns a 5% or more interest in the Company and (i) the identity
      of such QPAM and (ii) the names of all employee benefit plans whose

                                      -14-
<PAGE>

      assets are included in such investment fund have been disclosed to the
      Company in writing pursuant to this paragraph (c) prior to the execution
      and delivery of this Agreement; or

            (d) the Source is a governmental plan; or

            (e) the Source does not include assets of any employee benefit plan,
      other than a plan exempt from the coverage of ERISA and Section 4975 of
      the Code; or

            (f) the Source is an insurance company separate account maintained
      solely in connection with the fixed contractual obligations of the
      insurance company under which the amounts payable, or credited, to any
      employee benefit plan (or its related trust) and to any participant or
      beneficiary of such plan (including any annuitant) are not affected in any
      manner by the investment performance of the separate account.

As used in this SECTION 6.3, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.

SECTION 7. INFORMATION AS TO COMPANY.

      Section 7.1. Financial and Business Information. The Company shall deliver
to each holder of Notes that is an Institutional Investor:

            (a) Quarterly Statements -- within sixty (60) days after the end of
      each quarterly fiscal period in each fiscal year of the Company (other
      than the last quarterly fiscal period of each such fiscal year),

                  (i) a consolidated balance sheet of the Company and its
            Subsidiaries as at the end of such quarter,

                  (ii) consolidated statements of income and cash flows of the
            Company and its Subsidiaries, for such quarter and (in the case of
            the second and third quarters) for the portion of the fiscal year
            ending with such quarter,

                  (iii) a consolidated balance sheet of the Company and its
            Restricted Subsidiaries as at the end of such quarter, and

                  (iv) consolidated statements of income and cash flows of the
            Company and its Restricted Subsidiaries, for such quarter and (in
            the case of the second and third quarters) for the portion of the
            fiscal year ending with such quarter,

      setting forth in each case in comparative form the figures for the
      corresponding periods in the previous fiscal year, all in reasonable
      detail, prepared in accordance with GAAP applicable to quarterly financial
      statements generally, and certified by a Senior Financial Officer of the
      Company as fairly presenting, in all material respects, the financial
      position

                                      -15-
<PAGE>

      of the companies being reported on and their results of operations and
      cash flows, subject to changes resulting from year-end adjustments,
      provided that filing with the Securities and Exchange Commission within
      the time period specified above the Company's Quarterly Report on Form
      10-Q prepared in compliance with the requirements therefor shall be deemed
      to satisfy the requirements of clauses (i) and (ii) of this SECTION
      7.1(a);

            (b) Annual Statements -- within one hundred five (105) days after
      the end of each fiscal year of the Company,

                  (i) a consolidated balance sheet of the Company and its
            Subsidiaries, as at the end of such year,

                  (ii) consolidated statements of income, changes in
            shareholders' equity and cash flows of the Company and its
            Subsidiaries, for such year,

                  (iii) a consolidated balance sheet of the Company and its
            Restricted Subsidiaries, as at the end of such year, and

                  (iv) consolidated statements of income and cash flows of the
            Company and its Restricted Subsidiaries, for such year,

      setting forth in each case in comparative form the figures for the
      previous fiscal year, all in reasonable detail, prepared in accordance
      with GAAP, and (A) in the case of the financial statements described in
      clauses (i) and (ii) of this SECTION 7.1(b), accompanied by an opinion
      thereon of independent certified public accountants of recognized national
      standing, which opinion shall state that such financial statements present
      fairly, in all material respects, the financial position of the companies
      being reported upon and their results of operations and cash flows and
      have been prepared in conformity with GAAP, and that the examination of
      such accountants in connection with such financial statements has been
      made in accordance with generally accepted auditing standards, and that
      such audit provides a reasonable basis for such opinion in the
      circumstances, provided that filing with the Securities and Exchange
      Commission within the time period specified above of the Company's Annual
      Report on Form 10-K for such fiscal year (together with the Company's
      annual report to shareholders, if any, prepared pursuant to Rule 14a-3
      under the Exchange Act) prepared in accordance with the requirements
      therefor shall be deemed to satisfy the requirements of clauses (i) and
      (ii) of this SECTION 7.1(b) and (b) in the case of the financial
      statements described in clauses (iii) and (iv) of this SECTION 7.1(b),
      certified by a Senior Financial Officer of the Company as fairly
      presenting, in all material respects, the financial position of the
      companies being reported on and their results of operations and cash
      flows, subject to changes resulting from year-end adjustments;

            (c) Other Reports -- promptly upon their becoming available and, to
      the extent applicable, one copy of all press releases and other statements
      made available generally by the Company or any Subsidiary to the public
      concerning developments that

                                      -16-
<PAGE>

      are Material (other than press releases and other statements filed with or
      furnished to the Securities and Exchange Commission);

            (d) Notice of Default or Event of Default -- promptly, and in any
      event within five (5) Business Days after a Responsible Officer becomes
      aware of the existence of any Default or Event of Default or that any
      Person has given any notice or taken any action with respect to a claimed
      default hereunder or that any Person has given any notice or taken any
      action with respect to a claimed default of the type referred to in
      SECTION 11(g), a written notice specifying the nature and period of
      existence thereof and what action the Company is taking or proposes to
      take with respect thereto;

            (e) ERISA Matters -- promptly, and in any event within five (5)
      Business Days after a Responsible Officer becomes aware of any of the
      following, a written notice setting forth the nature thereof and the
      action, if any, that the Company or an ERISA Affiliate proposes to take
      with respect thereto:

                  (i) with respect to any Plan, any reportable event, as defined
            in Section 4043(c) of ERISA and the regulations thereunder, for
            which notice thereof has not been waived pursuant to such
            regulations as in effect on the date thereof and where such
            reportable event would reasonably be expected to have a Material
            Adverse Effect; or

                  (ii) the taking by the PBGC of steps to institute, or the
            threatening by the PBGC of the institution of, proceedings under
            Section 4042 of ERISA for the termination of, or the appointment of
            a trustee to administer, any Plan, or the receipt by the Company or
            any ERISA Affiliate of a notice from a Multiemployer Plan that such
            action has been taken by the PBGC with respect to such Multiemployer
            Plan where the outcome of any such action could reasonably be
            expected to result in liability having a Material Adverse Effect; or

                  (iii) any event, transaction or condition that would result in
            the incurrence of any liability by the Company or any ERISA
            Affiliate pursuant to Title I or IV of ERISA or the imposition of a
            penalty or excise tax under the provisions of the Code relating to
            employee benefit plans, or the imposition of any Lien on any of the
            rights, properties or assets of the Company or any ERISA Affiliate
            pursuant to Title I or IV of ERISA or such penalty or excise tax
            provisions, if such liability or Lien, taken together with any other
            such liabilities or Liens then existing, would reasonably be
            expected to have a Material Adverse Effect;

            (f) Notices from Governmental Authority -- promptly, and in any
      event within thirty (30) days of receipt thereof, copies of any notice to
      the Company or any Subsidiary from any federal or state Governmental
      Authority relating to any violation or noncompliance with any order,
      ruling, statute or other law or regulation that would reasonably be
      expected to have a Material Adverse Effect;

                                      -17-
<PAGE>

            (g) Supplements -- promptly and in any event within ten (10)
      Business Days after the execution and delivery of any Supplement, a copy
      thereof;

            (h) Financial Information -- promptly, any financial statements not
      covered elsewhere by this SECTION 7.1 covering the Company and its
      Restricted Subsidiaries delivered to any lenders under the Bank Credit
      Agreement; and

            (i) Requested Information -- with reasonable promptness, such other
      data and information relating to the business, operations, affairs,
      financial condition, assets or properties of the Company or any of its
      Subsidiaries or relating to the ability of the Company to perform its
      obligations hereunder and under the Notes as from time to time may be
      reasonably requested by any such holder of Notes.

      Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to SECTION 7.1(a) or SECTION 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer of
the Company setting forth:

            (a) Covenant Compliance -- the information required in order to
      establish whether the Company was in compliance with the requirements of
      SECTION 10.1 through SECTION 10.5 hereof, inclusive, during the quarterly
      or annual period covered by the statements then being furnished (including
      with respect to each such Section, where applicable, the calculations of
      the maximum or minimum amount, ratio or percentage, as the case may be,
      permissible under the terms of such Sections, and the calculation of the
      amount, ratio or percentage then in existence); and

            (b) Event of Default -- a statement that such officer has reviewed
      the relevant terms hereof and such review shall not have disclosed the
      existence of any condition or event that then constitutes a Default or an
      Event of Default or, if any such condition or event exists, specifying the
      nature and period of existence thereof and what action the Company shall
      have taken or proposes to take with respect thereto.

      Section 7.3. Inspection. The Company shall permit the representatives of
each holder of Notes that is an Institutional Investor:

            (a) No Default -- if no Default or Event of Default then exists, at
      the expense of such holder and upon reasonable prior notice to the
      Company, to visit the principal executive office of the Company, to
      discuss the affairs, finances and accounts of the Company and its
      Subsidiaries with the Company's officers, and (with the consent of the
      Company, which consent will not be unreasonably withheld) its independent
      public accountants, and (with the consent of the Company, which consent
      will not be unreasonably withheld) to visit the other offices and
      properties of the Company and each Restricted Subsidiary, all at such
      reasonable times and as often as may be reasonably requested in writing;
      and

            (b) Default -- if a Default or Event of Default then exists, at the
      expense of the Company, to visit and inspect any of the offices or
      properties of the Company or any

                                      -18-
<PAGE>

      Restricted Subsidiary, to examine all their respective books of account,
      records, reports and other papers, to make copies and extracts therefrom,
      and to discuss their respective affairs, finances and accounts with their
      respective officers and, with the Company present, independent public
      accountants (and by this provision the Company authorizes said accountants
      to discuss the affairs, finances and accounts of the Company and its
      Subsidiaries), all at such times and as often as may be reasonably
      requested.

SECTION 8. PAYMENT OF THE NOTES.

      Section 8.1. Required Prepayments. The entire unpaid principal amount of
the Notes shall become due and payable on November 1, 2011.

      Section 8.2. Optional Prepayments with Make-Whole Amount. The Company may,
at its option, upon notice as provided below, prepay at any time all, or from
time to time any part of, the Notes of any Series, in an amount not less than
$2,500,000 in aggregate principal amount of the Notes of such Series to be
prepaid in the case of a partial prepayment (or such lesser amount as shall be
required to effect a partial prepayment resulting from an offer of prepayment
pursuant to SECTION 10.5), at 100% of the principal amount so prepaid, together
with interest accrued thereon to the date of such prepayment, plus the
Make-Whole Amount, if any, determined for the prepayment date with respect to
such principal amount of each Note then outstanding of the applicable Series to
be prepaid. The Company will give each holder of Notes written notice of each
optional prepayment under this SECTION 8.2 not less than thirty (30) days and
not more than sixty (60) days prior to the date fixed for such prepayment. Each
such notice shall specify such date, the aggregate principal amount of the Notes
of the applicable Series to be prepaid on such date, the principal amount of
each Note held by such holder to be prepaid (determined in accordance with
SECTION 8.3), and the interest to be paid on the prepayment date with respect to
such principal amount being prepaid, and shall be accompanied by a certificate
of a Senior Financial Officer of the Company as to the estimated respective
Make-Whole Amount, if any, due in connection with such prepayment (calculated as
if the date of such notice were the date of the prepayment), setting forth the
details of such computation. Two (2) Business Days prior to such prepayment, the
Company shall deliver to each holder of Notes of the Series to be prepaid a
certificate of a Senior Financial Officer of the Company specifying the
calculation of each such Make-Whole Amount as of the specified prepayment date.

      Section 8.3. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to the provisions of SECTION 8.2, the
principal amount of the Notes of the Series to be prepaid shall be allocated
among all of the Notes of such Series at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof. All
regularly scheduled partial prepayments made with respect to any Series of
Additional Notes pursuant to any Supplement shall be allocated as provided
therein.

      Section 8.4. Maturity; Surrender, Etc. In the case of each prepayment of
Notes pursuant to this SECTION 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,

                                      -19-
<PAGE>

together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.

      Section 8.5. Purchase of Notes. The Company will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes of any Series in accordance with the terms of this
Agreement (including any Supplement hereto) and the Notes or (b) pursuant to a
written offer to purchase any outstanding Notes made by the Company or an
Affiliate pro rata to the holders of the Notes upon the same terms and
conditions. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to
any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.

      Section 8.6. Make-Whole Amount for the Series 2004-A Notes. The term
"Make-Whole Amount" means with respect to any Series 2004-A Note an amount equal
to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Series 2004-A Note, minus
the amount of such Called Principal, provided that the Make-Whole Amount may in
no event be less than zero. For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings with respect to the
Called Principal of such Series 2004-A Note:

            "Called Principal" means, the principal of the Series 2004-A Note
      that is to be prepaid pursuant to SECTION 8.2 or has become or is declared
      to be immediately due and payable pursuant to SECTION 12.1, as the context
      requires.

            "Discounted Value" means, with respect to the Called Principal of
      any Series 2004-A Note, the amount obtained by discounting all Remaining
      Scheduled Payments from their respective scheduled due dates to the
      Settlement Date with respect to such Called Principal, in accordance with
      accepted financial practice and at a discount factor (applied on the same
      periodic basis as that on which interest on such Series 2004-A Note is
      payable) equal to the Reinvestment Yield with respect to such Called
      Principal.

            "Reinvestment Yield" means, with respect to the Called Principal of
      any Series 2004-A Note, 0.50% over the yield to maturity calculated by
      using (i) the yields reported, as of 10:00 A.M. (New York City time) on
      the second Business Day preceding the Settlement Date on screen "PX-1" on
      the Bloomberg Financial Market Service (or such other information service
      as may replace Bloomberg) for actively traded U.S. Treasury securities
      having a maturity equal to the Remaining Average Life of such Called
      Principal as of such Settlement Date, or (ii) if such yields are not
      reported as of such time or the yields reported as of such time are not
      ascertainable, the Treasury Constant Maturity Series Yields reported, for
      the latest day for which such yields have been so reported as of the
      second Business Day preceding the Settlement Date, in Federal Reserve
      Statistical Release H.15 (519) (or any comparable successor publication)
      for actively traded U.S. Treasury securities having a constant maturity
      equal to the

                                      -20-
<PAGE>

      Remaining Average Life of such Called Principal as of such Settlement
      Date. In either case, the yield will be determined, if necessary, by (a)
      converting U.S. Treasury bill quotations to bond-equivalent yields in
      accordance with accepted financial practice and (b) interpolating linearly
      on a straight line basis between (1) the actively traded U.S. Treasury
      security with the maturity closest to and greater than the Remaining
      Average Life and (2) the actively traded U.S. Treasury security with the
      maturity closest to and less than the Remaining Average Life.

            "Remaining Average Life" means, with respect to any Called
      Principal, the number of years (calculated to the nearest one-twelfth
      year) obtained by dividing (i) such Called Principal into (ii) the sum of
      the products obtained by multiplying (a) the principal component of each
      Remaining Scheduled Payment with respect to such Called Principal by (b)
      the number of years (calculated to the nearest one-twelfth year) that will
      elapse between the Settlement Date with respect to such Called Principal
      and the scheduled due date of such Remaining Scheduled Payment.

            "Remaining Scheduled Payments" means, with respect to the Called
      Principal of any Series 2004-A Note, all payments of such Called Principal
      and interest thereon that would be due after the Settlement Date with
      respect to such Called Principal if no payment of such Called Principal
      were made prior to its scheduled due date, provided that if such
      Settlement Date is not a date on which interest payments are due to be
      made under the terms of such Series 2004-A Note, then the amount of the
      next succeeding scheduled interest payment will be reduced by the amount
      of interest accrued to such Settlement Date and required to be paid on
      such Settlement Date pursuant to SECTION 8.2 or 12.1.

            "Settlement Date" means, with respect to the Called Principal of any
      Series 2004-A Note, the date on which such Called Principal is to be
      prepaid pursuant to SECTION 8.2 or has become or is declared to be
      immediately due and payable pursuant to SECTION 12.1, as the context
      requires.

SECTION 9. AFFIRMATIVE COVENANTS.

      The Company covenants that so long as any of the Notes are outstanding:

      Section 9.1. Compliance with Law. The Company will, and will cause each of
its Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

                                      -21-
<PAGE>

      Section 9.2. Insurance. The Company will, and will cause each of its
Restricted Subsidiaries to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and similarly situated except for any non-maintenance that would not
reasonably be expected to have a Material Adverse Effect.

      Section 9.3. Maintenance of Properties. The Company will, and will cause
each of its Restricted Subsidiaries to, maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working order
and condition (other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

      Section 9.4. Payment of Taxes and Claims. The Company will, and will cause
each of its Subsidiaries to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes, assessments, charges and levies have become due and payable
and before they have become delinquent and all claims for which sums have become
due and payable that have become a Lien on properties or assets of the Company
or any Subsidiary not permitted by SECTION 10.4, provided that neither the
Company nor any Subsidiary need pay any such tax, assessment, charge, levy or
claim if (i) the amount, applicability or validity thereof is contested by the
Company or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of the Company or such Subsidiary
or (ii) the non-filing or nonpayment, as the case may be, of all such taxes,
assessments, charges, levies and claims in the aggregate would not reasonably be
expected to have a Material Adverse Effect.

      Section 9.5. Corporate Existence, Etc. Subject to SECTIONS 10.5 and 10.6,
the Company will at all times preserve and keep in full force and effect its
corporate existence, and will at all times preserve and keep in full force and
effect the corporate or other existence of each of its Restricted Subsidiaries
(unless merged into the Company or a Restricted Subsidiary) and all rights and
franchises of the Company and its Restricted Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such existence, right or franchise would not,
individually or in the aggregate, have a Material Adverse Effect.

      Section 9.6. Designation of Subsidiaries. The Company may from time to
time cause any Subsidiary (other than a Subsidiary Guarantor) to be designated
as an Unrestricted Subsidiary or any Unrestricted Subsidiary to be designated a
Restricted Subsidiary; provided,

                                      -22-
<PAGE>

however, that at the time of such designation and immediately after giving
effect thereto, (a) no Default or Event of Default would exist under the terms
of this Agreement, and (b) the Company and its Restricted Subsidiaries would be
in compliance with all of the covenants set forth in this SECTION 9 and in
SECTION 10 if tested on the date of such action and provided, further, that once
a Subsidiary has been designated an Unrestricted Subsidiary, it shall not
thereafter be redesignated as a Restricted Subsidiary on more than one occasion.
Within ten (10) days following any designation described above, the Company will
deliver to each Purchaser a notice of such designation accompanied by a
certificate signed by a Senior Financial Officer of the Company certifying
compliance with all requirements of this SECTION 9.6 and setting forth all
information required in order to establish such compliance.

      Section 9.7. Notes to Rank Pari Passu. The Notes and all other obligations
under this Agreement of the Company are and at all times shall remain direct and
unsecured obligations of the Company ranking pari passu as against the assets of
the Company with all other Notes from time to time issued and outstanding
hereunder without any preference among themselves and pari passu with all other
present and future senior unsecured Debt (actual or contingent) of the Company
which is not expressed to be subordinate or junior in rank to any other senior
unsecured Debt of the Company.

      Section 9.8. Additional Subsidiary Guarantors. The Company will cause any
Subsidiary which is required by the terms of the Bank Credit Agreement to become
a party to, or otherwise guarantee, Debt of the Company in respect of the Bank
Credit Agreement, to enter into the Subsidiary Guaranty and deliver to each of
the holders of the Notes (concurrently with the incurrence of any such
obligation pursuant to the Bank Credit Agreement) the following items:

            (a) a joinder agreement in respect of the Subsidiary Guaranty;

            (b) a certificate signed by an authorized Responsible Officer of the
      Company making representations and warranties to the effect of those
      contained in SECTIONS 5.1, 5.2, 5.4, 5.6 and 5.7, with respect to such
      Subsidiary and the Subsidiary Guaranty, as applicable;

            (c) such documents and evidence with respect to such Subsidiary as
      any holder of the Notes may reasonably request in order to establish the
      existence and good standing of such Subsidiary and the authorization of
      the transactions contemplated by such Subsidiary Guaranty; and

            (d) to the extent required under the Bank Credit Agreement, an
      opinion of counsel (who may be in-house counsel for the Company) addressed
      to each of the holders of the Notes satisfactory to the Required Holders,
      to the effect that the Subsidiary Guaranty by such Person has been duly
      authorized, executed and delivered and that the Subsidiary Guaranty
      constitutes the legal, valid and binding contract and agreement of such
      Person enforceable in accordance with its terms, except as an enforcement
      of such terms may be limited by bankruptcy, insolvency, fraudulent
      conveyance and similar laws affecting the enforcement of creditors' rights
      generally and by general equitable principles.

                                      -23-
<PAGE>

SECTION 10. NEGATIVE COVENANTS.

      The Company covenants that so long as any of the Notes are outstanding:

      Section 10.1. Consolidated Debt to Consolidated Total Capitalization. The
Company will not, as of the last day of each calendar month, permit the ratio of
Consolidated Debt to Consolidated Total Capitalization to exceed 65%.

      Section 10.2. Priority Debt. The Company will not, as of the last day of
each calendar month, permit the aggregate amount of all Priority Debt
outstanding at such time to exceed 15% of Consolidated Total Capitalization.

      Section 10.3. Fixed Charges Coverage Ratio. The Company will not permit
the ratio of Consolidated EBITDAR to Consolidated Fixed Charges for each period
of four consecutive fiscal quarters (calculated as at the end of each fiscal
quarter for the four consecutive fiscal quarters then ended) to be less than
1.75 to 1.00.

      Section 10.4. Limitation on Liens. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly create,
incur, assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property or asset (including,
without limitation, any document or instrument in respect of goods or accounts
receivable) of the Company or any such Restricted Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits (unless it makes, or
causes to be made, effective provision whereby the Notes will be equally and
ratably secured with any and all other obligations thereby secured, such
security to be pursuant to an agreement reasonably satisfactory to the Required
Holders and, in any such case, the Notes shall have the benefit, to the fullest
extent that, and with such priority as, the holders of the Notes may be entitled
under applicable law, of an equitable Lien on such property), except:

            (a) Liens for taxes, assessments or other governmental charges that
      are not yet due and payable or the payment of which is not at the time
      required by SECTION 9.4;

            (b) any attachment or judgment Lien, unless the judgment it secures
      shall not, within sixty (60) days after the entry thereof, have been
      discharged or execution thereof stayed pending appeal, or shall not have
      been discharged within sixty (60) days after the expiration of any such
      stay;

            (c) Liens incidental to the conduct of business or the ownership of
      properties and assets (including landlords', carriers', warehousemen's,
      mechanics', materialmen's and other similar Liens for sums not yet due and
      payable) and Liens to secure the performance of bids, tenders, leases, or
      trade contracts, or to secure statutory obligations (including obligations
      under workers compensation, unemployment insurance and other social
      security legislation), surety or appeal bonds or other Liens incurred in
      the ordinary course of business and not in connection with the borrowing
      of money;

                                      -24-
<PAGE>

            (d) leases or subleases granted to others, easements, rights-of-way,
      restrictions and other similar charges or encumbrances, in each case
      incidental to the ownership of property or assets or the ordinary conduct
      of the business of the Company or any of its Restricted Subsidiaries, and
      Liens incidental to minor survey exceptions and the like, provided that
      such Liens do not, in the aggregate, materially detract from the value of
      such property;

            (e) Liens securing Debt of a Restricted Subsidiary to the Company or
      to a Wholly-Owned Restricted Subsidiary;

            (f) Liens existing as of the Closing Date and reflected in SCHEDULE
      10.4;

            (g) Liens incurred after the Closing Date given to secure the
      payment of the purchase price incurred in connection with the acquisition,
      construction or improvement of property (other than accounts receivable or
      inventory) useful and intended to be used in carrying on the business of
      the Company or a Restricted Subsidiary, including Liens existing on such
      property at the time of acquisition or construction thereof or Liens
      incurred within three hundred sixty-five (365) days of such acquisition or
      completion of such construction or improvement, provided that (i) the Lien
      shall attach solely to the property acquired, purchased, constructed or
      improved; (ii) at the time of acquisition, construction or improvement of
      such property (or, in the case of any Lien incurred within three hundred
      sixty-five (365) days of such acquisition or completion of such
      construction or improvement, at the time of the incurrence of the Debt
      secured by such Lien), the aggregate amount remaining unpaid on all Debt
      secured by Liens on such property, whether or not assumed by the Company
      or a Restricted Subsidiary, shall not exceed the greater of (y) the cost
      of such acquisition, construction or improvement or (z) the Fair Market
      Value of such property (as determined in good faith by one or more
      officers of the Company to whom authority to enter into the transaction
      has been delegated by the board of directors of the Company); and (iii) at
      the time of such incurrence and after giving effect thereto, no Default or
      Event of Default would exist;

            (h) any Lien existing on property of a Person immediately prior to
      its being consolidated with or merged into the Company or a Restricted
      Subsidiary or its becoming a Restricted Subsidiary, or any Lien existing
      on any property acquired by the Company or any Restricted Subsidiary at
      the time such property is so acquired (whether or not the Debt secured
      thereby shall have been assumed), provided that (i) no such Lien shall
      have been created or assumed in contemplation of such consolidation or
      merger or such Person's becoming a Restricted Subsidiary or such
      acquisition of property, (ii) each such Lien shall extend solely to the
      item or items of property so acquired and, if required by the terms of the
      instrument originally creating such Lien, other property which is an
      improvement to or is acquired for specific use in connection with such
      acquired property, and (iii) at the time of such incurrence and after
      giving effect thereto, no Default or Event of Default would exist;

            (i) any extensions, renewals or replacements of any Lien permitted
      by the preceding subparagraphs (f), (g) and (h) of this SECTION 10.4,
      provided that (i) no

                                      -25-
<PAGE>

      additional property shall be encumbered by such Liens, (ii) the unpaid
      principal amount of the Debt or other obligations secured thereby shall
      not be increased on or after the date of any extension, renewal or
      replacement, and (iii) at such time and immediately after giving effect
      thereto, no Default or Event of Default shall have occurred and be
      continuing; and

            (j) Liens securing Priority Debt of the Company or any Restricted
      Subsidiary, provided that the aggregate principal amount of any such
      Priority Debt shall be permitted by SECTION 10.2.

      Section 10.5. Sales of Assets. The Company will not, and will not permit
any Restricted Subsidiary to, sell, lease or otherwise dispose of any
substantial part (as defined below) of the assets of the Company and its
Restricted Subsidiaries; provided, however, that the Company or any Restricted
Subsidiary may sell, lease or otherwise dispose of assets constituting a
substantial part of the assets of the Company and its Restricted Subsidiaries if
such assets are sold in an arms length transaction and, at such time and after
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing and an amount equal to the net proceeds received from such sale,
lease or other disposition shall be used within three hundred sixty-five (365)
days of such sale, lease or disposition, in any combination:

            (1) to acquire productive assets used or useful in carrying on the
      business of the Company and its Restricted Subsidiaries and having a value
      at least equal to the purchase price thereof; and/or

            (2) to prepay or retire Senior Debt of the Company and/or its
      Restricted Subsidiaries, provided that, to the extent any such proceeds
      are used to prepay the outstanding principal amount of the Notes, such
      prepayment shall be made in accordance with the terms of SECTION 8.2.

      As used in this SECTION 10.5, a sale, lease or other disposition of assets
shall be deemed to be a "substantial part" of the assets of the Company and its
Restricted Subsidiaries if the book value of such assets, when added to the book
value of all other assets sold, leased or otherwise disposed of by the Company
and its Restricted Subsidiaries during the period of twelve (12) consecutive
months ending on the date of such sale, lease or other disposition, exceeds 10%
of the book value of Consolidated Total Assets, determined as of the end of the
fiscal quarter immediately preceding such sale, lease or other disposition;
provided that there shall be excluded from any determination of a "substantial
part" any (i) sale or disposition of assets in the ordinary course of business
of the Company and its Restricted Subsidiaries, (ii) any transfer of assets from
the Company to any Wholly-Owned Restricted Subsidiary or from any Restricted
Subsidiary to the Company or a Wholly-Owned Restricted Subsidiary and (iii) any
sale or transfer of property acquired by the Company or any Restricted
Subsidiary after the date of this Agreement to any Person within three hundred
sixty-five (365) days following the acquisition or construction of such property
by the Company or any Restricted Subsidiary if the Company or a Restricted
Subsidiary shall concurrently with such sale or transfer, lease such property,
as lessee.

                                      -26-
<PAGE>

      Section 10.6. Merger and Consolidation. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, consolidate with or merge with
any other Person or convey, transfer or lease all or substantially all of its
assets in a single transaction or series of transactions to any Person; provided
that:

            (1) any Restricted Subsidiary of the Company may (x) consolidate
      with or merge with, or convey, transfer or lease all or substantially all
      of its assets in a single transaction or series of transactions to, (i)
      the Company or a Wholly-Owned Restricted Subsidiary so long as in any
      merge or consolidation involving the Company, the Company shall be the
      surviving or continuing corporation or (ii) any other Person so long as
      the survivor is the Restricted Subsidiary, or (y) convey, transfer or
      lease all or substantially all of its assets in compliance with the
      provisions of SECTION 10.5; and

            (2) the foregoing restriction does not apply to the consolidation or
      merger of the Company with, or the conveyance, transfer or lease of all or
      substantially all of the assets of the Company in a single transaction or
      series of transactions to, any Person so long as:

                  (i) the successor formed by such consolidation or the survivor
            of such merger or the Person that acquires by conveyance, transfer
            or lease all or substantially all of the assets of the Company as an
            entirety, as the case may be (the "Successor Corporation"), shall be
            a solvent entity organized and existing under the laws of the United
            States of America, any State thereof or the District of Columbia;

                  (ii) if the Company is not the Successor Corporation, such
            Successor Corporation shall have executed and delivered to each
            holder of Notes its assumption of the due and punctual performance
            and observance of each covenant and condition of this Agreement (and
            each Supplement thereto) and the Notes (pursuant to such agreements
            and instruments as shall be reasonably satisfactory to the Required
            Holders), and the Successor Corporation shall have caused to be
            delivered to each holder of Notes (A) an opinion of nationally
            recognized independent counsel, or other independent counsel
            reasonably satisfactory to the Required Holders, to the effect that
            all agreements or instruments effecting such assumption are
            enforceable in accordance with their terms and (B) an acknowledgment
            from each Subsidiary Guarantor that the Subsidiary Guaranty
            continues in full force and effect; and

                  (iii) immediately after giving effect to such transaction no
            Default or Event of Default would exist.

      (b) The Company will not, and will not permit any Restricted Subsidiary
to, sell, transfer or otherwise dispose of any shares of stock or other equity
interests of any other Restricted Subsidiary to any Person other than the
Company or another Restricted Subsidiary in one transaction or a series of
transactions other than in the ordinary course of business unless

                                      -27-
<PAGE>

such sale or other disposition can be made within the limitations of SECTION
10.5 or this SECTION 10.6.

      Section 10.7. Transactions with Affiliates. The Company will not and will
not permit any Restricted Subsidiary to enter into directly or indirectly any
Material transaction or Material group of related transactions (including
without limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the Company
or another Restricted Subsidiary), except upon fair and reasonable terms that
are not materially less favorable to the Company or such Restricted Subsidiary
than would be obtainable in a comparable arm's-length transaction with a Person
not an Affiliate, provided that this SECTION 10.7 shall not prohibit the Company
or any Restricted Subsidiary from (i) issuing shares of stock or other equity
interests in the Company to the officers and directors of the Company or any
Subsidiary as compensation for services rendered in the scope of their
employment or (ii) performing in accordance with transactions contemplated by
agreements in existence as of the Closing Date between the Company and/or any of
its Restricted Subsidiaries and their respective Affiliates. To the knowledge of
the Company, SCHEDULE 10.7 sets forth the Material affiliate agreements as of
the Closing Date (it being understood that the failure to list an agreement on
SCHEDULE 10.7 shall not affect in any way whether any transaction contemplated
by such agreement is permitted by this SECTION 10.7).

      Section 10.8. Nature of Business. The Company will not, and will not
permit any Restricted Subsidiary to, engage in any business, if, as a result,
when taken as a whole, the general nature of the business in which the Company
and its Restricted Subsidiaries would then be engaged would be substantially
changed from the general nature of the business of the Company and its
Restricted Subsidiaries, taken as a whole, on the date of this Agreement as
described in the Memorandum or reasonably related thereto.

SECTION 11. EVENTS OF DEFAULT.

      An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:

            (a) the Company defaults in the payment of any principal or
      Make-Whole Amount, if any, on any Note when the same becomes due and
      payable, whether at maturity or at a date fixed for prepayment or by
      declaration or otherwise; or

            (b) the Company defaults in the payment of any interest on any Note
      for more than five (5) Business Days after the same becomes due and
      payable; or

            (c) the Company defaults in the performance of or compliance with
      any term contained in SECTION 10 or any covenant in a Supplement which
      specifically provides that it shall have the benefit of this paragraph
      (c), or any Subsidiary Guarantor defaults in the performance of or
      compliance with any term of the Subsidiary Guaranty beyond any period of
      grace or cure period provided with respect thereto; or

                                      -28-
<PAGE>

            (d) the Company defaults in the performance of or compliance with
      any term contained herein or in any Supplement (other than those referred
      to in paragraphs (a), (b) and (c) of this SECTION 11) and such default is
      not remedied within thirty (30) days after the earlier of (i) a
      Responsible Officer obtaining actual knowledge of such default or (ii) the
      Company receiving written notice of such default from any holder of a Note
      (any such written notice to be identified as a "notice of default" and to
      refer specifically to this paragraph (d) of SECTION 11); or

            (e) any Subsidiary Guaranty ceases to be a legally valid, binding
      and enforceable obligation or contract of a Subsidiary Guarantor (other
      than upon a release of any Subsidiary Guarantor from a Subsidiary Guaranty
      in accordance with the terms of SECTION 2.3(b) hereof), or any Subsidiary
      Guarantor or any party by, through or on account of any such Person,
      challenges the validity, binding nature or enforceability of any such
      Subsidiary Guaranty; or

            (f) any representation or warranty made in writing by or on behalf
      of the Company or Subsidiary Guarantor or by any officer of the Company or
      any Subsidiary Guarantor in any writing furnished in connection with the
      transactions contemplated hereby or by any Subsidiary Guaranty proves to
      have been false or incorrect in any material respect on the date as of
      which made; or

            (g) (i) the Company or any Restricted Subsidiary is in default (as
      principal or as guarantor or other surety) in the payment of any principal
      of or premium or make-whole amount or interest (in the payment amount of
      at least $100,000) on any Debt other than the Notes that is outstanding in
      an aggregate principal amount of at least $20,000,000 beyond any period of
      grace provided with respect thereto, or (ii) the Company or any Restricted
      Subsidiary is in default in the performance of or compliance with any term
      of any instrument, mortgage, indenture or other agreement relating to any
      Debt other than the Notes in an aggregate principal amount of at least
      $20,000,000 or any other condition exists, and as a consequence of such
      default or condition such Debt has become, or has been declared, due and
      payable or one or more Persons has the right to declare such Debt to be
      due and payable before its stated maturity or before its regularly
      scheduled dates of payment, or (iii) as a consequence of the occurrence or
      continuation of any event or condition (other than the passage of time or
      the right of the holder of Debt to convert such Debt into equity
      interests), the Company or any Restricted Subsidiary has become obligated
      to purchase or repay Debt other than the Notes before its regular maturity
      or before its regularly scheduled dates of payment in an aggregate
      outstanding principal amount of at least $20,000,000 or one or more
      Persons have the right to require the Company or any Restricted Subsidiary
      to purchase or repay such Debt; or

            (h) the Company, any Material Subsidiary or any Subsidiary Guarantor
      (i) is generally not paying, or admits in writing its inability to pay,
      its debts as they become due, (ii) files, or consents by answer or
      otherwise to the filing against it of, a petition for relief or
      reorganization or arrangement or any other petition in bankruptcy, for
      liquidation or to take advantage of any bankruptcy, insolvency,
      reorganization, moratorium or other similar law of any jurisdiction, (iii)
      makes an assignment for the benefit of its creditors,

                                      -29-
<PAGE>

      (iv) consents to the appointment of a custodian, receiver, trustee or
      other officer with similar powers with respect to it or with respect to
      any substantial part of its property, (v) is adjudicated as insolvent or
      to be liquidated, or (vi) takes corporate action for the purpose of any of
      the foregoing; or

            (i) a court or governmental authority of competent jurisdiction
      enters an order appointing, without consent by the Company, any of its
      Material Subsidiaries or any Subsidiary Guarantor, a custodian, receiver,
      trustee or other officer with similar powers with respect to it or with
      respect to any substantial part of its property, or constituting an order
      for relief or approving a petition for relief or reorganization or any
      other petition in bankruptcy or for liquidation or to take advantage of
      any bankruptcy or insolvency law of any jurisdiction, or ordering the
      dissolution, winding-up or liquidation of the Company, any of its Material
      Subsidiaries or any Subsidiary Guarantor, or any such petition shall be
      filed against the Company, any of its Material Subsidiaries or any
      Subsidiary Guarantor and such petition shall not be dismissed within sixty
      (60) days; or

            (j) a final judgment or judgments at any one time outstanding for
      the payment of money aggregating in excess of $20,000,000 are rendered
      against one or more of the Company, its Restricted Subsidiaries or any
      Subsidiary Guarantor and which judgments are not, within sixty (60) days
      after entry thereof, bonded, discharged or stayed pending appeal, or are
      not discharged within sixty (60) days after the expiration of such stay;
      or

            (k) if (i) any Plan shall fail to satisfy the minimum funding
      standards of ERISA or the Code for any plan year or part thereof or a
      waiver of such standards or extension of any amortization period is sought
      or granted under Section 412 of the Code, (ii) a notice of intent to
      terminate any Plan shall have been or is reasonably expected to be filed
      with the PBGC or the PBGC shall have instituted proceedings under Section
      4042 of ERISA to terminate or appoint a trustee to administer any Plan or
      the PBGC shall have notified the Company or any ERISA Affiliate that a
      Plan may become a subject of any such proceedings, (iii) the aggregate
      "amount of unfunded benefit liabilities" (within the meaning of Section
      4001(a)(18) of ERISA) under all Plans, determined in accordance with Title
      IV of ERISA, shall exceed $20,000,000, (iv) the Company or any ERISA
      Affiliate shall have incurred or is reasonably expected to incur any
      liability pursuant to Title I or IV of ERISA or the penalty or excise tax
      provisions of the Code relating to employee benefit plans, (v) the Company
      or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
      Company or any ERISA Affiliate establishes or amends any employee welfare
      benefit plan that provides post-employment welfare benefits in a manner
      that could increase the liability of the Company or any ERISA Affiliate
      thereunder; and any such event or events described in clauses (i) through
      (vi) above, either individually or together with any other such event or
      events, could reasonably be expected to have a Material Adverse Effect.

As used in SECTION 11(k), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

                                      -30-
<PAGE>

SECTION 12. REMEDIES ON DEFAULT, ETC.

      Section 12.1. Acceleration. (a) If an Event of Default with respect to the
Company described in paragraph (h) or (i) of SECTION 11 (other than an Event of
Default described in clause (i) of paragraph (h) or described in clause (vi) of
paragraph (h) by virtue of the fact that such clause encompasses clause (i) of
paragraph (h)) has occurred, all the Notes of every Series then outstanding
shall automatically become immediately due and payable.

      (b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 50% in aggregate principal amount of the Notes of
any Series at the time outstanding may at any time at its or their option, by
notice or notices to the Company, declare all the Notes of such Series then
outstanding to be immediately due and payable.

      (c) If any Event of Default described in paragraph (a) or (b) of SECTION
11 has occurred and is continuing with respect to any Notes, any holder or
holders of Notes at the time outstanding affected by such Event of Default may
at any time, at its or their option, by notice or notices to the Company,
declare all the Notes held by such holder or holders to be immediately due and
payable.

      Upon any Notes becoming due and payable under this SECTION 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (i) all accrued and unpaid interest
thereon and (ii) the Make-Whole Amount, if any, determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount, if any, by the Company in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.

      Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under SECTION 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.

      Section 12.3. Rescission. At any time after the Notes of a Series have
been declared due and payable pursuant to clause (b) or (c) of SECTION 12.1, the
holders of more than 50% in aggregate principal amount of the Notes of such
Series then outstanding, by written notice to the Company, may rescind and annul
any such declaration and its consequences if (a) the Company has paid all
overdue interest on the Notes of such Series, all principal of and Make-Whole
Amount, if any, on any Notes of such Series that are due and payable and are
unpaid other than

                                      -31-
<PAGE>

by reason of such declaration, and all interest on such overdue principal and
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes of such Series, at the Default Rate,
(b) all Events of Default and Defaults, other than non-payment of amounts that
have become due solely by reason of such declaration, have been cured or have
been waived pursuant to SECTION 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to any Notes of
such Series. No rescission and annulment under this SECTION 12.3 will extend to
or affect any subsequent Event of Default or Default or impair any right
consequent thereon.

      Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No course
of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under SECTION 15, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this SECTION 12, including, without limitation, reasonable attorneys'
fees, expenses and disbursements of one special counsel for all holders of the
Notes.

SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

      Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.

      Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note
at the principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or its attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver not more than five (5) Business
Days following surrender of such Note, at the Company's expense (except as
provided below), one or more new Notes (as requested by the holder thereof) of
the same Series (and of the same tranche if such Series has separate tranches)
in exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
the Note of such Series originally issued hereunder or pursuant to any
Supplement. Each such new Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note if no interest shall have been paid thereon. The

                                      -32-
<PAGE>

Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes of such Series (or of such tranche if such Series has separate
tranches), one Note may be in a denomination of less than $100,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
SECTION 6.3, provided that such holder may (in reliance upon information
provided by the Company, which shall not be unreasonably withheld) make a
representation to the effect that the purchase by such holder of any Note will
not constitute a non-exempt prohibited transaction under Section 406 of ERISA
and Section 4975 of the Code.

      The Notes have not been registered under the Securities Act or under the
securities laws of any state and may not be transferred or resold unless
registered under the Securities Act and all applicable state securities laws or
unless an exemption from the requirement for such registration is available.

      Section 13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and

            (a) in the case of loss, theft or destruction, of indemnity
      reasonably satisfactory to it (provided that if the holder of such Note
      is, or is a nominee for, an original Purchaser or another holder of a Note
      with a minimum net worth of at least $10,000,000, such Person's own
      unsecured agreement of indemnity shall be deemed to be satisfactory), or

            (b) in the case of mutilation, upon surrender and cancellation
      thereof,

the Company at its own expense shall execute and deliver not more than five (5)
Business Days following satisfaction of such conditions, in lieu thereof, a new
Note of the same Series (and of the same tranche if such Series has separate
tranches), dated and bearing interest from the date to which interest shall have
been paid on such lost, stolen, destroyed or mutilated Note or dated the date of
such lost, stolen, destroyed or mutilated Note if no interest shall have been
paid thereon.

SECTION 14. PAYMENTS ON NOTES.

      Section 14.1. Place of Payment. Subject to SECTION 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in New York, New York at the principal office of Bank of
America, N.A. in such jurisdiction. The Company may at any time, by notice to
each holder of a Note, change the place of payment of the Notes so long as such
place of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.

                                      -33-
<PAGE>

      Section 14.2. Home Office Payment. So long as any Purchaser or Additional
Purchaser or such Purchaser's nominee or such Additional Purchaser's nominee
shall be the holder of any Note, and notwithstanding anything contained in
SECTION 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose for such Purchaser
on SCHEDULE A hereto or, in the case of any Additional Purchaser, SCHEDULE A
attached to any Supplement pursuant to which such Additional Purchaser is a
party, or by such other method or at such other address as such Purchaser or
Additional Purchaser shall have from time to time specified to the Company in
writing for such purpose, without the presentation or surrender of such Note or
the making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, such Purchaser or Additional Purchaser shall
surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to SECTION 14.1. Prior
to any sale or other disposition of any Note held by any Purchaser or Additional
Purchaser or such Person's nominee, such Person will, at its election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to SECTION 13.2. The Company will afford the
benefits of this SECTION 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by any Purchaser or Additional
Purchaser under this Agreement and that has made the same agreement relating to
such Note as the Purchasers or the Additional Purchasers have made in this
SECTION 14.2.

SECTION 15. EXPENSES, ETC.

      Section 15.1. Transaction Expenses. The Company will pay all reasonable
costs and expenses (including reasonable attorneys' fees of one special counsel
for the Purchasers or any Additional Purchasers and, if reasonably required,
local or other counsel) incurred by each Purchaser and each Additional Purchaser
and each other holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement (including any Supplement) or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement (including
any Supplement) or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement (including any Supplement) or the Notes, or by reason of being a
holder of any Note, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or restructuring of
the transactions contemplated hereby and by the Notes. The Company will pay, and
will save each Purchaser, each Additional Purchaser and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses if any,
of brokers and finders (other than those retained by the Purchasers or
Additional Purchasers). Without limiting the forgoing, the Company shall pay all
costs and expenses incurred in obtaining Private Placement Numbers for the
Series 2004-A Notes in accordance with the terms of SECTION 4.8.

                                      -34-
<PAGE>

      Section 15.2. Survival. The obligations of the Company under this SECTION
15 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement, any Supplement or the Notes, and
the termination of this Agreement or any Supplement.

SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

      All representations and warranties contained herein or in any Supplement
shall survive the execution and delivery of this Agreement, such Supplement and
the Notes, the purchase or transfer by any Purchaser or any Additional Purchaser
of any such Note or portion thereof or interest therein and the payment of any
Note may be relied upon by any subsequent holder of any such Note, regardless of
any investigation made at any time by or on behalf of any Purchaser or any
Additional Purchaser or any other holder of any such Note. All statements
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant to this Agreement or any Supplement shall be deemed
representations and warranties of the Company under this Agreement; provided,
that the representations and warranties contained in any Supplement shall only
be made for the benefit of the Additional Purchasers which are party to such
Supplement and the holders of the Notes issued pursuant to such Supplement,
including subsequent holders of any Note issued pursuant to such Supplement, and
shall not require the consent of the holders of existing Notes. Subject to the
preceding sentence, this Agreement (including every Supplement) and the Notes
embody the entire agreement and understanding between the Purchasers and the
Additional Purchasers and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.

SECTION 17. AMENDMENT AND WAIVER.

      Section 17.1. Requirements. (a) This Agreement (including any Supplement)
and the Notes may be amended, and the observance of any term hereof or of the
Notes may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Company and the Required Holders, except that
(i) no amendment or waiver of any of the provisions of SECTION 1, 2, 3, 4, 5, 6
or 21 hereof or the corresponding provision of any Supplement, or any defined
term (as it is used in any such Section or such corresponding provision of any
Supplement), will be effective as to any holder of Notes unless consented to by
such holder of Notes in writing, and (ii) no such amendment or waiver may,
without the written consent of all of the holders of Notes at the time
outstanding affected thereby, (A) subject to the provisions of SECTION 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the Make-Whole Amount, if
any, on, the Notes, (B) change the percentage of the principal amount of the
Notes the holders of which are required to consent to any such amendment or
waiver, or (C) amend any of SECTIONS 8, 11(a), 11(b), 12, 17 or 20.

      (b) Supplements. Notwithstanding anything to the contrary contained
herein, the Company may enter into any Supplement providing for the issuance of
one or more Series of Additional Notes consistent with SECTION 2.2 hereof
without obtaining the consent of any holder of any other Series of Notes.

                                      -35-
<PAGE>

   Section 17.2. Solicitation of Holders of Notes.

      (a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof, any Supplement or of the Notes. The Company will deliver executed or
true and correct copies of each amendment, waiver or consent effected pursuant
to the provisions of this SECTION 17 to each holder of outstanding Notes
promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite holders of Notes.

      (b) Payment. The Company will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as consideration
for or as an inducement to the entering into by such holder of Notes of any
waiver or amendment of any of the terms and provisions hereof or any Supplement
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.

      Section 17.3. Binding Effect, Etc. Any amendment or waiver consented to as
provided in this SECTION 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.

      Section 17.4. Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.

SECTION 18. NOTICES.

      All notices and communications provided for hereunder shall be in writing
and sent (a) by telefacsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), or (b) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:

                                      -36-
<PAGE>

            (i) if to a Purchaser or such Purchaser's nominee, to such Purchaser
      or such Purchaser's nominee at the address specified for such
      communications in SCHEDULE A to this Agreement, or at such other address
      as such Purchaser or such Purchaser's nominee shall have specified to the
      Company in writing pursuant to this SECTION 18;

            (ii) if to an Additional Purchaser or such Additional Purchaser's
      nominee, to such Additional Purchaser or such Additional Purchaser's
      nominee at the address specified for such communications in SCHEDULE A to
      any Supplement, or at such other address as such Additional Purchaser or
      such Additional Purchaser's nominee shall have specified to the Company in
      writing,

            (iii) if to any other holder of any Note, to such holder at such
      address as such other holder shall have specified to the Company in
      writing pursuant to this SECTION 18, or

            (iv) if to the Company, to the Company at its address set forth at
      the beginning hereof to the attention of Chief Financial Officer, with a
      copy to the General Counsel, or at such other address as the Company shall
      have specified to the holder of each Note in writing.

Notices under this SECTION 18 will be deemed given only when actually received.

SECTION 19. REPRODUCTION OF DOCUMENTS.

      This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Purchaser at the Closing or by any
Additional Purchaser (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to each Purchaser or any Additional Purchaser, may be reproduced by such
Purchaser or such Additional Purchaser by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and such
Purchaser or such Additional Purchaser may destroy any original document so
reproduced. The Company agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
Purchaser or such Additional Purchaser in the regular course of business) and
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This SECTION 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.

SECTION 20. CONFIDENTIAL INFORMATION.

      For the purposes of this SECTION 20, "Confidential Information" means
information delivered to any Purchaser or any Additional Purchaser by or on
behalf of the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this

                                      -37-
<PAGE>

Agreement, provided that such term does not include information that (a) was
publicly known or otherwise known to such Purchaser or such Additional Purchaser
prior to the time of such disclosure, (b) subsequently becomes publicly known
through no act or omission by such Purchaser or such Additional Purchaser or any
Person acting on such Purchaser's or such Additional Purchaser's behalf, (c)
otherwise becomes known to such Purchaser or such Additional Purchaser other
than through disclosure by the Company or any Subsidiary or (d) constitutes
financial statements delivered to such Purchaser or such Additional Purchaser
under SECTION 7.1 that are otherwise publicly available. Each Purchaser and each
Additional Purchaser will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by such Purchaser or such
Additional Purchaser in good faith to protect confidential information of third
parties delivered to such Purchaser or such Additional Purchaser, provided that
such Purchaser or such Additional Purchaser may deliver or disclose Confidential
Information to (i) such Purchaser's or such Additional Purchaser's directors,
trustees, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by such Purchaser's or such Additional Purchaser's Notes), (ii) such
Purchaser's or such Additional Purchaser's financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this SECTION 20, (iii)
any other holder of any Note, (iv) any Institutional Investor to which such
Purchaser or such Additional Purchaser sells or offers to sell such Note or any
part thereof or any participation therein (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this SECTION 20), (v) any Person from which such Purchaser or such
Additional Purchaser offers to purchase any security of the Company (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this SECTION 20), (vi) any federal
or state regulatory authority having jurisdiction over such Purchaser or such
Additional Purchaser, (vii) the National Association of Insurance Commissioners
(the "NAIC") or any similar organization, or any nationally recognized rating
agency that requires access to information about such Purchaser's or such
Additional Purchaser's investment portfolio, or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to such Purchaser
or such Additional Purchaser, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Purchaser or such
Additional Purchaser is a party or (z) if an Event of Default has occurred and
is continuing, to the extent such Purchaser or such Additional Purchaser may
reasonably determine such delivery and disclosure to be necessary or appropriate
in the enforcement or for the protection of the rights and remedies under such
Purchaser's or such Additional Purchaser's Notes, the Subsidiary Guaranty and
this Agreement. Each holder of a Note, by its acceptance of a Note, will be
deemed to have agreed to be bound by and to be entitled to the benefits of this
SECTION 20 as though it were a party to this Agreement. On reasonable request by
the Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this Agreement
or its nominee), such holder will enter into an agreement with the Company
embodying the provisions of this SECTION 20.

      Notwithstanding anything herein to the contrary, and to the extent not
otherwise prohibited by applicable securities laws, each Purchaser and each
Additional Purchaser (and each

                                      -38-
<PAGE>

employee, representative or other agent thereof) may disclose to any Person,
without limitations of any kind, the "tax treatment" and "tax structure" (in
each case, within the meaning of Treasury Regulation Section 1.6011-4) of the
offering of the Notes and all materials of any kind (including opinions or other
tax analyses) that are or have been provided to each Purchaser or any Additional
Purchaser relating to such tax treatment or tax structure; provided that, with
respect to any document or similar item that in either case contains information
concerning such tax treatment or tax structure of the offering as well as other
information, such permitted disclosure shall apply solely to such facts and
relevant portions of the document or similar item that relate to such tax
treatment or tax structure.

SECTION 21. SUBSTITUTION OF PURCHASER.

      Each Purchaser and each Additional Purchaser shall have the right to
substitute any one of such Purchaser's or such Additional Purchaser's Affiliates
as the purchaser of the Notes that such Purchaser or such Additional Purchaser
has agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser or such Additional Purchaser and its
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in SECTION 6. Upon receipt
of such notice, wherever the word "Purchaser" or the words "Additional
Purchaser" are used in this Agreement (other than in this SECTION 21), such word
shall be deemed to refer to such Affiliate in lieu of such Purchaser or such
Additional Purchaser. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to such Purchaser or
such Additional Purchaser all of the Notes then held by such Affiliate, upon
receipt by the Company of notice of such transfer, wherever the word "Purchaser"
or the words "Additional Purchaser" are used in this Agreement (other than in
this SECTION 21), such word shall no longer be deemed to refer to such
Affiliate, but shall refer to such Purchaser or such Additional Purchaser, and
such Purchaser or such Additional Purchaser shall have all the rights of an
original holder of the Notes under this Agreement.

SECTION 22. MISCELLANEOUS.

      Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement (including all covenants and other agreements
contained in any Supplement) by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.

      Section 22.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.

      Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such

                                      -39-
<PAGE>

prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
(to the full extent permitted by law) not invalidate or render unenforceable
such provision in any other jurisdiction.

      Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

      Section 22.5. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.

      Section 22.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York.

                                    * * * * *

                                      -40-
<PAGE>

      The execution hereof by the Purchasers shall constitute a contract among
the Company and the Purchasers for the uses and purposes hereinabove set forth.
This Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.

                                        Very truly yours,

                                        GENESEE & WYOMING INC.

                                        By /s/ John C. Hellmann
                                           -------------------------------------
                                           Name: John C. Hellmann
                                           Title: Chief Financial Officer

                                      -41-
<PAGE>

Accepted as of the date first written above.

                                     JACKSON NATIONAL LIFE INSURANCE COMPANY

                                     By: PPM America, Inc., as attorney in fact,
                                         on behalf of Jackson National Life
                                         Insurance Company

                                         By /s/ Mark Staub
                                            --------------------------
                                            Name: Mark Staub
                                            Title: Vice President

                                      -42-
<PAGE>

Accepted as of the date first written above.

                                     METROPOLITAN INSURANCE AND ANNUITY
                                       COMPANY

                                     By: Metropolitan Life Insurance Company, as
                                         Investment Manager

                                     By /s/ Judith A. Gulotta
                                        -----------------------------
                                        Name: Judith A. Gulotta
                                        Title: Director

                                      -43-
<PAGE>

Accepted as of the date first written above.

                                             METROPOLITAN LIFE INSURANCE COMPANY

                                             By /s/ Judith A. Gulotta
                                        `       ------------------------
                                                Name: Judith A. Gulotta
                                                Title: Director

                                      -44-
<PAGE>

Accepted as of the date first written above.

                                                 TEACHERS INSURANCE AND ANNUITY
                                                    ASSOCIATION OF AMERICA

                                                 By /s/ Lisa M. Ferraro
                                                    ----------------------------
                                                    Name: Lisa M. Ferraro
                                                    Title: Director

                                      -45-
<PAGE>

Accepted as of the date first written above.

                                          UNITED OF OMAHA LIFE INSURANCE COMPANY

                                          By /s/ Edwin H. Garrison, Jr.
                                             -----------------------------------
                                             Name: Edwin H. Garrison, Jr.
                                             Title: First Vice President

                                      -46-
<PAGE>

                                                               PRINCIPAL AMOUNT
                                                                 OF THE SERIES
                                                              2004-A NOTES TO BE
        NAME OF PURCHASERS                                         PURCHASED

JACKSON NATIONAL LIFE INSURANCE COMPANY                           $30,000,000
5901 Executive Drive
Lansing, Michigan 48911

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds to:

      The Bank of New York
      ABA #021-000-018
      BNF Account #: IOC566
      FBO: Jackson National Life
      Ref: CUSIP/PPN, Description, and Breakdown (P&I)
           [JNL - JNL 241/Non Insul., A/C # 187241]
           [JNL - JNL GIC, A/C # 187243]

Notices

Payment notices should be sent to:

      Jackson National Life Insurance Company
      c/o The Bank of New York
      Attention: P&I Department
      P.O. Box 19266
      Newark, New Jersey 07195
      Phone: (212) 437-3054
      Fax: (212) 437-6466

Original documents and copies of notes and certificates, notices, waivers,
amendments, consents, and financial information should be sent to:

      PPM America, Inc.
      225 West Wacker Drive, Suite 1100
      Chicago, Illinois 60606-1228
      Attention: Private Placements - Mark Staub
      Phone: (312) 634-1212
      Fax: (312) 634-0054

      and

                                   SCHEDULE A
                          (to Note Purchase Agreement)

<PAGE>

      Jackson National Life Insurance Company
      225 West Wacker Drive, Suite 1100
      Chicago, Illinois 60606-1228
      Attention: Investment Accounting - Mark Stewart
      Phone: (312) 338-5832
      Fax: (312) 236-5224

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 38-1659835

                                      A-2
<PAGE>

                                                               PRINCIPAL AMOUNT
                                                                OF THE SERIES
                                                              2004-A NOTES TO BE
           NAME OF PURCHASERS                                     PURCHASED

METROPOLITAN INSURANCE AND ANNUITY COMPANY                       $13,000,000
c/o Metropolitan Life Insurance Company
1 MetLife Plaza
27-01 Queens Plaza North
Long Island City, New York 11101

Payments

All scheduled payments of principal and interest by wire transfer of immediately
available funds to:

      JP Morgan Chase Bank
      ABA #021-000-021
      Account Number: 002-1-072301
      Account Name: Metropolitan Insurance and Annuity Company
      Reference: Genesee & Wyoming 4.85% Series 2004-A Senior Notes due 11/1/11

      With sufficient information to identify the source and application of such
      funds, including issuer, PPN#, interest rate, maturity and whether payment
      is of principal, interest, make whole amount or otherwise.

      For all payments other than scheduled payments of principal and interest,
      the Company shall seek instructions from the holder, and in the absence of
      instructions to the contrary, will make such payments to the account and
      in the manner set forth above.

Notices

All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed:

      Metropolitan Insurance and Annuity Company
      c/o Metropolitan Life Insurance Company
      Investments, Private Placements
      10 Park Avenue
      Morristown, New Jersey 07962-1902
      Attention: Director
      Fax Number: (973) 355-4250

With a copy (OTHER than with respect to deliveries of financial statements) to:

      Metropolitan Insurance and Annuity Company

                                      A-3
<PAGE>

      c/o Metropolitan Life Insurance Company
      10 Park Avenue
      Morristown, New Jersey 07962-1902
      Attention: Chief Counsel-Securities Investments (PRIV)
      Facsimile (973) 355-4338

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 13-2876440

                                      A-4
<PAGE>

                                                               PRINCIPAL AMOUNT
                                                                 OF THE SERIES
                                                              2004-A NOTES TO BE
      NAME OF PURCHASERS                                          PURCHASED

METROPOLITAN LIFE INSURANCE COMPANY                               $5,000,000
1 MetLife Plaza
27-01 Queens Plaza North
Long Island City, New York 11101

Payments

All scheduled payments of principal and interest by wire transfer of immediately
available funds to:

      JP Morgan Chase Bank
      ABA #021-000-021
      Account Number: 002-2-410591
      Account Name: Metropolitan Life Insurance Company
      Reference: Genesee & Wyoming Inc. 4.85% Series 2004-A Senior Notes due
      11/1/11

      With sufficient information to identify the source and application of such
      funds, including issuer, PPN#, interest rate, maturity and whether payment
      is of principal, interest, make whole amount or otherwise.

      For all payments other than scheduled payments of principal and interest,
      the Company shall seek instructions from the holder, and in the absence of
      instructions to the contrary, will make such payments to the account and
      in the manner set forth above.

Notices

All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed:

      Metropolitan Life Insurance Company
      Investments, Private Placements
      10 Park Avenue
      Morristown, New Jersey 07962-1902
      Attention: Director
      Fax Number: (973) 355-4250

With a copy (OTHER than with respect to deliveries of financial statements) to:

                                      A-5
<PAGE>

      Metropolitan Life Insurance Company
      10 Park Avenue
      Morristown, New Jersey 07962-1902
      Attention: Chief Counsel - Securities Investments (PRIV)
      Fax Number: (973) 355-4338

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 13-5581829

                                      A-6
<PAGE>

                                                               PRINCIPAL AMOUNT
                                                                 OF THE SERIES
                                                              2004-A NOTES TO BE
         NAME OF PURCHASERS                                        PURCHASED

TEACHERS INSURANCE AND ANNUITY                                    $18,000,000
  ASSOCIATION OF AMERICA
730 Third Avenue
New York, New York 10017

Payments

All payments on or in respect of the Notes shall be made in immediately
available funds on the due date by electronic funds transfer through the
Automated Clearing House System to:

      JP Morgan Chase Bank
      ABA #021-000-021
      Account Number 900-9-000200
      For further credit to the TIAA Account Number: G07040
      Reference: PPN #371559 A* 6/Genesee & Wyoming Inc./Maturity Date:
      November 1, 2011/Interest Rate: 4.85%/Principal and Interest Breakdown

Notices

Contemporaneous with the above electronic funds transfer, advice setting forth
(1) the full name, private placement number, interest rate and maturity date of
the Notes; (2) allocation of payment between principal, interest, Make-Whole
Amount, other premium or any special payment; and (3) the name and address of
the bank from which such electronic funds transfer was sent, shall be delivered,
mailed or faxed to:

      Teachers Insurance and Annuity Association of America
      730 Third Avenue
      New York, New York 10017
      Attention: Securities Accounting Division
      Phone Number: (212) 916-6004
      Fax Number: (212) 916-6955

All other notices and communications shall be delivered or mailed to:

      Teachers Insurance and Annuity Association of America
      730 Third Avenue
      New York, New York 10017
      Attention: Fixed Income and Real Estate
      Phone Number: (212) 916-4308 (Loren Archibald)
                    (212) 916-4000 (General Number)

      Fax Number: (212) 916-6140

                                      A-7
<PAGE>

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 13-1624203

                                      A-8
<PAGE>

                                                               PRINCIPAL AMOUNT
                                                                 OF THE SERIES
                                                              2004-A NOTES TO BE
          NAME OF PURCHASERS                                      PURCHASED

UNITED OF OMAHA LIFE INSURANCE COMPANY                            $9,000,000
Mutual of Omaha Plaza
Omaha, Nebraska 68175-1011
Attention: 4-Investment Loan Administration

Payments

All principal and interest payments on or in respect of the Notes shall be made
by wire transfer of immediately available funds to:

      JPMorgan Chase Bank
      ABA #021000021
      Private Income Processing

      for credit to: United of Omaha Life Insurance Company
      Account Number 900-9000200
      a/c G07097
      PPN: 371559 A* 6
      Interest Amount: ____________________________________________
      Principal Amount: ___________________________________________

Notices

All notices of payments of principal and interest, on or in respect of the Notes
and written confirmation of each such payment, corporate actions and
reorganization notifications to:

      JPMorgan Chase Bank
      14201 Dallas Parkway, 13th Floor
      Dallas, Texas 75254-2917
      Attention: Income Processing - G. Ruiz
      a/c: G07097

All other notices and communications (i.e., quarterly/annual reports, tax
filings, modifications, waivers regarding the indenture) to be addressed as
first provided above.

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 47-0322111

                                      A-9
<PAGE>

                                  DEFINED TERMS

      As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:

      "Additional Notes" is defined in SECTION 2.2.

      "Additional Purchasers" means purchasers of Additional Notes.

      "Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any other Person beneficially owning or holding,
directly or indirectly, 10% or more of any class of voting or equity interests
of such first Person or any Subsidiary or any Person of which such first Person
and its Subsidiaries beneficially own or hold, in the aggregate, directly or
indirectly, 10% or more of any class of voting or equity interests. As used in
this definition, "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to an
"Affiliate" is a reference to an Affiliate of the Company.

      "Agreement" is defined in the introductory paragraphs.

      "Bank Credit Agreement" means the Amended and Restated Revolving Credit
and Term Loan Agreement dated as of November 12, 2004 by and among the Company,
certain Subsidiaries of the Company named therein, Bank of America, N.A. (as
successor to Fleet National Bank), as administrative agent, and the other
financial institutions party thereto, as amended, restated, joined, supplemented
or otherwise modified from time to time, and any renewals, extensions or
replacements thereof, which constitute the primary bank credit facility of the
Company and its Subsidiaries.

      "Bank Lenders" means the banks and financial institutions party to the
Bank Credit Agreement.

      "Business Day" means any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York are required or authorized to be
closed.

      "Canadian Term Loan" has the meaning set forth in the Bank Credit
Agreement.

      "Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

      "Capital Lease Obligation" means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.

                                   SCHEDULE B
                          (to Note Purchase Agreement)

<PAGE>

      "Closing" is defined in SECTION 3.

      "Closing Date" is defined in SECTION 3.

      "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

      "Collateral Release" is defined in SECTION 2.3(b).

      "Company" means Genesee & Wyoming Inc., a Delaware corporation.

      "Confidential Information" is defined in SECTION 20.

      "Consolidated Debt" means as of any date of determination the total amount
of all Debt of the Company and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.

      "Consolidated EBITDAR" shall mean, for any period, Consolidated Net Income
for such period plus (to the extent deducted in computing such Consolidated Net
Income and without duplication) (a) depreciation, depletion, if any, and
amortization expense for such period, (b) income tax expense for such period,
and (c) Consolidated Fixed Charges for such period, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in accordance
with GAAP.

      "Consolidated Fixed Charges" means, with respect to any period, the sum of
(i) Consolidated Interest Expense for such period plus (ii) Lease Rentals for
such period, determined on a consolidated basis for the Company and its
Restricted Subsidiaries.

      "Consolidated Interest Expense" shall mean, for any period, the aggregate
amount of interest required to be paid or accrued by the Company and its
Restricted Subsidiaries during such period on all Debt of the Company and its
Restricted Subsidiaries related to the borrowing of money or the obtaining of
credit outstanding during all or any part of such period, including payments
consisting of interest in respect of any Capital Lease and including commitment
fees, agency fees, facility fees, balance deficiency fees and similar fees or
expenses in connection with the borrowing of money (other than non-cash interest
or fees) solely to the extent that such fees are properly included as interest
expense in accordance with GAAP.

      "Consolidated Net Income" shall mean, for any period, the consolidated net
income of the Company and its Restricted Subsidiaries determined in accordance
with GAAP, after eliminating therefrom all extraordinary nonrecurring items of
income or loss; minus any equity in the net income of (or plus any equity in the
net loss of) any equity investment of the Company or any Restricted Subsidiary
in (x) GWI Holdings Pty. Limited or (y) any Unrestricted Subsidiary, plus cash
dividends or similar cash distributions paid to the Company or its Restricted
Subsidiaries from (x) GWI Holdings Pty. Limited or (y) any Unrestricted
Subsidiary, during the applicable period.

                                      B-2
<PAGE>

      "Consolidated Net Worth" shall mean the consolidated stockholder's equity
of the Company and its Restricted Subsidiaries, as defined according to GAAP.

      "Consolidated Total Assets" means, as of any date of determination, the
total amount of all assets of the Company and its Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP.

      "Consolidated Total Capitalization" means, at any time, the sum of (i)
Consolidated Net Worth and (ii) Consolidated Debt.

      "Debt" means, with respect to any Person, without duplication,

            (a) its liabilities for borrowed money;

            (b)   its liabilities for the deferred purchase price of property
      acquired by such Person (excluding accounts payable and other accrued
      liabilities arising in the ordinary course of business but including,
      without limitation, all liabilities created or arising under any
      conditional sale or other title retention agreement with respect to any
      such property);

            (c)   its Capital Lease Obligations;

            (d)   its liabilities for borrowed money secured by any Lien with
      respect to any property owned by such Person (whether or not it has
      assumed or otherwise become liable for such liabilities); and

            (e)   any Guaranty by such Person with respect to liabilities of a
      type described in any of clauses (a) through (d) hereof.

      Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

      "Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

      "Default Rate" means with respect to the Notes of any Series that rate of
interest that is 2% per annum above the rate of interest stated in clause (a) of
the first paragraph of the Notes of such Series (and of such tranche if such
Series has separate tranches).

      "Environmental Laws" means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

                                      B-3
<PAGE>

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

      "ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under Sections 414(b), (c) or (m) of the Code.

      "Event of Default" is defined in SECTION 11.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Fair Market Value" means, at any time and with respect to any property,
the sale value of such property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell), as reasonably
determined in the good faith opinion of the Company's board of directors.

      "GAAP" means those generally accepted accounting principles as in effect
from time to time in the United States of America.

      "Governmental Authority" means

            (a)   the government of

                  (i)   the United States of America or any state or other
            political subdivision thereof, or

                  (ii)  any jurisdiction in which the Company or any Restricted
            Subsidiary conducts all or any part of its business, or which has
            jurisdiction over any properties of the Company or any Restricted
            Subsidiary, or

            (b)   any entity exercising executive, legislative, judicial,
      regulatory or administrative functions of, or pertaining to, any such
      government.

      "Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:

            (a)   to purchase such Debt or obligation or any property
      constituting security therefor primarily for the purpose of assuring the
      owner of such Debt or obligation of the ability of any other Person to
      make payment of the Debt or obligation;

            (b)   to advance or supply funds (i) for the purchase or payment of
      such Debt or obligation, or (ii) to maintain any working capital or other
      balance sheet condition or any

                                      B-4
<PAGE>

      income statement condition of any other Person or otherwise to advance or
      make available funds for the purchase or payment of such Debt or
      obligation;

            (c)   to lease properties or to purchase properties or services
      primarily for the purpose of assuring the owner of such Debt or obligation
      of the ability of any other Person to make payment of the Debt or
      obligation; or

            (d)   otherwise to assure the owner of such Debt or obligation
      against loss in respect thereof.

      In any computation of the Debt or other liabilities of the obligor under
any Guaranty, the Debt or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor, provided
that the amount of such Debt outstanding for purposes of this Agreement shall
not exceed the maximum amount of Debt that is the subject of such Guaranty.

      "Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

      "holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to SECTION
13.1.

      "Institutional Investor" means (a) any original purchaser of a Note and
(b) any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form.

      "Lease Rentals" shall mean, for any period, the aggregate amount of fixed
rental or operating lease expense payable by the Company and its Restricted
Subsidiaries with respect to leases of real and personal property (excluding
Capital Lease Obligations) determined in accordance with GAAP.

      "Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement (other than an operating
lease) or Capital Lease, upon or with respect to any property or asset of such
Person (including, in the case of stock, shareholder agreements, voting trust
agreements and all similar arrangements).

      "Make-Whole Amount" shall have the meaning (i) set forth in SECTION 8.6
with respect to any Series 2004-A Note and (ii) set forth in the applicable
Supplement with respect to any other Series of Notes.

                                      B-5
<PAGE>

      "Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Restricted Subsidiaries taken as a whole.

      "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries taken as a whole, or (b) the rights,
remedies and/or benefits of the holders of the Notes under this Agreement
(including any Supplement) and the Notes, or (c) the rights, remedies and/or
benefits of the holders of the Notes under the Subsidiary Guaranty or (d) the
validity or enforceability of this Agreement (including any Supplement), the
Notes or the Subsidiary Guaranty.

      "Material Subsidiary" means, at any time, any Restricted Subsidiary of the
Company which, together with all other Restricted Subsidiaries of such
Restricted Subsidiary, accounts for at least 5% of Consolidated Total Assets.

      "Memorandum" is defined in SECTION 5.3.

      "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).

      "NAIC" is defined in SECTION 20.

      "Notes" is defined in SECTION 1.

      "Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the Company or any Subsidiary Guarantor, as
applicable, whose responsibilities extend to the subject matter of such
certificate.

      "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

      "Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.

      "Plan" means an "employee benefit plan" (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA (other than a Multiemployer Plan) that is
established or maintained, or to which contributions are made or required to be
made, by the Company or any ERISA Affiliate or with respect to which the Company
or any ERISA Affiliate may have any liability.

      "Priority Debt" means (without duplication), as of the date of any
determination thereof, the sum of (i) all unsecured Debt of Restricted
Subsidiaries (including all Guaranties of Debt of the Company) but excluding (v)
Debt outstanding under the Canadian Term Loan in an aggregate principal amount
not to exceed 38,500,000 Canadian Dollars, (w) unsecured Debt of Subsidiary
Guarantors, (x) Debt owing to the Company or any Wholly-Owned Restricted
Subsidiary, (y) Debt outstanding at the time such Person became a Restricted
Subsidiary (other

                                      B-6
<PAGE>

than an Unrestricted Subsidiary which is designated as a Restricted Subsidiary
pursuant to SECTION 9.6 hereof), provided that such Debt shall have not been
incurred in contemplation of such person becoming a Restricted Subsidiary, and
(z) all Guaranties of Debt of the Company by any Restricted Subsidiary which has
also guaranteed the Notes and (ii) all Debt of the Company and its Restricted
Subsidiaries secured by Liens other than Debt secured by Liens permitted by
subparagraphs (a) through (i), inclusive, of SECTION 10.4.

      "property" or "properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.

      "PTE" is defined in SECTION 6.3.

      "Purchasers" means the purchasers of the Notes named in SCHEDULE A hereto.

      "QPAM Exemption" means PTE 84-14 issued by the United States Department of
Labor.

      "Required Holders" means, at any time, the holders of more than 50% in
principal amount of the Notes of each Series at the time outstanding (exclusive
of Notes then owned by the Company or any of its Affiliates and any Notes held
by parties who are contractually required to abstain from voting with respect to
matters affecting the holders of the Notes).

      "Responsible Officer" means any Senior Financial Officer of the Company
and any other officer of the Company with responsibility for the administration
of the relevant portion of this Agreement.

      "Restricted Subsidiary" means any Subsidiary in which: (i) at least a
majority of the voting securities are owned by the Company and/or one or more
wholly-owned Restricted Subsidiaries and (ii) the Company has not designated an
Unrestricted Subsidiary by notice in writing given to the holders of the Notes.

      "Securities Act" means the Securities Act of 1933, as amended from time to
time.

      "Senior Debt" means, as of the date of any determination thereof, all
Consolidated Debt, other than Subordinated Debt.

      "Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company or any Subsidiary
Guarantor, as applicable.

      "Series" means any series of Notes issued pursuant to this Agreement or
any Supplement hereto.

      "Series 2004-A Notes" is defined in SECTION 1.

      "Source" is defined in SECTION 6.3.

                                      B-7
<PAGE>

      "Subordinated Debt" means all unsecured Debt of the Company which shall
contain or have applicable thereto subordination provisions providing for the
subordination thereof to other Debt of the Company (including, without
limitation, the obligations of the Company under this Agreement, any Supplement
or the Notes).

      "Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership or joint venture can and does ordinarily
take major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.

      "Subsidiary Guarantor" means each Subsidiary which is party to the
Subsidiary Guaranty.

      "Subsidiary Guaranty" is defined in SECTION 2.3.

      "Successor Corporation" is defined in SECTION 10.6.

      "Supplement" is defined in SECTION 2.2.

      "tranche" means all Notes of a Series having the same maturity, interest
rate and schedule for mandatory prepayments.

      "Unrestricted Subsidiary" means any Subsidiary so designated by the
Company.

      "Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary one hundred percent of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Restricted Subsidiaries at such
time.

                                      B-8
<PAGE>

                         CHANGES IN CORPORATE STRUCTURE

                                      None

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

<PAGE>

           SUBSIDIARIES OF THE COMPANY, OWNERSHIP OF SUBSIDIARY STOCK

<TABLE>
<CAPTION>
                                                     Ownership
                                                   (by Genesee &
                                                    Wyoming Inc.
                               State of           unless otherwise          States of
Name of Subsidiary             Formation             indicated)             Operation
---------------------------    ----------     -------------------------     ---------
<S>                            <C>            <C>                           <C>
RESTRICTED
SUBSIDIARIES

Allegheny & Eastern            Delaware        100% owned by Buffalo &         PA
Railroad, LLC                                  Pittsburgh Railroad, Inc.

Arkansas Louisiana &           Delaware        100%                            AR/LA
Mississippi Railroad
Company

Buffalo & Pittsburgh           Delaware        100%                            NY/PA
Railroad, Inc.

P&L Junction Holdings, Inc.    New York        100%                            NY

Chattahoochee Industrial       Georgia         100%                            GA
Railroad

Commonwealth Railway,          Virginia        100% owned by Rail              VA
Incorporated                                   Link, Inc.

Corpus Christi Terminal        Delaware        100%                            TX
Railroad, Inc.

Fordyce and Princeton R.R.     Arkansas        100%                            AR
Company

GWI Holdings Pty Ltd           Western         100%
                               Australia

Genesee and Wyoming
Railroad Company               New York        100%                            NY
</TABLE>

                                  SCHEDULE 5.4
                          (to Note Purchase Agreement)

<PAGE>

<TABLE>
<CAPTION>
                                                     Ownership
                                                   (by Genesee &
                                                    Wyoming Inc.
                               State of           unless otherwise            States of
Name of Subsidiary             Formation             indicated)               Operation
---------------------------    ----------     -------------------------       ---------
<S>                            <C>            <C>                             <C>
Genesee & Wyoming              Delaware        100%                            NY
Railroad Services, Inc.

Genesee & Wyoming              Canada          100% owned by GWI               Quebec
Canada Inc.                                    Canada, Inc.

Golden Isles Terminal          Delaware        100%                            GA
Railroad, Inc.

GWI Canada, Inc.               Delaware        100%                            Quebec

GWI Leasing Corporation        Delaware        100%                            CT

Huron Central Railway Inc.     Canada          100% owned by                   Ontario
                                               Genesee & Wyoming
                                               Canada Inc.

Illinois & Midland Railroad,   Delaware        100%                            IL
Inc.

Louisiana & Delta Railroad,    Delaware        100%                            LA
Inc.

Mirabel Railway, Inc.          Canada          100% owned by Genesee &
                                               Genesee & Wyoming
                                               Canada Inc.                     Quebec

Pittsburg & Shawmut            Delwara         100% owned by Buffalo           PA
Railroad, LLC                                  & Pittsburgh Railroad, Inc.

Portland & Western             New York        100%                            OR
Railroad, Inc.
</TABLE>

                                      5.4-2
<PAGE>

<TABLE>
<CAPTION>
                                                     Ownership
                                                   (by Genesee &
                                                    Wyoming Inc.
                               State of           unless otherwise          States of
Name of Subsidiary             Formation             indicated)             Operation
---------------------------    ----------     -------------------------     --------------
<S>                            <C>            <C>                           <C>
Quebec-Gatineau Railway        Canada           100% owned by Genesee &     Quebec
Inc.                                            Wyoming
                                                Inc.

Rail Link, Inc.                Virginia         100%                        AZ/AR/CA/CO/F
                                                                            L/GA/LA/MI/MT
                                                                            /NC/PA/SC/TN/T
                                                                            X/UT/WY

Rochester & Southern           New York         100%                        NY
Railroad, Inc.

Savannah Port Terminal         Delaware         100%                        GA
Railroad, Inc.

Talleyrand Terminal            Virginia         100% owned by Rail          FL
Railroad Company, Inc.                          Link, Inc.

Willamette & Pacific           New York         100%                        OR
Railroad, Inc.

South Buffalo Railway          New York         100%                        NY
Company

Emons Transportation           Delaware         100%                        PA
Group, Inc.

Emons Finance Corp.            Delaware         100% owned by Emons         DE
                                                Transportation Group,
                                                Inc.

Emons Industries, Inc.         New York         100% owned by Emons         PA
                                                Transportation Group,
                                                Inc.
</TABLE>

                                     5.4-3
<PAGE>

<TABLE>
<CAPTION>
                                                     Ownership
                                                   (by Genesee &
                                                    Wyoming Inc.
                               State of           unless otherwise          States of
Name of Subsidiary             Formation             indicated)             Operation
---------------------------    ----------     -------------------------     ---------
<S>                            <C>            <C>                           <C>
Maine Intermodal               Delaware         100% owned by Emons         ME
Transportation, Inc.                            Transportation Group,
                                                Inc.

York Rail Logistics, Inc.      Delaware         100% owned by Emons         PA
                                                Transportation Group,
                                                Inc.

Emons Railroad Group, Inc.     Delaware         100% owned by Emons         PA
                                                Transportation Group,
                                                Inc.

York Railway Company           Delaware         100% owned by Emons         PA
                                                Railroad Group, Inc.

Maryland and Pennsylvania      Delaware         100% owned by York
Railroad, LLC                                   Railway Company             PA/MD

Yorkrail, LLC                  Delaware         100% owned by York          PA
                                                Railway Company

St. Lawrence & Atlantic        Delaware         100% owned by Emons         ME/NH/VT
Railroad Company                                Railroad Group, Inc.

St. Lawrence & Atlantic        Quebec           100% owned by Emons         Quebec
Railroad (Quebec), Inc.                         Quebec Group, Inc.

SLR Leasing Corp.              Delaware         100% owned by St.           ME/NH/VT
                                                Lawrence & Atlantic
                                                Railroad Company

Utah Railway Company           Utah             100%                        UT
</TABLE>

                                     5.4-4
<PAGE>

<TABLE>
<CAPTION>
                                                     Ownership
                                                   (by Genesee &
                                                    Wyoming Inc.
                               State of           unless otherwise          States of
Name of Subsidiary             Formation             indicated)             Operation
---------------------------    ----------     -------------------------     ---------
<S>                            <C>            <C>                           <C>
Salt Lake City Southern        Delaware       100% by Utah Railway          UT
Railroad Company, Inc.                        Company
</TABLE>

                                     5.4-5
<PAGE>

<TABLE>
<CAPTION>
                                                     Ownership
                                 State of      (by Genesee & Wyoming Inc.     States of
Name of Subsidiary              Formation      unless otherwise indicated)    Operation
----------------------------   ------------    --------------------------    -----------
<S>                            <C>             <C>                           <C>
UNRESTRICTED
SUBSIDIARIES

Breaux Bridge Railroad, Inc.   Delaware        100%                          LA

Genesee & Wyoming              Delaware        100%                          Holding Co.
Investors, Inc.

GWI Dayton, Inc.               Delaware        100%                          Holding Co.

GW Logistics, Inc.             Delaware        100%                          OR

GWI Rail Management            Delaware        100%                          Holding Co.
Corporation

Finger Lakes Railway           Delaware        44.0% Genesee & Wyoming,
Company                                        Inc.

Kittanning Equipment           Pennsylvania    100%                          PA
Leasing Company

Tazewell & Peoria Railroad,    Delaware        100%                          IL
Inc.

G.W. Mexico, S.A. de C.V.      Mexico          99%

GW Servicios, S.A. de C.V.     Mexico          86.84% Genesee & Wyoming,
                                               Inc.; 13.16% IFC

Compania de Ferrocarriles                      96.53% owned by Servicios;
Chiapas-Mayab, S.A. de C.V.    Mexico          3.47% by Genesee & Wyoming
                                               Inc.
</TABLE>

                                     5.4-6
<PAGE>

<TABLE>
<CAPTION>
                                                              Ownership
                                   State of           (by Genesee & Wyoming Inc.        States of
Name of Subsidiary                Formation           unless otherwise indicated)       Operation
---------------------------      ------------         --------------------------        ---------
<S>                              <C>                  <C>                               <C>
Australia Southern Railroad      South Australia      100% owned by Australian
Pty Ltd.                                              Railroad Group Pty Ltd

S A Rail Pty Limited             South Australia      100% owned by Australian
                                                      Southern Railroad Pty Limited

Genesee & Wyoming                Bolivia              90% GWI; 10% owned by
Bolivia S.R.L.                                        Unirail

Latin American Rail, LLC         New York             47.5% GWI; 52.5% Unirail,
                                                      LLC

Australia Northern Railroad      Australia            100% owned by Australian
Pty Limited                                           Railraod Group Pty Ltd

Viper Line Pty Ltd               South Australia      100% owned by Australian
                                                      Railroad Group Pty Ltd

Asia Pacific Transport Pty       South Australia      50% owned by Australian
Ltd                                                   Southern Railroad, Pty Ltd;
                                                      50% Brown & Root
                                                      Engineering & Construction Pty
                                                      Ltd (parent of Kinhill Pty Ltd)

GWA Holdings, Pty Ltd            Australia            100% owned by Australian
                                                      Railroad Group Pty Ltd

GWA Northern                     Australia            100% owned by GWA
                                                      Holdings, Pty Ltd

GWA Operations North             Australia            100% owned by GWA
                                                      Holdings, Pty Ltd
</TABLE>

                                     5.4-7
<PAGE>

<TABLE>
<CAPTION>
                                                          Ownership
                                 State of          (by Genesee & Wyoming Inc.        States of
Name of Subsidiary               Formation          unless otherwise indicated)      Operation
---------------------------      ---------        ------------------------------     ---------
<S>                              <C>              <C>                                <C>
Australian Railroad Group        Western          50% owned by GWI Holdings
Pty Ltd                          Australia        Pty Ltd (50% owned by
                                                  Wesfarmers Railroad Holdings
                                                  Pty Limited, Western Australia)

AWR Holdings WA Pty Ltd          Western          100% owned by Australian
                                 Australia        Railroad Group Pty Ltd

ARG Financing Pty Ltd            Western          100% owned by Australian
                                 Australia        Railroad Group Pty Ltd

ARG Risk Management Pty Ltd      Western          100% owned by Australian
                                 Australia        Railroad Group Pty Ltd

Australia Western Railroad       Western          100% owned by AWR Holdings
Pty Ltd                          Australia        WA Pty Ltd

AWR Lease Co Pty Ltd             Western          100% owned by Australia
                                 Australia        Western Railroad Pty Ltd

Westrail Freight                 Western          100% owned by AWR Holdings
Employment Pty Ltd               Australia        WA Pty Ltd

Westrail Freight Pty Ltd         Western          100% owned by Australia Western
                                 Australia        Railroad Pty Ltd

Westrail Freight Services        Western          100% owned by Australia
Pty Ltd                          Australia        Western Railroad Pty Ltd

Westrail Logistics Pty Ltd       Western          100% owned by Australia Western
                                 Australia        Railroad Pty Ltd
</TABLE>

                                     5.4-8
<PAGE>

<TABLE>
<CAPTION>
                                                          Ownership
                                 State of          (by Genesee & Wyoming Inc.        States of
Name of Subsidiary               Formation          unless otherwise indicated)      Operation
---------------------------      ---------        ------------------------------     ---------
<S>                              <C>              <C>                                <C>
WestNet Rail Pty Ltd             Western          100% owned by AWR Holdings
                                 Australia        WA Pty Ltd

WestNet StandardGauge Pty        Western          100% owned by WestNet Rail
Ltd.                             Australia        Pty Ltd

WestNet NarrowGauge Pty Ltd      Western          100% owned by WestNet Rail
                                 Australia        Pty Ltd

ARG Sell Down Holdings           Western          100% owned by Australian
                                 Australia        Railroad Group Pty Ltd

AER Holdings                     Western          100% owned by Australian
                                 Australia        Railroad Group Pty Ltd

ARG Sell Down No. 1              Western          100% owned by ARG Sell
                                 Australia        Down Holdings

ARG Sell Down No. 2              Western          100% owned by ARG Sell
                                 Australia        Down Holdings

Australia Eastern Railroad       Western          100% owned by AER Holdings
                                 Australia

Australia Eastern Railroad       Western          100% owned by Australia
No.2                             Australia        Eastern Railroad

Erie Holdings Co.                New York         100%                               NY

The Dansville and Mount          New York         99% - 454 shares out of a total    NY
Morris Railroad Company                           of 458 shares issued and
                                                  outstanding are owned by
                                                  Genesee & Wyoming Inc.
</TABLE>

                                     5.4-9
<PAGE>

                              FINANCIAL STATEMENTS

                   Second Fiscal Quarter Ending June 30, 2004
 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission

                      Fiscal Year Ending December 31, 2003
  Annual Report on Form 10-K filed with the Securities and Exchange Commission

                                  SCHEDULE 5.5
                          (to Note Purchase Agreement)

<PAGE>

                             LICENSES, PERMITS, ETC.

                                      None

                                  SCHEDULE 5.11
                          (to Note Purchase Agreement)

<PAGE>

                           EXISTING DEBT; FUTURE LIENS

      1. Emons' State Funded Loans. The State of Maine 94-1, the State of Maine
95-1 loan, the New Hampshire Bond and the Promissory Note in favor of Canadian
National, with an aggregate outstanding balance of $1,356,817 as of September
30, 2004.

      2. Williamette Valley Note. The Installment Note dated as of February 5,
1997 between WPR and Valley Development Initiatives provided for a loan from
Valley Development Initiatives in an aggregate principal amount of not more than
$400,000, having an interest rate of five percent (5%) per annum and a term of
ten years, in substantially the form delivered to the Administrative Agent, with
outstanding principal of $123,356 as of September 30, 2004.

      3. Loans from the State of Illinois to the Illinois & Midland Railroad,
dated as of March 22, 1995 and July 13, 1996, with aggregate outstanding
principal of $514,738 as of September 30, 2004.

      4. Fourth Amended and Restated Revolving Credit and Term Loan Agreement,
dated as of October 31, 2002, among the Company, Quebec-Gatineau Railway Inc.,
the Guarantors, the Administrative Agent and the Banks with principal
outstanding as of September 30, 2004 of (1):

                    a. US Revolver -           $ 77,700,000
                    b. Canadian Term Loan -    $ 30,516,593 (2)

----------
(1)   To be paid with the proceeds of the Bank Credit Agreement

(2)   US Dollar equivalent of Canadian Dollar principal

                                  SCHEDULE 5.15
                          (to Note Purchase Agreement)

<PAGE>

                                 EXISTING LIENS

                See attached list of equipment and office leases

                                  SCHEDULE 10.4
                          (to Note Purchase Agreement)

<PAGE>

                             AFFILIATE TRANSACTIONS

The Company is required by the terms of the Financial Support Agreement dated
December 5, 2000 between the Company, its Mexican subsidiaries GW Servicios,
S.A. de C.V. ("Servicios") and Compania de Ferrocarriles Chiapas-Mayab, S.A. de
C.V. ("FCCM") and the lenders thereto ("Senior Lenders"), to provide cash to
Servicios and FCCM in an amount up to US$8.0 million, if necessary, to meet
their investment and financial obligations prior to completing the investment
phase of the project described therein ("Physical Completion") and up to $7.5
million, if necessary, to meet their debt service obligations prior to
completing the financial phase of said project. As of September 30, 2004,
Servicios and FCCM had not achieved Physical Completion. In September 2004, the
Company provided $1.7 million to FCCM pursuant to this financial support
agreement as a long-term loan subordinated to the Senior Lenders' loans.

                                  SCHEDULE 10.7
                          (to Note Purchase Agreement)

<PAGE>

                                 [FORM OF NOTE]

                             GENESEE & WYOMING INC.

              4.85% SERIES 2004-A SENIOR NOTE, DUE NOVEMBER 1, 2011

No. [_______]                                                             [Date]
$[__________]                                                    PPN 371559 A* 6

      FOR VALUE RECEIVED, the undersigned, GENESEE & WYOMING INC. (herein called
the "Company"), a corporation organized and existing under the laws of the State
of Delaware, hereby promises to pay to [_____________________] or registered
assigns, the principal sum of [______________] DOLLARS on November 1, 2011 with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 4.85% per annum from the date
hereof, payable semi-annually, on the first day of May and November in each year
and at maturity, commencing on May 1, 2005, until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as defined
in the Note Purchase Agreement referred to below), payable semi-annually as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate of 6.85% per annum.

      Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank of America, N.A in New York, New York or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreement referred to
below.

      This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to the Note Purchase Agreement, dated as of November 12, 2004
(as from time to time amended, supplemented or modified, the "Note Purchase
Agreement"), between the Company and the respective Purchasers named therein and
is entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in SECTION 20 of the Note Purchase Agreement and (ii) to have made the
representations set forth in SECTIONS 6.1 and 6.3 of the Note Purchase
Agreement.

      This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

                                    EXHIBIT 1
                          (to Note Purchase Agreement)

<PAGE>

      This Note is not subject to regularly scheduled prepayments of principal.
This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

      Pursuant to the Subsidiary Guaranty Agreement dated as of November 12,
2004 (as amended, restated or otherwise modified from time to time, the
"Subsidiary Guaranty"), certain Subsidiaries of the Company have absolutely and
unconditionally guaranteed payment in full of the principal of, Make-Whole
Amount, if any, and interest on this Note and the performance by the Company of
its obligations contained in the Note Purchase Agreement all as more fully set
forth in said Subsidiary Guaranty.

      If an Event of Default, as defined in the Note Purchase Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

      This Note shall be construed and enforced in accordance with, and the
rights of the issuer and holder hereof shall be governed by, the law of the
State of New York.

                                                GENESEE & WYOMING INC.

                                                By _____________________________
                                                   Name: _______________________
                                                   Title: ______________________

                                     E-1-2
<PAGE>

                               GUARANTY AGREEMENT

                                   EXHIBIT 2.3
                          (to Note Purchase Agreement)

<PAGE>
================================================================================

                               Guaranty Agreement

                          Dated as of November 12, 2004

                Re: $75,000,000 4.85% Series 2004-A Senior Notes,
                              Due November 1, 2011
                                       of
                             Genesee & Wyoming Inc.

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                                TABLE OF CONTENTS

                          (Not a part of this Guaranty)

<TABLE>
<CAPTION>
Section                          Heading                                   Page
<S>          <C>                                                           <C>
Parties................................................................      1

Recitals...............................................................      1

Section 1.   Definitions...............................................      2

Section 2.   Guaranty of Notes and Note Purchase Agreement.............      2

Section 3.   Guaranty of Payment and Performance.......................      3

Section 4.   General Provisions Relating to the Guaranty...............      3

Section 5.   Representations and Warranties of the Guarantors..........      8

Section 6.   Guarantor Covenants.......................................     10

Section 7.   Amendments, Waivers and Consents..........................     10

Section 8.   Notices...................................................     11

Section 9.   Payments Free and Clear of Taxes..........................     12

Section 10.  Miscellaneous.............................................     14

Section 11.  Indemnity.................................................     17

Signature..............................................................     18
</TABLE>

Attachments to Guaranty Agreement:

Exhibit A  -- Guaranty Joinder
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                               GUARANTY AGREEMENT

                Re: $75,000,000 4.85% Series 2004-A Senior Notes,
                              Due November 1, 2011
                                       of
                             Genesee & Wyoming Inc.

      This Guaranty Agreement dated as of November 12, 2004 (the "Guaranty") is
entered into on a joint and several basis by each of the undersigned, together
with any entity which may become a party hereto by execution and delivery of a
Guaranty Joinder in substantially the form set forth as Exhibit A hereto (a
"Guaranty Joinder") (which parties are hereinafter referred to individually as a
"Guarantor" and collectively as the "Guarantors").

                                    RECITALS

      A. Each Guarantor is presently a direct or indirect Subsidiary of Genesee
& Wyoming Inc., a Delaware corporation (the "Company").

      B. In order to raise funds to refinance existing indebtedness and for
general corporate purposes, the Company has entered into that certain Note
Purchase Agreement, dated as of November 12, 2004 (the "Note Purchase
Agreement") between the Company and each of the purchasers named on Schedule A
attached thereto (the "Note Purchasers"; together with their successors, assigns
or any other future holders from time to time of the Notes, the "Holders")
providing for, among other things, the issue and sale by the Company to the Note
Purchasers of the Company's 4.85% Series 2004-A Senior Notes, due November 1,
2011 in the aggregate principal amount of $75,000,000 (the "Notes").

      C. The Note Purchasers have required as a condition to their purchase of
the Notes that the Company cause each of the undersigned to enter into this
Guaranty and to cause each Subsidiary which hereafter at any time provides
security or other credit support of any kind with respect to, or otherwise
becomes guarantor of, the Debt of the Company outstanding under the Bank Credit
Agreement to enter into a Guaranty Joinder, in each case as security for the
Notes, and the Company has agreed to cause each of the undersigned to execute
this Guaranty and to cause each such Subsidiary to execute a Guaranty Joinder,
in each case in order to induce the Note Purchasers to purchase the Notes and
thereby benefit the Company and its Subsidiaries by providing funds to enable
the Company to refinance existing indebtedness and to enable the Company and its
Subsidiaries to have funds available for general corporate purposes.

      D. Each of the Guarantors will derive substantial direct and indirect
benefit from the sale of the Notes to the Note Purchasers.

      Now, therefore, as required by the Note Purchase Agreement and in
consideration of the premises and other good and valuable consideration, the
receipt and sufficiency whereof are
<PAGE>
hereby acknowledged, each Guarantor does hereby covenant and agree, jointly and
severally, as follows:

Section 1. Definitions.

      Capitalized terms used herein shall have the meanings set forth in the
Note Purchase Agreement unless herein defined or the context shall otherwise
require.

Section 2. Guaranty of Notes and Note Purchase Agreement.

      (a) Subject to the limitation set forth in SECTION 2(B) hereof, each
Guarantor jointly and severally does hereby irrevocably, absolutely and
unconditionally guarantee unto the Holders: (1) the full and prompt payment of
the principal of, Make-Whole Amount, if any, and interest on the Notes from time
to time outstanding, as and when such payments shall become due and payable,
whether by lapse of time, upon redemption or prepayment, by extension or by
acceleration or declaration or otherwise (including (to the extent legally
enforceable) interest due on overdue payments of principal, Make-Whole Amount,
if any, and interest) in Federal or other immediately available funds of the
United States of America which at the time of payment or demand therefor shall
be legal tender for the payment of public and private debts, (2) the full and
prompt performance, observance and payment by the Company of each and all of the
indebtedness, indemnities, obligations, covenants and agreements required to be
performed or owed by the Company under the terms of the Notes and the Note
Purchase Agreement and (3) the full and prompt payment, upon demand by any
Holder, of all reasonable costs and expenses, legal or otherwise (including
reasonable attorneys' fees), if any, as shall have been expended or incurred in
the protection or enforcement of any rights, privileges or liabilities in favor
of the Holders under or in respect of the Notes, the Note Purchase Agreement or
under this Guaranty or in any action in connection therewith or herewith and in
each and every case irrespective of the validity, regularity, or enforceability
of any of the Notes or Note Purchase Agreement or any of the terms thereof or
any other like circumstance or circumstances.

      (b) The obligations of any Guarantor hereunder shall be limited to the
lesser of (i) the obligations of the Company guaranteed hereunder, or (ii) a
maximum aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), if and to the extent such Guarantor (or a trustee on its
behalf) has properly invoked the protections of the Fraudulent Transfer Laws in
each case after giving effect to all other liabilities of such Guarantor,
contingent or otherwise, that are relevant under the Fraudulent Transfer Laws.

Section 3. Guaranty of Payment and Performance.

      This is a guarantee of payment and performance and each Guarantor hereby
waives, to the fullest extent permitted by law, any right to require that any
action on or in respect of any Note or the Note Purchase Agreement be brought
against the Company or any other Person or that resort be had to any direct or
indirect security for the Notes or for this Guaranty or any

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other remedy. Any Holder may, at its option, proceed hereunder against any
Guarantor in the first instance to collect monies when due, the payment of which
is guaranteed hereby, without first proceeding against the Company or any other
Person and without first resorting to any direct or indirect security for the
Notes or for this Guaranty or any other remedy. The liability of each Guarantor
hereunder shall in no way be affected or impaired by any acceptance by any
Holder of any direct or indirect security for, or other guaranty of, any Debt,
liability or obligation of the Company or any other Person to any Holder or by
any failure, delay, neglect or omission by any Holder to realize upon or protect
any such guaranty, Debt, liability or obligation or any notes or other
instruments evidencing the same or any direct or indirect security therefor or
by any approval, consent, waiver, or other action taken, or omitted to be taken
by any such Holder.

      The covenants and agreements on the part of the Guarantors herein
contained shall be joint and several covenants and agreements, and references to
the Guarantors shall be deemed references to each of them and none of them shall
be released from liability hereunder by reason of this Guaranty ceasing to be
binding as a continuing security on any other of them.

Section 4. General Provisions Relating to the Guaranty.

      (a) Each Guarantor hereby consents and agrees that any Holder or Holders
from time to time, with or without any further notice to or assent from any
other Guarantor may, without in any manner affecting the liability of any
Guarantor under this Guaranty, and upon such terms and conditions as any such
Holder or Holders may deem advisable:

            (1) extend in whole or in part (by renewal or otherwise), modify,
      increase, change, compromise, release or extend the duration of the time
      for the performance or payment of any Debt, liability or obligation of the
      Company or of any other Person secondarily or otherwise liable for any
      Debt, liability or obligations of the Company on the Notes, or waive any
      Default with respect thereto, or waive, modify, amend or change any
      provision of any other agreement or this Guaranty; or

            (2) sell, release, surrender, modify, impair, exchange or substitute
      any and all property, of any nature and from whomsoever received, held by,
      or for the benefit of, any such Holder as direct or indirect security for
      the payment or performance of any Debt, liability or obligation of the
      Company or of any other Person secondarily or otherwise liable for any
      Debt, liability or obligation of the Company on the Notes; or

            (3) settle, adjust or compromise any claim of the Company against
      any other Person secondarily or otherwise liable for any Debt, liability
      or obligation of the Company on the Notes.

      Each Guarantor hereby ratifies and confirms any such extension, renewal,
change, sale, release, waiver, surrender, exchange, modification, amendment,
impairment, substitution, settlement, adjustment or compromise and that the same
shall be binding upon it, and hereby waives, to the fullest extent permitted by
law, any and all defenses, counterclaims or offsets

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which it might or could have by reason thereof, it being understood that such
Guarantor shall at all times be bound by this Guaranty and remain liable
hereunder.

      (b) Each Guarantor hereby waives, to the fullest extent permitted by law:

            (1) notice of acceptance of this Guaranty by the Holders or of the
      creation, renewal or accrual of any liability of the Company, present or
      future, or of the reliance of such Holders upon this Guaranty (it being
      understood that all Debt, liabilities and obligations described in SECTION
      2 hereof shall conclusively be presumed to have been created, contracted
      or incurred in reliance upon the execution of this Guaranty); and

            (2) demand of payment by any Holder from the Company or any other
      Person indebted in any manner on or for any of the Debt, liabilities or
      obligations hereby guaranteed; and

            (3) presentment for the payment by any Holder or any other Person of
      the Notes or any other instrument, protest thereof and notice of its
      dishonor to any party thereto and to such Guarantor.

      The obligations of each Guarantor under this Guaranty and the rights of
any Holder to enforce such obligations by any proceedings, whether by action at
law, suit in equity or otherwise, shall not be subject to any reduction,
limitation, impairment or termination (other than by payments in cash in full of
the Notes and the obligations of the Company under the Note Purchase Agreement),
whether by reason of any claim of any character whatsoever or otherwise and
shall not be subject to any defense, set-off, counterclaim (other than any
compulsory counterclaim), recoupment or termination whatsoever.

      (c) The obligations of each Guarantor hereunder shall be binding upon such
Guarantor and its successors and assigns, and shall remain in full force and
effect until the entire principal, interest and Make-Whole Amount, if any, on
the Notes and all other sums due pursuant to SECTION 2 shall have been paid and
such obligations shall not be affected, modified or impaired upon the happening
from time to time of any event, including without limitation any of the
following, whether or not with notice to or the consent of the Guarantors:

            (1) the genuineness, validity, regularity or enforceability of the
      Notes, the Note Purchase Agreement or any other agreement or any of the
      terms of any thereof, the continuance of any obligation on the part of the
      Company, any other Guarantor or any other Person on or in respect of the
      Notes or under the Note Purchase Agreement or any other agreement or the
      power or authority or the lack of power or authority of the Company to
      issue the Notes or the Company to execute and deliver the Note Purchase
      Agreement or any other agreement or of any other Guarantor to execute and
      deliver this Guaranty or any other agreement or to perform any of its
      obligations hereunder or the existence or continuance of the Company, any
      other Guarantor or any other Person as a legal entity; or

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            (2) any default, failure or delay, willful or otherwise, in the
      performance by the Company, any other Guarantor or any other Person of any
      obligations of any kind or character whatsoever under the Notes, the Note
      Purchase Agreement, this Guaranty or any other agreement; or

            (3) any creditors' rights, bankruptcy, receivership or other
      insolvency proceeding of the Company, any other Guarantor or any other
      Person or in respect of the property of the Company, any other Guarantor
      or any other Person or any merger, consolidation, reorganization,
      dissolution, liquidation, the sale of all or substantially all of the
      assets of or winding up of the Company, any other Guarantor or any other
      Person; or

            (4) impossibility or illegality of performance on the part of the
      Company, any other Guarantor or any other Person of its obligations under
      the Notes, the Note Purchase Agreement, this Guaranty or any other
      agreements; or

            (5) in respect of the Company, any other Guarantor or any other
      Person, any change of circumstances, whether or not foreseen or
      foreseeable, whether or not imputable to the Company, any other Guarantor
      or any other Person, or other impossibility of performance through fire,
      explosion, accident, labor disturbance, floods, droughts, embargoes, wars
      (whether or not declared), civil commotion, acts of God or the public
      enemy, delays or failure of suppliers or carriers, inability to obtain
      materials, action of any federal or state regulatory body or agency,
      change of law or any other causes affecting performance, or any other
      force majeure, whether or not beyond the control of the Company, any other
      Guarantor or any other Person and whether or not of the kind hereinbefore
      specified; or

            (6) any attachment, claim, demand, charge, Lien, order, process,
      encumbrance or any other happening or event or reason, similar or
      dissimilar to the foregoing, or any withholding or diminution at the
      source, by reason of any taxes, assessments, expenses, Debt, obligations
      or liabilities of any character, foreseen or unforeseen, and whether or
      not valid, incurred by or against the Company, any Guarantor or any other
      Person or any claims, demands, charges or Liens of any nature, foreseen or
      unforeseen, incurred by any Person, or against any sums payable in respect
      of the Notes or under the Note Purchase Agreement or this Guaranty, so
      that such sums would be rendered inadequate or would be unavailable to
      make the payments herein provided; or

            (7) any order, judgment, decree, ruling or regulation (whether or
      not valid) of any court of any nation or of any political subdivision
      thereof or any body, agency, department, official or administrative or
      regulatory agency of any thereof or any other action, happening, event or
      reason whatsoever which shall delay, interfere with, hinder or prevent, or
      in any way adversely affect, the performance by the Company, any Guarantor
      or any other Person of its respective obligations under or in respect of
      the Notes, the Note Purchase Agreement, this Guaranty or any other
      agreement; or

            (8) the failure of any Guarantor to receive any benefit from or as a
      result of its execution, delivery and performance of this Guaranty; or

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            (9) any failure or lack of diligence in collection or protection,
      failure in presentment or demand for payment, protest, notice of protest,
      notice of default and of nonpayment, any failure to give notice to any
      Guarantor of failure of the Company, any other Guarantor or any other
      Person to keep and perform any obligation, covenant or agreement under the
      terms of the Notes, the Note Purchase Agreement, this Guaranty or any
      other agreement or failure to resort for payment to the Company, any other
      Guarantor or to any other Person or to any other guaranty or to any
      property, security, Liens or other rights or remedies; or

            (10) the acceptance of any additional security or other guaranty,
      the advance of additional money to the Company or any other Person, the
      renewal or extension of the Notes or amendments, modifications, consents
      or waivers with respect to the Notes, the Note Purchase Agreement or any
      other agreement, or the sale, release, substitution or exchange of any
      security for the Notes; or

            (11) any merger or consolidation of the Company, any other Guarantor
      or any other Person into or with any other Person or any sale, lease,
      transfer or other disposition of any of the assets of the Company, any
      other Guarantor or any other Person to any other Person, or any change in
      the ownership of any shares of the Company, any other Guarantor or any
      other Person; or

            (12) any defense whatsoever that: (i) the Company or any other
      Person might have to the payment of the Notes (principal, Make-Whole
      Amount, if any, or interest), other than payment thereof in Federal or
      other immediately available funds, or (ii) the Company or any other Person
      might have to the performance or observance of any of the provisions of
      the Notes, the Note Purchase Agreement or any other agreement, whether
      through the satisfaction or purported satisfaction by the Company, any
      other Guarantor or any other Person of its debts due to any cause such as
      bankruptcy, insolvency, receivership, merger, consolidation,
      reorganization, dissolution, liquidation, winding-up or otherwise, other
      than the defense of indefeasible payment in full in cash of the Notes; or

            (13) any act or failure to act with regard to the Notes, the Note
      Purchase Agreement, this Guaranty or any other agreement or anything which
      might vary the risk of any Guarantor or any other Person; or

            (14) any other circumstance which might otherwise constitute a
      defense available to, or a discharge of, any Guarantor or any other Person
      in respect of the obligations of any Guarantor or other Person under this
      Guaranty or any other agreement, other than the defense of the
      indefeasible payment in full in cash of the Notes;

provided that the specific enumeration of the above-mentioned acts, failures or
omissions shall not be deemed to exclude any other acts, failures or omissions,
though not specifically mentioned above, it being the purpose and intent of this
Guaranty that the obligations of each Guarantor shall be absolute, irrevocable
and unconditional and shall not be discharged, impaired or varied except by the
payment of the principal of, Make-Whole Amount, if any, and interest on the

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Notes in accordance with their respective terms whenever the same shall become
due and payable as in the Notes provided and all other sums due and payable
under the Note Purchase Agreement, at the place specified in and all in the
manner and with the effect provided in the Notes and the Note Purchase
Agreement, as each may be amended or modified from time to time. Without
limiting the foregoing, it is understood that repeated and successive demands
may be made and recoveries may be had hereunder as and when, from time to time,
the Company shall default under or in respect of the terms of the Notes or the
Note Purchase Agreement and that notwithstanding recovery hereunder for or in
respect of any given default or defaults by the Company under the Notes or the
Note Purchase Agreement, this Guaranty shall remain in full force and effect and
shall apply to each and every subsequent default.

      (d) All rights of any Holder hereunder may be transferred or assigned at
any time and shall be considered to be transferred or assigned at any time or
from time to time upon the transfer of any Note whether with or without the
consent of or notice to the Guarantors under this Guaranty or to the Company.

      (e) To the extent of any payments made under this Guaranty, each Guarantor
shall be subrogated to the rights of the Holder or Holders upon whose Notes such
payment was made, but such Guarantor covenants and agrees that such right of
subrogation shall be junior and subordinate in right of payment to the prior
indefeasible final payment in cash in full of all amounts due and owing by the
Company with respect to the Notes and the Note Purchase Agreement and by the
Guarantors under this Guaranty, and the Guarantors shall not take any action to
enforce such right of subrogation, and the Guarantors shall not accept any
payment in respect of such right of subrogation, until all amounts due and owing
by the Company under or in respect of the Notes and the Note Purchase Agreement
and all amounts due and owing by the Guarantors hereunder have indefeasibly been
finally paid in cash in full. If any amount shall be paid to any Guarantor in
violation of the preceding sentence at any time prior to the later of the
indefeasible payment in cash in full of the Notes and all other amounts payable
under the Notes, the Note Purchase Agreement and this Guaranty, such amount
shall be held in trust for the benefit of the Holders and shall forthwith be
paid to the Holders to be credited and applied to the amounts due or to become
due with respect to the Notes and all other amounts payable under the Note
Purchase Agreement and this Guaranty, whether matured or unmatured. Each
Guarantor acknowledges that it has received direct and indirect benefits from
the financing arrangements contemplated by the Note Purchase Agreement and that
the waiver set forth in this paragraph (e) is knowingly made as a result of the
receipt of such benefits.

      (f) Each Guarantor agrees that to the extent the Company, any other
Guarantor or any other Person makes any payment on any Note, which payment or
any part thereof is subsequently invalidated, voided, declared to be fraudulent
or preferential, set aside, recovered, rescinded or is required to be retained
by or repaid to a trustee, receiver, or any other Person under any bankruptcy
code, common law, or equitable cause, then and to the extent of such payment,
the obligation or the part thereof intended to be satisfied shall be revived and
continued in full force and effect with respect to the Guarantors' obligations
hereunder, as if said payment had not been made. The liability of the Guarantors
hereunder shall not be reduced or discharged, in whole or in part, by any
payment to any Holder from any source that is thereafter paid, returned or
refunded in whole or in part by reason of the assertion of a claim of any kind
relating

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thereto, including, but not limited to, any claim for breach of contract, breach
of warranty, preference, illegality, invalidity, or fraud asserted by any
account debtor or by any other Person. If an Event of Default shall exist and
the acceleration of the Notes shall at any time be prevented by reason of the
pendency of a case or proceedings relating to the Company under bankruptcy or
insolvency law for purposes of this Guaranty and the obligations of the
Guarantors hereunder, the Notes shall be deemed to have been accelerated with
the same effect as if the Notes had been accelerated in accordance with the
terms of the Note Purchase Agreement upon the request of the requisite
percentage of the holders of the Notes, if any, required to accelerate the
indebtedness evidenced by the Notes pursuant to the Note Purchase Agreement.

      (g) No Holder shall be under any obligation: (1) to marshall any assets in
favor of the Guarantors or in payment of any or all of the liabilities of the
Company under or in respect of the Notes or the obligations of the Guarantors
hereunder or (2) to pursue any other remedy that the Guarantors may or may not
be able to pursue themselves and that may lighten the Guarantors' burden, any
right to which each Guarantor hereby expressly waives.

Section 5. Representations and Warranties of the Guarantors.

      Each Guarantor represents and warrants to each Holder that:

      (a) Such Guarantor is a corporation or other legal entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on (1) the validity or
enforceability of this Guaranty or (2) the rights and/or remedies of the Holders
under this Guaranty. Such Guarantor has the power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Guaranty and to perform the provisions hereof.

      (b) This Guaranty has been duly authorized, executed and delivered by all
necessary action on the part of such Guarantor, and this Guaranty constitutes a
legal, valid and binding obligation of such Guarantor enforceable against such
Guarantor in accordance with its terms, except as such enforceability may be
limited by (1) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or conveyance or other similar laws affecting the
enforcement of creditors' rights generally and (2) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

      (c) The execution, delivery and performance by such Guarantor of this
Guaranty will not (1) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property
of such Guarantor or any of its subsidiaries under its organizational documents,
or under any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, or any other material agreement or instrument to which such
Guarantor or any of its subsidiaries is bound or by which such Guarantor or any
of its subsidiaries or any of their respective properties may be bound or
affected, (2) conflict with or result in a breach of any

                                     - 8 -
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of the terms, conditions or provisions of any order, judgment, decree, or ruling
of any court, arbitrator or Governmental Authority applicable to such Guarantor
or any of its subsidiaries or (3) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to such Guarantor or
any of its subsidiaries.

      (d) No consent, approval or authorization of or declaration, registration
or filing with any Governmental Authority is required in connection with the
execution or delivery of this Guaranty, or the performance by such Guarantor of
its obligations hereunder.

      (e) There are no actions, suits or proceedings pending, or, to the
knowledge of such Guarantor, threatened in writing against or affecting such
Guarantor which seek to enjoin, or otherwise prevent the consummation of, the
transactions contemplated herein or to recover any damages or obtain any relief
as a result of any of the transactions contemplated herein in any court or
before any arbitrator of any kind or before or by any Governmental Authority.

      (f) The obligations of such Guarantor under this Guaranty are equal in
rank and priority and are pari passu in right of payment with all other Debt of
such Guarantor (including Debt of such Guarantor due and owing under the
guaranty provided by such Guarantor in connection with the Bank Credit
Agreement) which is not secured or which is not expressly subordinated in right
of payment to any other Debt of such Guarantor.

      (g) On the Closing Date and after giving effect to the transactions
contemplated by the Note Purchase Agreement and this Guaranty, such Guarantor is
solvent, has capital not unreasonably small in relation to its business or any
contemplated or undertaken transaction and has assets having a value both at
fair valuation and at present fair salable value greater than the amount
required to pay its debts as they become due and greater than the amount that
will be required to pay its probable liability on its existing debts as they
become absolute and matured. Such Guarantor does not intend to incur, or believe
that it will incur, debts beyond its ability to pay such debts as they become
due. Such Guarantor will not be rendered insolvent by the execution and delivery
of, and performance of its obligations under, this Guaranty. Such Guarantor does
not intend to hinder, delay or defraud its creditors by or through the execution
and delivery of, or performance of its obligations under, this Guaranty.

Section 6. Guarantor Covenants.

      Each Guarantor hereby covenants and agrees that (i) it will comply with
each of the covenants and agreements set forth in Sections 7, 9 and 10 of the
Note Purchase Agreement and (ii) the obligations of such Guarantor under this
Guaranty are and at all times shall remain unsecured obligations of such
Guarantor ranking pari passu in right of payment with all other Debt of such
Guarantor (including Debt of such Guarantor due and owing under the guaranty
provided by such Guarantor in connection with the Bank Credit Agreement) which
is not secured or which is not expressly subordinated in right of payment to any
other Debt of such Guarantor.

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Section 7. Amendments, Waivers and Consents.

      (a) This Guaranty may be amended, and the observance of any term hereof
may be waived (either retroactively or prospectively), with (and only with) the
written consent of each Guarantor and the Required Holders, except that (1) no
amendment or waiver of any of the provisions of SECTION 2, 3 or 4, or any
defined term (as it is used therein), will be effective as to any Holder unless
consented to by such Holder in writing, (2) no such amendment or waiver may,
without the written consent of each Holder, (i) change the percentage of the
principal amount of the Notes the Holders of which are required to consent to
any such amendment or waiver, or (ii) amend this SECTION 7, and (3) this
Guaranty may be amended by (A) the addition of additional Guarantors pursuant to
a Guaranty Joinder and (B) the addition of Additional Notes pursuant to a
Supplement and a Guaranty Ratification relating thereto.

      Notwithstanding any other provision contained in this SECTION 7 or
elsewhere in this Guaranty to the contrary, Notes which at any time are held by
any Guarantor, the Company or by any Affiliate of the Company shall not be
deemed outstanding for purposes of any vote, consent, approval, waiver or other
action required or permitted to be taken by the holders of Notes, or by any of
them, under the provisions of this SECTION 7, and none of such Guarantors, the
Company nor any such Affiliate shall be entitled to exercise any right as a
holder of Notes with respect to any such vote, consent, approval or waiver or to
take or participate in taking any such action at any time.

      (b) Each Guarantor will provide each Holder (irrespective of the amount of
Notes then owned by it) with sufficient information, sufficiently far in advance
of the date a decision is required, to enable such Holder to make an informed
and considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof. The Guarantors will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this SECTION 7 to each Holder promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite Holders.

      (c) Each Guarantor agrees it will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of fee or otherwise, or grant any
security, to any Holder as consideration for or as an inducement to the entering
into by any Holder of any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each Holder even if such
Holder did not consent to such waiver or amendment.

      (d) Any amendment or waiver consented to as provided in this SECTION 7
applies equally to all Holders and is binding upon them and upon each future
holder and upon the Guarantors. No such amendment or waiver will extend to or
affect any obligation, covenant or agreement not expressly amended or waived or
impair any right consequent thereon. No course of dealing between the Guarantors
and any Holder nor any delay in exercising any rights hereunder shall operate as
a waiver of any rights of any Holder. As used herein, the term "this Guaranty"
and references thereto shall mean this Guaranty as it may from time to time be
amended or supplemented.

                                     - 10 -
<PAGE>
Section 8. Notices.

         All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:

            (1) if to a Note Purchaser, to such Note Purchaser at the address
      specified for such communications on Schedule A to the Note Purchase
      Agreement or at such other address as such Note Purchaser shall have
      specified to any Guarantor or the Company in writing,

            (2) if to any other Holder, to such Holder at such address as such
      Holder shall have specified to any Guarantor or the Company in writing, or

            (3) if to the Company, to the Company at 66 Field Point Road,
      Greenwich, Connecticut 06830 or at such other address as the Company shall
      have specified to the Holders in writing, or

            (4) if to any Guarantor, to such Guarantor at c/o Genesee & Wyoming
      Inc., 66 Field Point Road, Greenwich, Connecticut 06830 or at such other
      address as such Guarantor shall have specified to the Holders in writing.

      Notices under this SECTION 8 will be deemed given only when actually
received. Each document, instrument, financial statement, report, notice or
other communication delivered in connection with this Guaranty shall be in
English or accompanied by an English translation thereof.

      This Guaranty has been prepared and signed in English and the parties
hereto agree that the English version hereof and thereof (to the maximum extent
permitted by applicable law) shall be the only version valid for the purpose of
the interpretation and construction hereof and thereof notwithstanding the
preparation of any translation into another language hereof or thereof, whether
official or otherwise or whether prepared in relation to any proceedings which
may be brought in a jurisdiction outside the United States of America or any
other jurisdiction in respect hereof or thereof.

Section 9. Payments Free and Clear of Taxes.

      All payments whatsoever under this Guaranty will be made by each Guarantor
in lawful currency of the United States of America free and clear of, and
without liability or withholding or deduction for or on account of, any present
or future taxes, levies, imposts, duties, fees, charges, deductions,
withholding, restrictions or conditions of any nature whatsoever (hereinafter
called "Taxes") imposed or levied by or on behalf of any jurisdiction other than
the United States (or any political subdivision or taxing authority of or in
such jurisdiction) (hereinafter a "Taxing Jurisdiction"), unless the withholding
or deduction of such Tax is compelled by law.

                                     - 11 -
<PAGE>
      If any deduction or withholding for any Tax of a Taxing Jurisdiction shall
at any time be required in respect of any amounts to be paid by any Guarantor
under this Guaranty, such Guarantor will pay to the relevant Taxing Jurisdiction
the full amount required to be withheld, deducted or otherwise paid before
penalties attach thereto or interest accrues thereon and pay to each Holder such
additional amounts as may be necessary in order that the net amounts paid to
such Holder pursuant to the terms of this Guaranty after such deduction,
withholding or payment (including, without limitation, any required deduction or
withholding of Tax on or with respect to such additional amount), shall be not
less than the amounts then due and payable to such Holder under the terms of
this Guaranty before the assessment of such Tax, provided that no payment of any
additional amounts shall be required to be made for or on account of:

            (a) any Tax that would not have been imposed but for the existence
      of any present or former connection between such Holder (or a fiduciary,
      settlor, beneficiary, member of, shareholder of, or possessor of a power
      over, such Holder, if such Holder is an estate, trust, partnership or
      corporation or any Person other than the Holder to whom the Notes or any
      amount payable thereon is attributable for the purposes of such Tax) and
      the Taxing Jurisdiction, other than the mere holding of the relevant Note
      or the receipt of payments thereunder or in respect thereof, including,
      without limitation, such Holder (or such other Person described in the
      above parenthetical) being or having been a citizen or resident thereof,
      or being or having been present or engaged in trade or business therein or
      having or having had an establishment, office, fixed base or branch
      therein, provided that this exclusion shall not apply with respect to a
      Tax that would not have been imposed but for such Guarantor, after the
      date of the Closing, opening an office in, moving an office to,
      reincorporating in, or changing the Taxing Jurisdiction from or through
      which payments on account of this Guaranty or the Notes are made to, the
      Taxing Jurisdiction imposing the relevant Tax;

            (b) any Tax that would not have been imposed but for the delay or
      failure by such Holder (following a written request by such Guarantor) in
      the filing with the relevant Taxing Jurisdiction of Forms (as defined
      below) that are required to be filed by such Holder to avoid or reduce
      such Taxes, provided that for Forms required to be filed in the United
      States ("U.S. Forms") such Holder is legally able to deliver such U.S.
      Forms, or, for Forms required to be filed in other jurisdictions
      ("non-U.S. Forms"), the filing of such non-U.S. Forms would not (in such
      Holder's reasonable judgment) impose any unreasonable burden (in time,
      resources or otherwise) on such Holder or result in any confidential or
      proprietary income tax return information being revealed, either directly
      or indirectly, to any Person and such delay or failure could have been
      lawfully avoided by such Holder, and provided further that such Holder
      shall be deemed to have satisfied the requirements of this clause (b) upon
      the good faith completion and submission of such Forms as may be specified
      in a written request of such Guarantor no later than sixty (60) days after
      receipt by such Holder of such written request (accompanied by copies of
      such Forms and related instructions, if any, all in the English language
      or with an English translation thereof); or

            (c) any combination of clauses (a) and (b) above;

                                     - 12 -
<PAGE>
and provided further that in no event shall such Guarantor be obligated to pay
such additional amounts (i) to any Holder not resident in the United States of
America or any other jurisdiction in which an original Note Purchaser is
resident for tax purposes on the date of the Closing in excess of the amounts
that such Guarantor would be obligated to pay if such Holder had been a resident
of the United States of America or such other jurisdiction, as applicable, for
purposes of, and eligible for the benefits of, any double taxation treaty from
time to time in effect between the United States of America or such other
jurisdiction and the relevant Taxing Jurisdiction or (ii) to any Holder
registered in the name of a nominee if under the law of the relevant Taxing
Jurisdiction (or the current regulatory interpretation of such law) securities
held in the name of a nominee do not qualify for an exemption from the relevant
Tax and such Guarantor shall have given timely notice of such law or
interpretation to such Holder.

      By acceptance of any Note, each Holder agrees that it will from time to
time with reasonable promptness (x) duly complete and deliver to or as
reasonably directed by any Guarantor all such forms, certificates, documents and
returns provided to such Holder by such Guarantor (collectively, together with
instructions for completing the same, "Forms") required to be filed by or on
behalf of such Holder in order to avoid or reduce any such Tax pursuant to the
provisions of an applicable statute, regulation or administrative practice of
the relevant Taxing Jurisdiction or of a tax treaty between the United States
and such Taxing Jurisdiction and (y) provide any Guarantor with such information
with respect to such Holder as such Guarantor may reasonably request in order to
complete any such Forms, provided that nothing in this SECTION 9 shall require
any Holder to deliver any U.S. Form it is not legally able to deliver or provide
information with respect to any non-U.S. Form or otherwise if in the opinion of
such Holder such non-U.S. Form or disclosure of information would involve the
disclosure of tax return or other information that is confidential or
proprietary to such Holder, and provided further that each such Holder shall be
deemed to have complied with its obligation under this paragraph with respect to
any Form if such Form shall have been duly completed and delivered by such
Holder to such Guarantor or mailed to the appropriate taxing authority (which in
the case of a United Kingdom Inland Revenue Form FD13 or any similar Form shall
be deemed to occur when such Form is submitted to the United States Internal
Revenue Service in accordance with instructions contained in such Form),
whichever is applicable, within sixty (60) days following a written request of
such Guarantor (which request shall be accompanied by copies of such Form and
English translations of any such Form not in the English language) and, in the
case of a transfer of any Note, at least ninety (90) days prior to the relevant
interest payment date.

      On or before the date of the Closing such Guarantor will furnish you with
copies of the appropriate Form (and English translation if required as
aforesaid) currently required to be filed in a Taxing Jurisdiction pursuant to
clause (b) of the first paragraph of this SECTION 9, if any, and in connection
with the transfer of any Note such Guarantor will furnish the transferee of such
Note with copies of any Form and English translation then required.

      Each Guarantor will furnish the Holders, promptly and in any event within
sixty (60) days after the date of any payment by such Guarantor of any Tax in
respect of any amounts paid under this Guaranty, the original tax receipt issued
by the relevant taxation or other authorities involved for all amounts paid as
aforesaid (or if such original tax receipt is not available or must legally be
kept in the possession of such Guarantor, a duly certified copy of the original
tax

                                     - 13 -
<PAGE>
receipt or any other reasonably satisfactory evidence of payment), together with
such other documentary evidence with respect to such payments as may be
reasonably requested from time to time by any Holder.

      If any Guarantor is required by any applicable law, as modified by the
practice of the taxation or other authority of any relevant Taxing Jurisdiction,
to make any deduction or withholding of any Tax in respect of which such
Guarantor would be required to pay any additional amount under this SECTION 9,
but for any reason does not make such deduction or withholding with the result
that a liability in respect of such Tax is assessed directly against the Holder,
and such Holder pays such liability, then such Guarantor will promptly reimburse
such Holder for such payment (including any related interest or penalties to the
extent such interest or penalties arise by virtue of a default or delay by such
Guarantor) upon demand by such Holder accompanied by an official receipt (or a
duly certified copy thereof) issued by the taxation or other authority of the
relevant Taxing Jurisdiction.

      If any Guarantor makes payment to or for the account of any Holder and
such Holder is entitled to a refund of the Tax to which such payment is
attributable upon the making of a filing (other than a Form described above),
then such Holder shall, as soon as practicable after receiving written request
from such Guarantor (which shall specify in reasonable detail and supply the
refund forms to be filed) use reasonable efforts to complete and deliver such
refund forms to or as directed by such Guarantor, subject, however, to the same
limitations with respect to Forms as are set forth above.

      The obligations of each Guarantor under this SECTION 9 shall survive the
payment or transfer of any Note and the provisions of this SECTION 9 shall also
apply to successive transferees of the Notes.

Section 10. Miscellaneous.

      (a) No remedy herein conferred upon or reserved to any Holder is intended
to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given under this Guaranty now or hereafter existing at law or in equity. No
delay or omission to exercise any right or power accruing upon any default,
omission or failure of performance hereunder shall impair any such right or
power or shall be construed to be a waiver thereof but any such right or power
may be exercised from time to time and as often as may be deemed expedient. In
order to entitle any Holder to exercise any remedy reserved to it under this
Guaranty, it shall not be necessary for such Holder to physically produce its
Note in any proceedings instituted by it or to give any notice, other than such
notice as may be herein expressly required.

      (b) The Guarantors will pay all sums becoming due under this Guaranty by
the method and at the address specified for such purpose in the Note Purchase
Agreement, or by such other reasonable method or at such other address as any
Holder shall have from time to time specified to the Guarantors in writing for
such purpose, without the presentation or surrender of this Guaranty or any
Note.

                                     - 14 -
<PAGE>
      (c) Any provision of this Guaranty that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

      (d) If the whole or any part of this Guaranty shall be now or hereafter
become unenforceable against any one or more of the Guarantors for any reason
whatsoever or if it is not executed by any one or more of the Guarantors, this
Guaranty shall nevertheless be and remain fully binding upon and enforceable
against each other Guarantor as if it had been made and delivered only by such
other Guarantors.

      (e) This Guaranty shall be binding upon each Guarantor and its successors
and assigns and shall inure to the benefit of each Holder and its successors and
assigns (including, without limitation, any subsequent Holder) whether so
expressed or not, so long as its Notes remain outstanding and unpaid.

      (f) This Guaranty may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

      (g) Each Guarantor covenants that, so long as any Holder shall hold any of
the Notes, it shall cooperate with such Holder and execute such further
instruments and documents as such Holder shall reasonably request to carry out
to such Holder's satisfaction the transactions contemplated by this Guaranty.

      (h) All representations and warranties contained herein or made in writing
by or on behalf of any party to this Guaranty or otherwise in connection
herewith, shall (a) survive the execution and delivery of this Guaranty and
shall continue in effect as long as this Guaranty is outstanding, and (b) be
deemed to be material and to have been relied upon by the Holders, regardless of
any investigation made by the Holders or on their behalf.

      (i) Any Subsidiary of the Company which becomes a party hereto after the
date hereof pursuant to Section 9.8 of the Note Purchase Agreement and a
Guaranty Joinder shall be bound by all of the terms and provisions of this
Guaranty, and shall be a "Guarantor" for all purposes of this Guaranty, the Note
Purchase Agreement and the Notes.

      (j) Each Guarantor hereby instructs Adam B. Frankel, Senior Vice President
and General Counsel of the Company and the Guarantors, and Simpson Thacher &
Bartlett LLP, special counsel to the Company and the Guarantors, to deliver to
each Holder the legal opinion required by Section 4.4 of the Note Purchase
Agreement.

      (k) Each Guarantor irrevocably submits to the non-exclusive jurisdiction
of any New York State or federal court sitting in the Borough of Manhattan, The
City of New York, over any suit, action or proceeding arising out of or relating
solely to this Guaranty or the Notes. To the

                                     - 15 -
<PAGE>
fullest extent permitted by applicable law, each Guarantor irrevocably waives
and agrees not to assert, by way of motion, as a defense or otherwise, any claim
that it is not subject to the jurisdiction of any such court, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.

      (l) Each Guarantor agrees, to the fullest extent permitted by applicable
law, that a final judgment in any suit, action or proceeding brought in any such
court shall be conclusive and binding upon it subject to rights of appeal, as
the case may be, and may be enforced in the courts of the United States of
America or the State of New York (or any other courts to the jurisdiction of
which it or any of its assets is or may be subject) by a suit upon such
judgment.

      (m) Each Guarantor consents to process being served in any suit, action or
proceeding solely by mailing a copy thereof by registered or certified or
priority mail, postage prepaid, return receipt requested, or delivering a copy
thereof in the manner for delivery of notices specified in SECTION 8, to the
Company, as its agent for the purpose of accepting service of any process in the
United States. Each Guarantor agrees that such service upon receipt (i) shall be
deemed in every respect effective service of process upon it in any such suit,
action or proceeding and (ii) shall, to the fullest extent permitted by
applicable law, be taken and held to be valid personal service upon and personal
delivery to it. Notices hereunder shall be conclusively presumed received as
evidenced by a delivery receipt furnished by the United States Postal Service or
any reputable commercial delivery service.

      (n) Nothing in this SECTION 10 shall affect the right of any Holder to
serve process in any manner permitted by law, or limit any right that the
Holders may have to bring proceedings against each Guarantor in the courts of
any appropriate jurisdiction or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction.

      (o) Each Guarantor hereby irrevocably appoints the Company to receive for
it, and on its behalf, service of process in the United States.

      (p) The parties hereto hereby waive trial by jury in any action brought on
or with respect to this Guaranty, the Notes or any other document executed in
connection herewith or therewith.

      (q) Any payment on account of an amount that is payable hereunder in U.S.
Dollars which is made to or for the account of any Holder in any other currency,
whether as a result of any judgment or order or the enforcement thereof or the
realization of any security or the liquidation of any Guarantor, shall
constitute a discharge of the obligation of such Guarantor under this Guaranty
only to the extent of the amount of U.S. Dollars which such Holder could
purchase in the foreign exchange markets in London, England, with the amount of
such other currency in accordance with normal banking procedures at the rate of
exchange prevailing on the London Banking Day following receipt of the payment
first referred to above. If the amount of U.S. Dollars that could be so
purchased is less than the amount of U.S. Dollars originally due to such Holder,
such Guarantor agrees to the fullest extent permitted by law, to indemnify and
save

                                     - 16 -
<PAGE>
harmless such Holder from and against all loss or damage arising out of or as a
result of such deficiency. This indemnity shall, to the fullest extent permitted
by law, constitute an obligation separate and independent from the other
obligations contained in this Guaranty, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by such Holder from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due hereunder or under the Notes or under any judgment or order. As used
herein the term "London Banking Day" shall mean any day other than Saturday or
Sunday or a day on which commercial banks are required or authorized by law to
be closed in London, England.

      (r) Time shall be of the essence hereof.

      (s) This Guaranty shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New
York.

Section 11. Indemnity

To the fullest extent of applicable law, each Guarantor shall indemnify and save
each Holder harmless from and against any losses which may arise by virtue of
any of the obligations hereby guaranteed being or becoming for any reason
whatsoever in whole or in part void, voidable, contrary to law, invalid,
ineffective or otherwise unenforceable by the Holder or any of them in
accordance with its terms (all of the foregoing collectively, an "Indemnifiable
Circumstance"). For greater certainty, these losses shall include without
limitation all obligations hereby guaranteed which would have been payable by
the Company but for the existence of an Indemnifiable Circumstance, net of any
withholding or deduction of or on account of any Tax in accordance with SECTION
9 hereof; provided, however, that the extent of any Guarantor's aggregate
liability under this SECTION 11 shall not at any time exceed the amount (but for
any Indemnifiable Circumstance) otherwise guaranteed pursuant to SECTION 2.

                    [Signatures Appear on the Following Page]

                                     - 17 -
<PAGE>
      In Witness Whereof, each of the undersigned has caused this Guaranty to be
duly executed by an authorized representative as of this _______ day of
November, 2004

                                        Arkansas Louisiana & Mississippi
                                          Railroad Company

                                        By: /s/Adam B. Frankel:
                                            ------------------------------------
                                            Name:  Adam B. Frankel
                                            Title: Secretary

                                        Buffalo & Pittsburgh Railroad, Inc.

                                        By: /s/David J. Collins
                                            ------------------------------------
                                            Name:  David J. Collins
                                            Title: President

                                        Chattahoochee Industrial Railroad

                                        By: /s/Matthew O. Walsh
                                            ------------------------------------
                                            Name:  Matthew O. Walsh
                                            Title: Treasurer

                                        Commonwealth Railway, Incorporated

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: President

                                        Corpus Christi Terminal Railroad, Inc.

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: President

                                     - 18 -
<PAGE>
                                        Fordyce and Princeton R.R. Co.

                                        By: /s/Adam B. Frankel:
                                            ------------------------------------
                                            Name:  Adam B. Frankel
                                            Title: Secretary

                                        Genesee and Wyoming Railroad Company

                                        By: /s/David J. Collins
                                            ------------------------------------
                                            Name:  David J. Collins
                                            Title: President

                                        Genesee & Wyoming Railroad Services,
                                          Inc.

                                        By: /s/Adam B. Frankel:
                                            ------------------------------------
                                            Name:  Adam B. Frankel
                                            Title: President

                                        Golden Isles Terminal Railroad, Inc.

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: President

                                     - 19 -
<PAGE>
                                        GWI Canada, Inc.

                                        By: /s/Mortimer B. Fuller III
                                            ------------------------------------
                                            Name:  Mortimer B. Fuller, III
                                            Title: President

                                        GWI Leasing Corporation

                                        By: /s/Mark W. Hastings
                                            ------------------------------------
                                            Name:  Mark W. Hastings
                                            Title: President

                                        Illinois & Midland Railroad, Inc.

                                        By: /s/Spencer D. White
                                            ------------------------------------
                                            Name:  Spencer D. White
                                            Title: President

                                        Louisiana & Delta Railroad, Inc.

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: Chief Operating Officer

                                     - 20 -
<PAGE>
                                        P&L Junction Holdings, Inc.

                                        By: /s/David J. Collins
                                            ------------------------------------
                                            Name:  David J. Collins
                                            Title: President

                                        Portland & Western Railroad, Inc.

                                        By: /s/Larry Phipps
                                            ------------------------------------
                                            Name:  Larry Phipps:
                                            Title: President

                                        Rail Link, Inc.

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: President

                                        Rochester & Southern Railroad, Inc.

                                        By: /s/David J. Collins
                                            ------------------------------------
                                            Name:  David J. Collins
                                            Title: President

                                        Salt Lake City Southern Railroad
                                          Company, Inc.

                                        By: /s/Mortimer B. Fuller III
                                            ------------------------------------
                                            Name:  Mortimer B. Fuller, III
                                            Title: President

                                     - 21 -
<PAGE>
                                        Savannah Port Terminal Railroad, Inc.

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: President

                                        South Buffalo Railway Company

                                        By: /s/David J. Collins
                                            ------------------------------------
                                            Name:  David J. Collins
                                            Title: President

                                        Talleyrand Terminal Railroad Company,
                                          Inc.

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: President

                                        Utah Railway Company

                                        By: /s/Mortimer B. Fuller, III
                                            ------------------------------------
                                            Name:  Mortimer B. Fuller, III
                                            Title: President

                                        Willamette & Pacific Railroad, Inc.

                                        By: /s/Larry Phipps
                                            ------------------------------------
                                            Name:  Larry Phipps
                                            Title: President

                                     - 22 -
<PAGE>
                                        Emons Transportation Group, Inc.

                                        By: /s/Mortimer B. Fuller, III
                                            ------------------------------------
                                            Name:  Mortimer B. Fuller, III
                                            Title: President

                                        Emons Finance Corp.

                                        By: /s/Lisa M. Oakes
                                            ------------------------------------
                                            Name:  Lisa M. Oakes
                                            Title: Vice President

                                        Emons Industries, Inc.

                                        By: /s/Robert Grossman
                                            ------------------------------------
                                            Name:  Robert Grossman
                                            Title: President

                                        Emons Railroad Group, Inc.

                                        By: /s/Mortimer B. Fuller, III
                                            ------------------------------------
                                            Name:  Mortimer B. Fuller, III
                                            Title: President

                                        Maine Intermodal Transportation, Inc.

                                        By: /s/Mortimer B. Fuller, III
                                            ------------------------------------
                                            Name:  Mortimer B. Fuller, III
                                            Title: President

                                     - 23 -
<PAGE>
                                        York Rail Logistics, Inc.

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: President

                                        York Railway Company

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: President

                                        St. Lawrence & Atlantic Railroad Company

                                        By: /s/Mario Brault
                                            ------------------------------------
                                            Name:  Mario Brault
                                            Title: President

                                        SLR Leasing Corp.

                                        By: /s/Mortimer B. Fuller, III
                                            ------------------------------------
                                            Name:  Mortimer B. Fuller, III
                                            Title: President

                                        Allegheny & Eastern Railroad, LLC

                                        By: /s/David J. Collins
                                            ------------------------------------
                                            Name:  David J. Collins
                                            Title: Sole Manager and Chief
                                                   Executive Officer

                                     - 24 -
<PAGE>
                                        Pittsburg & Shawmut Railroad, LLC

                                        By: /s/David J. Collins
                                            ------------------------------------
                                            Name:  David J. Collins
                                            Title: Sales Manager and Chief
                                                   Executive Officer

                                        Maryland and Pennsylvania Railroad, LLC

                                        By: /s/James W. Benz
                                            ------------------------------------
                                            Name:  James W. Benz
                                            Title: President

                                        Yorkrail, LLC

                                        By: /s/Mortimer B. Fuller, III
                                            ------------------------------------
                                            Name:  Mortimer B. Fuller, III
                                            Title: President

                                     - 25 -
<PAGE>
                                       A-3
                                    EXHIBIT A
                             (to Guaranty Agreement)

                                GUARANTY JOINDER

                Re: $75,000,000 4.85% Series 2004-A Senior Notes,
                              Due November 1, 2011
                                       of
                             Genesee & Wyoming Inc.

      This Guaranty Joinder dated as of _________, _____ (the or this "Guaranty
Joinder") is entered into [on a joint and several basis] by [each of] the
undersigned __________, a ____________ corporation [and ____________, a
___________ corporation] ([which parties are hereinafter referred to
individually as] an "Additional Guarantor" [and collectively as the "Additional
Guarantors"]). Capitalized terms not defined herein shall have the meaning
ascribed to them in the Note Purchase Agreement.

                                    RECITALS

      A. [Each] Additional Guarantor, is presently a Subsidiary of Genesee &
Wyoming Inc., a Delaware corporation (the "Company").

      B. In order to raise funds to refinance existing indebtedness and for
general corporate purposes, the Company has entered into the Note Purchase
Agreement dated as of November 12, 2004 (the "Note Purchase Agreement") between
the Company and each of the purchasers named on Schedule A attached thereto (the
"Note Purchasers" or the "Holders") providing for, among other things, the issue
and sale by the Company to the Note Purchasers of the Company's 4.85% Series
2004-A Senior Notes, due November 1, 2011 in the aggregate principal amount of
$75,000,000 (the "Notes").

      C. As a condition precedent to their purchase of the Notes, the Note
Purchasers required that certain Subsidiaries of the Company enter into the
Guaranty Agreement dated as of November 12, 2004 (the "Guaranty") as security
for the Notes.

      Now, therefore, as required by the Note Purchase Agreement and in
consideration of the premises and other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, [each/the] Additional
Guarantor does hereby covenant and agree, [jointly and severally,] as follows:

      In accordance with the requirements of the Guaranty, the Additional
Guarantor[s] desire to amend the definition of Guarantor (as the same may have
been heretofore amended) set forth in the Guaranty attached hereto so that at
all times from and after the date hereof, the Additional Guarantor[s] shall be
[jointly and severally] liable as set forth in the Guaranty for the obligations
of the Company under the Note Purchase Agreement and Notes to the extent and in
the manner set forth in the Guaranty.

                                   Exhibit A
                            (to Guaranty Agreement)
<PAGE>
      The undersigned is the duly elected ____________ of the Additional
Guarantor[s] and is duly authorized to execute and deliver this Guaranty Joinder
for the benefit of all Holders of the Notes. The execution by the undersigned of
this Guaranty Joinder shall evidence its consent to and acknowledgment and
approval of the terms set forth herein and in the Guaranty and by such execution
the Additional Guarantor[s] shall be deemed to have made the representations and
warranties set forth in SECTION 5 of the Guaranty in favor of the Holders as of
the date of this Guaranty Joinder.

      Upon execution of this Guaranty Joinder, the Guaranty shall be deemed to
be amended as set forth above. Except as amended herein, the terms and
provisions of the Guaranty are hereby ratified, confirmed and approved in all
respects.

                                      A-2
<PAGE>
      Any and all notices, requests, certificates and other instruments
(including the Notes) may refer to the Guaranty without making specific
reference to this Guaranty Joinder, but nevertheless all such references shall
be deemed to include this Guaranty Joinder unless the context shall otherwise
require.

                                        [Name of Additional Guarantor]

                                        By
                                           -------------------------------------
                                           Its
                                               ---------------------------------

                                      A-3
<PAGE>

                       FORM OF OPINION OF GENERAL COUNSEL
                                 TO THE COMPANY

      The closing opinion of Adam B. Frankel, Senior Vice President and General
Counsel of the Company, which is called for by SECTION 4.4 of the Note Purchase
Agreement, shall be dated the date of Closing and addressed to the Purchasers,
shall be satisfactory in scope and form to each Purchaser and shall be
substantially to the effect that:

      1. The Company is a corporation, duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to execute and perform the Note Purchase Agreement
and to issue the Series 2004-A Notes.

      2. The Company has the full corporate power and the corporate authority to
conduct the activities in which it is now engaged and is duly licensed or
qualified and is in good standing as a foreign corporation in each jurisdiction
in which the character of the properties owned or leased by it or the nature of
the business transacted by it makes such licensing or qualification necessary
except in jurisdictions where the failure to be so qualified or licensed would
not have a material adverse effect on the business of the Company.

      3. Each Subsidiary is a corporation or similar legal entity, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and is duly licensed or qualified and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it or the nature of the business transacted by it makes such licensing
or qualification necessary except in jurisdictions where the failure to be so
qualified or licensed would not have a material adverse effect on the business
of such Subsidiary. All of the issued and outstanding shares of capital stock or
similar equity interests of each such Subsidiary Guarantor have been duly
issued, are fully paid and non-assessable and are owned by the Company, by one
or more Subsidiaries, or by the Company and one or more Subsidiaries. Each
Subsidiary Guarantor has the power and authority and is duly authorized to enter
into and perform its obligations under the Subsidiary Guaranty.

      4. The issuance and sale of the Series 2004-A Notes by the Company, the
execution, delivery and performance by the Company of the Note Purchase
Agreement, and the execution, delivery and performance by each Subsidiary
Guarantor of the Subsidiary Guaranty do not violate any provision of any law or
other rule or regulation of any Governmental Authority applicable to the Company
or any such Subsidiary Guarantor or conflict with or result in any breach of any
of the provisions of or constitute a default under or result in the creation or
imposition of any Lien upon any property of the Company or any such Subsidiary
Guarantor pursuant to the provisions of the Articles or Certificate of
Incorporation or By-laws, or such similar organizational or governing
instrument, as the case may be, of the Company or such Subsidiary Guarantor or
any material agreement or other instrument known to such counsel to which the
Company or any such Subsidiary Guarantor is a party or by which the Company or
any such Subsidiary Guarantor may be bound.

                                 EXHIBIT 4.4(a)
                          (to Note Purchase Agreement)

<PAGE>

      5. There are no actions, suits or proceedings pending or, to the knowledge
of such counsel after due inquiry, threatened against or affecting the Company
or any Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which, if adversely determined, would have a
Material Adverse Effect. To the knowledge of such counsel, neither the Company
nor any Subsidiary is in default with respect to any court or governmental
authority, or arbitration board or tribunal.

      The opinion of Adam B. Frankel shall cover such other matters relating to
the sale of the Notes as each Purchaser may reasonably request. With respect to
matters of fact on which such opinion is based, such counsel shall be entitled
to rely on appropriate certificates of public officials and other officers of
the Company and its Subsidiaries. The opinion of Adam B. Frankel is limited to
the laws of the State of New York, the general business corporation law and the
general limited liability company law of the State of Delaware and the Federal
laws of the United States.

                                   E-4.4(a)-2
<PAGE>

                       FORM OF OPINION OF SPECIAL COUNSEL
                                 TO THE COMPANY

      The closing opinion of Simpson Thacher & Bartlett LLP, special counsel to
the Company, which is called for by SECTION 4.4 of the Note Purchase Agreement,
shall be dated the date of Closing and addressed to the Purchasers, shall be
satisfactory in scope and form to each Purchaser and shall be substantially to
the effect that:

      1. The Note Purchase Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding contract
of the Company enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).

      2. The Series 2004-A Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding contract of
the Company enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).

      3. The Subsidiary Guaranty has been duly authorized by all necessary
corporate or other organizational action on the part of each Subsidiary
Guarantor, has been duly executed and delivered by each Subsidiary Guarantor and
constitutes the legal, valid and binding contract of each such Subsidiary
Guarantor enforceable against such Subsidiary Guarantor in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).

      4. No approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any governmental body, Federal or
state, is necessary in connection with the execution, delivery and performance
of the Note Purchase Agreement, the Series 2004-A Notes or the Subsidiary
Guaranty.

      5. No registration under the Securities Act of the Series 2004-A Notes or
the Subsidiary Guaranty and no qualification of an indenture under the Trust
Indenture Act of 1939, as amended, is required for the offer and sale of the
Series 2004-A Notes and the Subsidiary Guaranty by the Company and the
Subsidiary Guarantors solely in the manner contemplated by the Memorandum and
the Note Purchase Agreement.

      6. Neither the issuance of the Series 2004-A Notes nor the application of
the proceeds of the sale of the Series 2004-A Notes will violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934, as amended, or
any regulation issued pursuant thereto,

                                 EXHIBIT 4.4(b)
                          (to Note Purchase Agreement)

<PAGE>

including, without limitation, Regulation T, U or X of the Board of Governors of
the Federal Reserve System.

      7. The Company is not an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended.

      The opinion of Simpson Thacher & Bartlett LLP, shall cover such other
matters relating to the sale of the Notes as each Purchaser may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and other officers of the Company and its Subsidiaries. The opinion of
Simpson Thacher & Bartlett LLP is limited to the laws of the State of New York,
the general business corporation law and the general limited liability company
law of the State of Delaware and the Federal laws of the United States.

                                   E-4.4(b)-2
<PAGE>

                       FORM OF OPINION OF SPECIAL COUNSEL
                                TO THE PURCHASERS

      The closing opinion of Chapman and Cutler LLP, special counsel to the
Purchasers, called for by SECTION 4.4 of the Note Purchase Agreement, shall be
dated the date of Closing and addressed to each Purchaser, shall be satisfactory
in form and substance to each Purchaser and shall be substantially to the effect
that:

      1. The Company is a corporation, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the corporate power
and the corporate authority to execute and deliver the Note Purchase Agreement
and to issue the Series 2004-A Notes.

      2. The Note Purchase Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding contract
of the Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors' rights
generally, and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity or at
law).

      3. The Series 2004-A Notes have been duly authorized by all necessary
corporate action on the part of the Company, and the Notes being delivered on
the date hereof have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law).

      4. The issuance, sale and delivery of the Series 2004-A Notes and the
execution and delivery of the Subsidiary Guaranty under the circumstances
contemplated by the Note Purchase Agreement and the Subsidiary Guaranty do not,
under existing law, require the registration of the Series 2004-A Notes or the
Subsidiary Guaranty under the Securities Act of 1933, as amended, or the
qualification of an indenture under the Trust Indenture Act of 1939, as amended.

                                 EXHIBIT 4.4(c)
                          (to Note Purchase Agreement)

<PAGE>

      The opinion of Chapman and Cutler LLP shall also state that the opinions
of Adam B. Frankel, Assistant Vice President and General Counsel to the Company,
and Simpson Thacher & Bartlett LLP, special counsel to the Company, are
satisfactory in scope and form to Chapman and Cutler LLP and that, in their
opinion, the Purchasers are justified in relying thereon. With respect to
matters of fact upon which such opinion is based, Chapman and Cutler LLP may
rely on appropriate certificates of public officials and officers of the Company
and upon representations of the Company and the Purchasers delivered in
connection with the issuance and sale of the Series 2004-A Notes.

      In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler LLP may rely, as to matters referred to in paragraph 1, solely upon an
examination of the Certificate of Incorporation certified by, and a certificate
of good standing of the Company from, the Secretary of State of the State of
Delaware, the Bylaws of the Company and the general business corporation law of
the State of Delaware. The opinion of Chapman and Cutler LLP is limited to the
laws of the State of New York, the general business corporation law of the State
of Delaware and the Federal laws of the United States.

                                   E-4.4(c)-2

<PAGE>

                             GENESEE & WYOMING INC.

                 [NUMBER] SUPPLEMENT TO NOTE PURCHASE AGREEMENT

                       Dated as of ______________________

      Re: $____________ [_____%/Floating Rate] Series _______ Senior Notes
                            DUE _____________________

                                    EXHIBIT S
                          (to Note Purchase Agreement)

<PAGE>

                             GENESEE & WYOMING INC.
                               66 FIELD POINT ROAD
                          GREENWICH, CONNECTICUT 06830

                                                                     Dated as of
                                                      ____________________, 20__

To the Purchaser(s) named in
Schedule A hereto

Ladies and Gentlemen:

      This [Number] Supplement to Note Purchase Agreement (the "Supplement") is
between GENESEE & WYOMING INC., a Delaware corporation (the "Company"), and the
institutional investors named on SCHEDULE A attached hereto (the "Purchasers").

      Reference is hereby made to that certain Note Purchase Agreement dated as
of November 12, 2004 (the "Note Purchase Agreement") between the Company and the
purchasers listed on SCHEDULE A thereto. All capitalized terms not otherwise
defined herein shall have the same meaning as specified in the Note Purchase
Agreement. Reference is further made to SECTION 2.2 of the Note Purchase
Agreement which requires that, prior to the delivery of any Additional Notes,
the Company and each Additional Purchaser shall execute and deliver a
Supplement.

      The Company hereby agrees with the Purchaser(s) as follows:

      1. The Company has authorized the issue and sale of $__________ aggregate
principal amount of its [_____%/ Floating Rate] Series ______ Senior Notes due
_________, ____ (the "Series ______ Notes"). The Series ____ Notes, together
with the Series 2004-A Notes [and the Series ____ Notes] initially issued
pursuant to the Note Purchase Agreement [and the _________ Supplement] and each
series of Additional Notes which may from time to time hereafter be issued
pursuant to the provisions of SECTION 2.2 of the Note Purchase Agreement, are
collectively referred to as the "Notes" (such term shall also include any such
notes issued in substitution therefor pursuant to SECTION 13 of the Note
Purchase Agreement). The Series _____ Notes shall be substantially in the form
set out in EXHIBIT 1 hereto with such changes therefrom, if any, as may be
approved by the Purchaser(s) and the Company. [ADDITIONAL PROVISIONS TO BE ADDED
IF FLOATING RATE NOTES ARE TO BE ISSUED.]

      2. Subject to the terms and conditions hereof and as set forth in the Note
Purchase Agreement and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to each Purchaser,
and each Purchaser agrees to purchase from the Company, Series _____ Notes in
the principal amount set forth opposite such Purchaser's

<PAGE>

name on SCHEDULE A hereto at a price of 100% of the principal amount thereof on
the closing date hereinafter mentioned.

      3. The sale and purchase of the Series ______ Notes to be purchased by
each Purchaser shall occur at the offices of [Chapman and Cutler LLP, 111 West
Monroe Street, Chicago, Illinois 60603,] at 10:00 A.M. Chicago time, at a
closing (the "Closing") on ______, ____ or on such other Business Day thereafter
on or prior to _______, ____ as may be agreed upon by the Company and the
Purchasers. At the Closing, the Company will deliver to each Purchaser the
Series ______ Notes to be purchased by such Purchaser in the form of a single
Series ______ Note (or such greater number of Series ______ Notes in
denominations of at least $100,000 as such Purchaser may request) dated the date
of the Closing and registered in such Purchaser's name (or in the name of such
Purchaser's nominee), against delivery by such Purchaser to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to account number [__________________________] at ____________ Bank,
[Insert Bank address, ABA number for wire transfers, and any other relevant wire
transfer information]. If, at the Closing, the Company shall fail to tender such
Series ______ Notes to any Purchaser as provided above in this SECTION 3, or any
of the conditions specified in SECTION 4 shall not have been fulfilled to any
Purchaser's reasonable satisfaction, such Purchaser shall, at such Purchaser's
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights such Purchaser may have by reason of such failure or
such nonfulfillment.

      4. The obligation of each Purchaser to purchase and pay for the Series
______ Notes to be sold to such Purchaser at the Closing is subject to the
fulfillment to such Purchaser's reasonable satisfaction, prior to or at the
Closing, of the conditions set forth in SECTION 4 of the Note Purchase Agreement
with respect to the Series ______ Notes to be purchased at the Closing, and to
the following additional conditions:

            (a) Except as supplemented, amended or superceded by the
      representations and warranties set forth in EXHIBIT A hereto, each of the
      representations and warranties of the Company set forth in SECTION 5 of
      the Note Purchase Agreement shall be correct in all material respects as
      of the date of Closing and the Company shall have delivered to each
      Purchaser an Officer's Certificate of the Company, dated the date of the
      Closing certifying that such condition has been fulfilled.

            (b) Contemporaneously with the Closing, the Company shall sell to
      each Purchaser, and each Purchaser shall purchase, the Series ______ Notes
      to be purchased by such Purchaser at the Closing as specified in SCHEDULE
      A.

            (c) A Private Placement Number issued by Standard & Poor's CUSIP
      Service Bureau (in cooperation with the Securities Valuation Office of the
      National Association of Insurance Commissioners) shall have been obtained
      for the Series ___ Notes.

            (d) Each Subsidiary Guarantor shall have executed and delivered a
      Guaranty Ratification with respect to its Subsidiary Guaranty in the form
      of EXHIBIT B attached hereto.

                                      -2-
<PAGE>

      5. [Here insert special provisions for Series ______ Notes including
prepayment provisions applicable to Series ______ Notes (including Make-Whole
Amount and, in the case of floating rate Notes, break amount and prepayment
premium, if applicable) and closing conditions applicable to Series ______
Notes].

      6. Each Purchaser represents and warrants that the representations and
warranties set forth in SECTION 6 of the Note Purchase Agreement are true and
correct on the date hereof with respect to the purchase of the Series ______
Notes by such Purchaser.

      7. The Company and each Purchaser agree to be bound by and comply with the
terms and provisions of the Note Purchase Agreement as fully and completely as
if such Purchaser were an original signatory to the Note Purchase Agreement.

      The execution hereof shall constitute a contract between the Company and
the Purchaser(s) for the uses and purposes hereinabove set forth, and this
agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.

                                                  GENESEE & WYOMING INC.

                                                  By ___________________________

                                                     Name:______________________
                                                     Title:_____________________

Accepted as of __________, _____

                                                  [VARIATION]

                                                  By ___________________________

                                                     Name:______________________
                                                     Title:_____________________

                                      -3-
<PAGE>

                       INFORMATION RELATING TO PURCHASERS

NAME AND ADDRESS OF PURCHASER                                     PRINCIPAL
                                                                AMOUNT OF SERIES
                                                                ______ NOTES TO
                                                                  BE PURCHASED
[NAME OF PURCHASER]                                             $

(1)   All payments by wire transfer of
      immediately available funds to:

      with sufficient information to identify the
      source and application of such funds.

(2)   All notices of payments and written
      confirmations of such wire transfers:

(3)   All other communications:

                                   SCHEDULE A
                                 (to Supplement)

<PAGE>

                          SUPPLEMENTAL REPRESENTATIONS

      The Company represents and warrants to each Purchaser that except as
hereinafter set forth in this EXHIBIT A, each of the representations and
warranties set forth in SECTION 5 of the Note Purchase Agreement is true and
correct in all material respects as of the date hereof with respect to the
Series ______ Notes with the same force and effect as if each reference to
"Series 2004-A Notes" set forth therein was modified to refer the "Series ______
Notes" and each reference to "this Agreement" therein was modified to refer to
the Note Purchase Agreement as supplemented by the _______ Supplement. The
Section references hereinafter set forth correspond to the similar sections of
the Note Purchase Agreement which are supplemented hereby:

      Section 5.3. Disclosure. The Company, through its agent, [Banc of America
Securities LLC] has delivered to each Purchaser a copy of a Private Placement
Memorandum, dated ____________ (the "Memorandum"), relating to the transactions
contemplated by the ______ Supplement. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Restricted Subsidiaries. The Note Purchase Agreement, the
Memorandum, the documents, certificates or other writings delivered to each
Purchaser by or on behalf of the Company in connection with the transactions
contemplated by the Note Purchase Agreement and the _______ Supplement and the
financial statements listed in SCHEDULE 5.5 to the _____ Supplement, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Since ____________, there
has been no change in the financial condition, operations, business, properties
or prospects of the Company or any Restricted Subsidiary except changes that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that would
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Memorandum or in the other documents, certificates and
other writings delivered to each Purchaser by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.

      Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a)
SCHEDULE 5.4 to the ______ Supplement contains (except as noted therein)
complete and correct lists of the Company's Restricted and Unrestricted
Subsidiaries, and showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of
its capital stock or similar equity interests outstanding owned by the Company
and each other Subsidiary. The Company's Material Affiliates (other than
Subsidiaries) and the Company's senior officers and directors are set forth in
Section ____ of the Memorandum.

      Section 5.13. Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Series __ Notes or the Subsidiary
Guaranty or any similar securities for sale to, or solicited any offer to buy
any of the same from, or otherwise approached or negotiated in respect thereof
with, any Person other than the Purchasers and not more than [______] other
Institutional Investors, each of which has been offered the Series ______ Notes
and the Subsidiary Guaranty at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of

                                    EXHIBIT A
                                 (to Supplement)

<PAGE>

the Notes or the Subsidiary Guaranty to the registration requirements of Section
5 of the Securities Act.

      Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Series ______ Notes to
______________________________ and for general corporate purposes. No part of
the proceeds from the sale of the Series ______ Notes pursuant to the _____
Supplement will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 2% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 2% of the
value of such assets. As used in this Section, the terms "margin stock" and
"purpose of buying or carrying" shall have the meanings assigned to them in said
Regulation U.

      Section 5.15. Existing Debt; Future Liens. (a) Schedule 5.15 to the
_________ Supplement sets forth a complete and correct list of all outstanding
Debt of the Company and its Restricted Subsidiaries as of _____________, since
which date there has been no Material change in the amounts, interest rates,
sinking funds, installment payments or maturities of the Debt of the Company or
its Restricted Subsidiaries. Neither the Company nor any Restricted Subsidiary
is in default and no waiver of default is currently in effect, in the payment of
any principal or interest on any Debt of the Company or such Subsidiary and no
event or condition exists with respect to any Debt of the Company or any
Restricted Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.

[Add any additional Sections as appropriate at the time the Series ______ Notes
are issued]

                                      -2-
<PAGE>

                              GUARANTY RATIFICATION

To the Purchasers Named on the
 Attached Schedule I Hereto

      Re:   $_____________ _____% Series _____ Senior Notes
                (the "Series ___ Notes") due ________ __, ____of
                             Genesee & Wyoming Inc.

Ladies and Gentlemen:

      Reference is made to the ______ Supplement to the Note Purchase Agreement
dated as of _________ __, 20__ (the "____ Supplement") to be entered into by and
among Genesee & Wyoming, Inc., a Delaware corporation (the "Company") and the
institutional investors named on Schedule I attached hereto (the "Purchasers").
All terms used and not otherwise defined herein shall have the respective
meanings assigned thereto in the _______ Supplement.

      As an inducement to your purchase of the Series ___ Notes referred to
above, the undersigned does hereby ratify and reaffirm that the payment of all
principal, interest, Make-Whole Amount and all other amounts becoming due from
time to time on the Series ___ Notes are absolutely and unconditionally
guaranteed by the undersigned as provided for by the Subsidiary Guaranty and the
undersigned hereby certifies that the Subsidiary Guaranty is unmodified and
remains in full force and effect.

      This Guaranty Ratification is furnished for good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged by
the undersigned, and the undersigned understands and intends that the Purchasers
will rely on the foregoing and that the undersigned will be legally bound by the
foregoing. This Guaranty Ratification shall inure to the benefit of the
Purchasers and their respective successors and assigns.

      IN WITNESS WHEREOF, the undersigned has executed and delivered this
Guaranty Ratification as of __________ __, 20__, pursuant to proper authority
duly granted.

                                                    [SUBSIDIARY GUARANTOR]

                                                     By: _______________________
                                                         Its

                                    EXHIBIT B
                                 (to Supplement)

<PAGE>

                                   SCHEDULE I

[Purchasers]

<PAGE>

                          [FORM OF SERIES ______ NOTE]

                             GENESEE & WYOMING INC.

                ___% SERIES ______ SENIOR NOTE DUE ______________

No. [_________]                                                           [Date]
$[____________]                                               PPN [____________]

      FOR VALUE RECEIVED, the undersigned, Genesee & Wyoming Inc., a Delaware
corporation (herein called the "Company"), a corporation organized and existing
under the laws of the State of ____________, hereby promises to pay to
[________________], or registered assigns, the principal sum of
[________________] DOLLARS on _______________, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of ____% per annum from the date hereof, payable
semi-annually, on the _____ day of ______ and ______ in each year, commencing on
the first of such dates after the date hereof, until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as defined
in the Note Purchase Agreement referred to below), payable semi-annually as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate equal to [coupon + 2%] per annum.

      Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at ______________________, in ______________________, or at such other
place as the Company shall have designated by written notice to the holder of
this Note as provided in the Note Purchase Agreement referred to below.

      This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to a Supplement, dated ___________, to the Note Purchase
Agreement dated as of November 12, 2004 (as from time to time amended,
supplemented or modified, the "Note Purchase Agreement"), between the Company,
the Purchasers named therein and Additional Purchasers of Notes from time to
time issued pursuant to any Supplement to the Note Purchase Agreement. This Note
and the holder hereof are entitled equally and ratably with the holders of all
other Notes of all series from time to time outstanding under the Note Purchase
Agreement to all the benefits provided for thereby or referred to therein. Each
holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed
to the confidentiality provisions set forth in SECTION 20 of the Note Purchase
Agreement and (ii) to have made the representations set forth in SECTIONS 6.1
and 6.3 of the Note Purchase Agreement.

      This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney

                                    EXHIBIT 1
                                 (to Supplement)

<PAGE>

duly authorized in writing, a new Note of the same series for a like principal
amount will be issued to, and registered in the name of, the transferee. Prior
to due presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

      [The Company will make required prepayments of principal on the dates and
in the amounts specified in the Note Purchase Agreement.] [This Note is not
subject to regularly scheduled prepayments of principal.] This Note is [also]
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement, but not
otherwise.

      Pursuant to the Subsidiary Guaranty Agreement dated as of November 12,
2004 (as amended or modified from time to time, the "Subsidiary Guaranty"),
certain Subsidiaries of the Company have absolutely and unconditionally
guaranteed payment in full of the principal of, Make-Whole Amount, if any, and
interest on this Note and the performance by the Company of its obligations
contained in the Note Purchase Agreement all as more fully set forth in said
Subsidiary Guaranty.

      If an Event of Default, as defined in the Note Purchase Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

      This Note shall be construed and enforced in accordance with, and the
rights of the issuer and the holder hereof shall be governed by, the law of the
State of New York.

                                                     GENESEE & WYOMING INC.

                                                     By
                                                        Name:___________________
                                                        Title:__________________

                                     E-1-2<PAGE>
                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

               This EMPLOYMENT AGREEMENT by and among Sears, Roebuck and Co., a
New York corporation ("Sears"), Kmart Holding Corporation, a Delaware
corporation ("Kmart") and Alan J. Lacy (the "Executive") is dated as of the 16th
day of November, 2004 (the "Agreement").

               Sears and Kmart have determined that it is in the best interests
of Sears and Kmart and their respective shareholders to assure that Sears will
have the continued dedication of the Executive pending the Sears Merger and
the Kmart Merger (each pursuant to and as defined in the Agreement and Plan of
Merger dated as of November 16, 2004 (the "Merger Agreement") by and between
Kmart and Sears (the "Merger Agreement")) and that Sears, Kmart and Sears
Holdings Corporation (the "Company") will have the dedication of the Executive
following consummation of the Sears Merger and the Kmart Merger. Therefore, in
order to accomplish these objectives, the Executive, Sears and Kmart desire to
enter into this Agreement.

               NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

               1. Effective Date. The "Effective Date" shall mean the date on
which the "Effective Time" (as defined in the Merger Agreement) of the Merger
occurs. In the event that the Effective Time shall not occur, this Agreement
shall be null and void ab initio and of no further force and effect.

               2. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to serve the Company, subject to the
terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the fifth anniversary thereof (the "Employment
Period").

               3. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, the Executive shall serve as the Vice Chairman and Chief
Executive Officer of the Company and a member of the Office of the Chairman with
such duties and responsibilities as are customarily assigned to such positions.
It is understood that the President of the Company shall report directly to the
Office of the Chairman. The Executive shall report directly and exclusively to
the Board of Directors of the Company (the "Board"). The Executive shall be
appointed to the Board and shall serve on the Board during the Employment
Period, subject to election by the shareholders of the Company, without
additional consideration.

                    (ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his business attention and time to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a violation of
this Agreement for the Executive to (A) subject to the approval of the Board,
serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational

<PAGE>

institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective Time
and set forth on Schedule A hereto, the continued conduct of such activities (or
the conduct of activities similar in nature and scope thereto) subsequent to the
Effective Time shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.

               (b) Compensation (i) Base Salary. During the Employment Period,
the Executive shall receive an annual base salary ("Annual Base Salary") at a
rate of not less than $1,500,000 payable in accordance with the Company's normal
payroll policies. The Executive's Annual Base Salary shall be reviewed for
increase at least annually by the Board pursuant to its normal performance
review policies for senior executives. Annual Base Salary shall not be reduced
after any increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased.

                    (ii) Annual Bonus. With respect to each fiscal year ending
during the Employment Period, the Executive shall receive an annual bonus
("Annual Bonus") with a target of 150% of the Executive's Annual Base Salary
(the "Reference Bonus"). The actual Annual Bonus, which could be higher or lower
than the Reference Bonus, shall be based on the attainment of performance
objectives as determined by the Compensation Committee of the Board (the
"Committee").

                    (iii) Equity-Based Grants. On the Effective Date, the
Executive will receive a grant of 75,000 restricted shares of the Company (the
"Restricted Shares"). The Restricted Shares will vest on June 30, 2006, subject
to the Executive's continued employment with the Company on the applicable
vesting date and Section 5 of this Agreement. In addition, on the Effective
Date, the Executive will receive a grant of options to purchase 200,000 shares
of the Company's common stock (the "Stock Options") with a per share exercise
price equal to the closing price of a share of the Company's common stock on the
New York Stock Exchange or the NASDAQ (as to be agreed by the parties) on the
date of grant. The Stock Options will vest with respect to 1/4 of the shares
subject to the Stock Option on each of the first four (4) anniversaries of the
Effective Date, subject to the Executive's continued employment with the Company
on each applicable vesting date and Section 5 of this Agreement. In the event of
any stock split, reverse stock split, stock dividend, merger, consolidation,
recapitalization or similar event affecting the capital structure of the Company
occurring prior to the Effective Time, the number of shares subject to the
Restricted Shares and Stock Options shall be equitably and proportionately
adjusted. Effective as of the Effective Time, the Executive and the Company
shall enter into a Restricted Share agreement and a Stock Option agreement
evidencing the grant of the Restricted Shares and the Stock Options in the forms
attached hereto as Exhibit A and Exhibit B, respectively.

                    (iv) Other Employee Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be, shall
be eligible for participation in and shall receive all benefits under savings
and retirement plans that are tax-qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the

                                       2
<PAGE>

"Code"), in plans that are supplemental to any such tax-qualified plans, and
welfare benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, vision,
disability, salary continuance, group life and supplemental group life,
accidental death, travel accident insurance, sick leave and vacation plans,
practices, policies and programs), but not any severance plan, practice, policy
or program, on a basis that is no less favorable than those generally applicable
or made available to other senior executives of the Company. The Executive shall
be eligible for participation in fringe benefits and perquisite plans,
practices, policies and programs (including, without limitation, expense
reimbursement plans, practices, policies and programs) on a basis that is no
less favorable than those generally applicable or made available to other senior
executives of the Company.

               4. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may provide the Executive
with written notice in accordance with Section 10(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the Executive's legal
representative.

               (b) Cause. The Company may terminate the Executive's employment
during the Employment Period either with or without Cause. For purposes of this
Agreement, "Cause" shall mean:

                    (i) the Executive is convicted of, or pleads guilty or nolo
contendere to a charge of commission of, a felony; or

                    (ii) the Executive has engaged in willful gross neglect or
willful gross misconduct in carrying out his duties, which results in material
economic harm to the Company or in reputational harm causing quantifiable
material injury to the Company.

For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Board or the Chairman of
the Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Board at a meeting of

                                       3
<PAGE>

the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in clause (ii)
above, and specifying the particulars thereof in detail.

               (c) Good Reason. The Executive's employment may be terminated by
the Executive with or without Good Reason. For purposes of this Agreement, "Good
Reason" shall mean in the absence of a written consent of the Executive:

                    (i) the assignment to the Executive of any duties
inconsistent with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 3(a) of this Agreement, or any other action by the
Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial or
inadvertent action not taken in bad faith and which is remedied by the Company
within 30 days after receipt of notice thereof given by the Executive;

                    (ii) any failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, other than an isolated,
insubstantial or inadvertent failure not occurring in bad faith and which is
remedied by the Company within 30 days after receipt of notice thereof given by
the Executive;

                    (iii) any requirement by the Company that the Executive's
services be rendered primarily at a location or locations other than Hoffman
Estates, Illinois;

                    (iv) any failure by the Company, Sears or Kmart to comply
with Section 9(c) of this Agreement;

                    (v) any failure to elect or reelect the Executive to the
Board.

For purposes of this provision, "Good Reason" shall cease to exist for an event
on the ninetieth day after the Executive first has knowledge of such event,
unless the Executive has given the Company written notice thereof prior to such
date. Anything in this Agreement to the contrary notwithstanding, a termination
by the Executive for any reason pursuant to a Notice of Termination given during
the 30-day period immediately following June 30, 2006 shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.

               (d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than 30
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance

                                       4
<PAGE>

which contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or circumstance
in enforcing the Executive's or the Company's rights hereunder.

               (e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive with or without Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein within 30 days of such notice,
as the case may be, (ii) if the Executive's employment is terminated by the
Company other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and (iii)
if the Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.

               (f) Resignation. Upon termination of the Executive's employment
for any reason, the Executive agrees to resign, as of the Date of Termination,
to the extent applicable, from any positions that the Executive holds with the
Company and its affiliated companies, the Board (and any committees thereof) and
the Board of Directors (and any committees thereof) of any of the affiliated
companies.

               5. Obligations of the Company upon Termination. (a) Good Reason;
Other Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause, death
or Disability or the Executive shall terminate employment for Good Reason:

                    (i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination (except that the amount
described in clause B below shall be paid when annual bonuses are paid to senior
executives generally) the aggregate of the following amounts:

                    A. the sum of (1) the Executive's accrued Annual Base Salary
               and any accrued vacation pay through the Date of Termination, (2)
               the Executive's business expenses that have not been reimbursed
               by the Company as of the Date of Termination that were incurred
               by the Executive prior to the Date of Termination in accordance
               with the applicable Company policy, and (3) the Executive's
               Annual Bonus earned for the fiscal year immediately preceding the
               fiscal year in which the Date of Termination occurs if such bonus
               has been determined but not paid as of the Date of Termination
               (the sum of the amounts described in clauses (1) through (3),
               shall be hereinafter referred to as the "Accrued Obligations");
               and

                    B. the product of (1) the Annual Bonus, determined as if the
               Executive had remained employed through the end of the applicable
               fiscal year of the Company, and (2) a fraction, the numerator of
               which is the number of days in the fiscal year in which the Date
               of Termination occurs through the Date of Termination, and the
               denominator of which is 365 (the "Pro Rata Bonus"); and

                                       5
<PAGE>

                    C. the amount equal to the product of (1) two and (2) the
               sum of (x) the Executive's Annual Base Salary and (y) the
               Reference Bonus; and

                    (ii) the Executive shall receive two additional years of age
and service credit under all welfare benefit plans, programs, agreements and
arrangements of the Company; and

                    (iii) any equity-based awards granted to the Executive,
including the Restricted Shares and the Stock Options shall vest and become free
of restrictions immediately, any stock options granted to the Executive,
including the Stock Options, shall be exercisable for a period of three years
after his termination of employment, without regard to any provisions relating
to earlier termination of the stock options based on termination of employment
(the "Equity Benefits"); and

                    (iv) for the two-year period following the Date of
Termination, the Company shall continue to provide medical and dental benefits
to the Executive and his eligible dependents as if the Executive remained an
active employee of the Company, and the Executive and his eligible dependents
shall be eligible to participate in the Company's post-retirement welfare
benefit programs in effect for senior executives of the Company (collectively
"Welfare Benefits"). The applicable period of health benefit continuation under
the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") shall begin
on the Date of Termination; and

                    (v) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies through the Date of Termination (such
other amounts and benefits shall be hereinafter referred to as the "Other
Benefits"). As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control with the
Company.

In the event of the Executive's termination during the Employment Period by the
Company other than for Cause or Disability or by the Executive for Good Reason,
each of the Executive and the Company agree to execute a mutual general release
in favor of the other party, substantially in the form attached hereto as
Exhibit C. The payments and provision of benefits to the Executive required by
Section 5(a) (other than the Accrued Obligations and Other Benefits) shall be
conditioned upon the Executive's delivery (and non-revocation prior to the
expiration of the revocation period contained in the release) of such release in
favor of the Company, subject to the Company's delivery to the Executive of such
release in favor of the Executive.

               (b) Death. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for (i) payment of Accrued Obligations, (ii)
the timely payment or provision of Other Benefits, (iii) payment of the Pro Rata
Bonus, (iv) the Welfare Benefits and (v) the Equity Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination and
the Pro Rata Bonus shall be paid to the

                                       6
<PAGE>

Executive's estate or beneficiary, as applicable, on the date specified in
Section 5(a)(i). With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(b) shall include death benefits for which
the Company pays as in effect on the date of the Executive's death and the
continued provision of the Welfare Benefits. The applicable period of health
benefit continuation under COBRA shall begin on the Date of Termination.

               (c) Disability. If the Executive's employment is terminated by
the Company by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for (i) payment of Accrued Obligations, (ii) the timely
payment or provision of Other Benefits, (iii) payment of the Pro Rata Bonus,
(iv) the Welfare Benefits and (v) the Equity Benefits. Accrued Obligations shall
be paid to the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination and the Pro Rata Bonus shall
be paid to the Executive's estate or beneficiary, as applicable, on the date
specified in Section 5(a)(i). With respect to the provision of Other Benefits,
the term Other Benefits as utilized in this Section 5(c) shall include, and the
Executive shall be entitled after the Disability Effective Date to receive,
disability and the continued provision of Welfare Benefits. The applicable
period of health benefit continuation under COBRA shall begin on the Date of
Termination.

               (d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated by the Company for Cause or the Executive
terminates his employment without Good Reason during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (i) the Accrued Obligations through
the Date of Termination and (ii) Other Benefits, in each case to the extent
theretofore unpaid. Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination.

               6. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest by the Company, any of its affiliates or their respective
predecessors, successors or assigns, the Executive, his estate, beneficiaries or
their respective successors and assigns of the validity or enforceability of, or
liability under, any provision of this Agreement (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement); provided, that the Executive prevails on at least one material
claim.

               7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company or any of its
affiliates to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this

                                       7
<PAGE>

Section 7) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.

               (b) Subject to the provisions of Section 7(c), all determinations
required to be made under this Section 7, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Deloitte &
Touche LLP or such other nationally recognized certified public accounting firm
reasonably acceptable to the Executive as may be designated by the Company (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm shall be
borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 7, shall be paid by the Company to the Executive or directly to the
Internal Revenue Service, in the sole discretion of the Company, within five
days of the later of (i) the due date for the payment of any Excise Tax, and
(ii) the receipt of the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 7(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.

               (c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:

                    (i) give the Company any information reasonably requested by
the Company relating to such claim,

                                       8
<PAGE>

                    (ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,

                    (iii) cooperate with the Company in good faith in order
effectively to contest such claim, and

                    (iv) permit the Company to participate in any proceedings
relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 7(c), the Company shall control all proceedings taken in connection
with such contest, and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either pay the
tax claimed to the appropriate taxing authority on behalf of the Executive and
direct the Executive to sue for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; provided, however,
that, if the Company pays such claim and directs the Executive to sue for a
refund, the Company shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and provided,
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which the Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

               (d) If, after the receipt by the Executive of a payment by the
Company of an amount on the Executive's behalf pursuant to Section 7(c), the
Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the requirements of
Section 7(c)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after payment by the Company of an amount on the Executive's behalf pursuant to
Section 7(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then the amount of such payment
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

                                       9
<PAGE>

               8. Confidential Information; Non-Solicit of Employees;
Non-Compete. (a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it or as may be required by applicable law, court order, a
regulatory body or arbitrator or other mediator.

               (b) In consideration of the grant of the Stock Options and the
Company's obligations under Section 5 hereof:

               (i) During the one-year period following the Executive's
termination of employment during the Employment Period for any reason (the
"Restricted Period"), the Executive will not, directly or indirectly, on behalf
of the Executive or any other person, become associated with, whether as a
principal, partner, employee, consultant or shareholder (other than as a holder
of 5% or less of the outstanding voting shares of any publicly traded company),
a Competitor. For purposes of this Section 8(b) a "Competitor" shall mean any
entity that is actively engaged in any retail business with more than $1 billion
in annual revenue from such retail business; provided, however, that if the
Executive terminates employment for any reason pursuant to a Notice of
Termination given during the 30-day period immediately following June 30, 2006,
a "Competitor" shall mean only Wal-Mart Stores, Inc., The Home Depot, Inc.,
Target Corporation, J. C. Penney Company, Inc., Lowe's Companies, Inc., Best Buy
Co., Inc., Circuit City Stores, Inc., or Kohl's Corporation, or any successor
thereto.

               (ii) During the Restricted Period, the Executive shall not,
directly or indirectly, solicit or encourage any person to leave his or her
employment with the Company or assist in any way with the hiring of any Sears
employee by any other business.

               (c) The Executive acknowledges that the Company would be
irreparably injured by a violation of this Section 8 and the Executive or the
Company, as applicable, agrees that the Company or the Executive, as applicable,
in addition to any other remedies available to it for such breach or threatened
breach, shall be entitled, without posting a bond, to a preliminary injunction,
temporary restraining order, or other equivalent relief, restraining the
Executive or the Company (including its executive officers and directors), as
applicable, from any actual or threatened breach of this Section 8.

               9. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives, heirs or legatees.

                                       10
<PAGE>

               (b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.

               (c) Kmart and Sears will assign and cause the Company to assume
this Agreement as soon as practicable following the formation of the Company and
in no event later than the Effective Time. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

               10. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. If, under any such law, any portion
of this Agreement is at any time deemed to be in conflict with any applicable
statute, rule, regulation or ordinance, such portion shall be deemed to be
modified or altered to conform thereto. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives.

               (b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other parties or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

If to the Executive:   At the most recent address
                       on file at the Company.

If to Sears:           Sears, Roebuck and Co.
                       3333 Beverly Road
                       Hoffman Estates, Illinois 60179
                       Attention: General Counsel

If to Kmart:           Kmart Holding Corporation
                       3100 West Big Beaver Road
                       Troy, Michigan 48084-3163
                       Attention: General Counsel

If to the Company:     Sears Holdings Corporation
                       3333 Beverly Road
                       Hoffman Estates, Illinois 60179
                       Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

                                       11
<PAGE>

               (c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

               (d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

               (e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement, except as set forth in Section 4(c).

               (f) Except as otherwise expressly provided herein, from and after
the Effective Time, this Agreement shall supersede any other employment,
severance or change of control agreement between the parties and between the
Executive and Sears, with respect to the subject matter hereof (including
without limitation, the Executive Non-Disclosure and Non-Solicitation of
Employees Agreement and the Executive Severance/Non-Compete Agreement between
the Executive and Sears, each dated as of November 26, 2001). Any provision of
this Agreement that by its terms continues after the expiration of the
Employment Period or the termination of the Executive's employment shall survive
in accordance with its terms.

                                       12
<PAGE>

               IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
Sears and Kmart have caused these presents to be executed in its name on its
behalf, all as of the day and year first above written and Kmart has caused
these presents to be assumed in the name of the Company and on its behalf, as of
the date set forth below.

                                       ALAN J. LACY

                                       /s/ Alan J. Lacy
                                       -----------------------------------------

                                       KMART HOLDING CORPORATION

                                       By /s/ William C. Crowley
                                          --------------------------------------
                                       Name:  William C. Crowley
                                       Title:  Senior Vice President, Finance

                                       SEARS, ROEBUCK AND CO.

                                       By /s/ Glenn R. Richter
                                          --------------------------------------
                                       Name:  Glenn R. Richter
                                       Title:  Senior Vice President and
                                               Chief Financial Officer

Assumed by Sears Holdings Corporation:

By
  -----------------------------
Name:
Title:
Date:

<PAGE>

                                    EXHIBIT A

                           SEARS HOLDINGS CORPORATION
                           RESTRICTED SHARE AGREEMENT

               RESTRICTED SHARE AGREEMENT, entered into as of [ ], 200[ ],
between Sears Holdings Corporation, a Delaware corporation (the "Company"), and
Alan J. Lacy (the "Executive");

               WHEREAS, Sears, Roebuck and Co., a New York corporation, and
Kmart Holding Corporation, a Delaware corporation, and the Executive have
entered into an employment agreement dated as of the 16th day of November, 2004
(the "Employment Agreement"), which has been assumed by the Company, pursuant to
which, among other things, the Company has determined that, as an inducement
material to the Executive's agreement to enter into employment with the Company,
in satisfaction of certain of the Company's obligations under Section 3(b)(iii)
of the Employment Agreement, and subject to the restrictions stated below, the
Executive should be granted shares of the Company's common stock, par value $.01
(the "Common Stock");

               WHEREAS, the Company desires to grant the Executive 75,000 shares
of restricted Common Stock (the "Restricted Shares");

               NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the parties
hereto do hereby agree as follows:

1.   Capitalized Terms. Capitalized terms not defined herein shall have the
     definitions ascribed to such terms in the Employment Agreement.

2.   Grant. Pursuant to Section 3(b)(iii) of the Employment Agreement, the
     Executive is hereby granted, effective as of the Effective Date (the "Grant
     Date") and subject to the terms and conditions of this Agreement, 75,000
     Restricted Shares.

3.   Equity Plan. At such time, if any, as the Company shall have adopted (and,
     if required, there shall have been approved by the Company's shareholders)
     an equity incentive plan under which restricted shares of Common Stock may
     be granted (the "Plan"), the Restricted Shares and this Agreement shall be
     subject to the terms of such Plan, to the extent the terms of such Plan are
     not inconsistent with the terms of this Agreement and the applicable
     provisions of the Employment Agreement.

4.   Issuance of Stock. The Restricted Shares shall be held in the custody of
     the Company or its designee for the Executive's benefit. The Restricted
     Shares shall be subject to the restrictions described herein. The
     Restricted Shares shall bear appropriate legends with respect to the
     restrictions described herein.

                                      A-1
<PAGE>

5.   Vesting.

     (a)  The Restricted Shares shall vest in full and become free of
          restrictions on June 30, 2006, provided that the Executive is employed
          by or rendering services to the Company or a subsidiary or affiliate
          thereof as of each such date.

     (b)  Notwithstanding the foregoing, any unvested Restricted Shares shall
          immediately vest in full, and become free of restriction upon the
          Executive's termination of employment (i) by the Company without
          Cause, (ii) by the Executive for Good Reason, or (iii) by reason of
          the Executive's death or Disability.

6.   Restrictions.

     (a)  No portion of the Restricted Shares or rights granted hereunder may be
          sold, transferred, assigned, pledged or otherwise encumbered or
          disposed of by the Executive until such portion of the Restricted
          Shares becomes vested in accordance with Section 3 of this Agreement,
          and any purported sale, transfer, assignment, pledge, encumbrance or
          disposition shall be void and unenforceable against the Company. The
          period of time between the Grant Date and the date all Restricted
          Shares become vested is referred to herein as the "Restriction
          Period."

     (b)  If the Executive's employment with the Company terminates for any
          reason which does not result in vesting of the Restricted Shares as
          provided in Section 3 above, the balance of the Restricted Shares
          subject to the provisions of this Agreement which have not vested at
          the time of the Executive's termination of employment shall be
          forfeited by the Executive, and ownership transferred back to the
          Company.

7.   Executive Shareholder Rights. During the Restriction Period, the Executive
     shall have all the rights of a shareholder with respect to the Restricted
     Shares except for the right to transfer the Restricted Shares, as set forth
     in Section 4 of this Agreement. Accordingly, the Executive shall have the
     right to vote the Restricted Shares and to receive any cash dividends paid
     to or made with respect to the Restricted Shares, provided, however, that
     dividends paid, if any, with respect to that Restricted Shares which has
     not vested at the time of the dividend payment shall be held in the custody
     of the Company and shall be subject to the same restrictions that apply to
     the corresponding Restricted Shares; provided, further, that if such a
     restriction on dividends would be subject to the tax imposed under the
     provisions of Section 409A of the Code, such dividends shall be paid to the
     Executive immediately and shall not be subject to the same restrictions
     that apply to the corresponding Restricted Shares.

8.   Changes in Stock. In the event of (a) a stock dividend, stock split,
     reverse stock split, share combination, or recapitalization or similar
     event of or by the Company (each, a "Share Change"), or (b) a merger,
     consolidation, acquisition of property or shares, separation, spinoff,
     reorganization, stock rights offering, liquidation, disaffiliation, or
     similar event of or by the Company (each, a "Corporate Transaction"), in
     each case, affecting the Common Stock, the Committee or the Board may in
     its discretion make

                                      A-2
<PAGE>

     such substitutions or adjustments as it deems appropriate and equitable to
     adjust the number and kind of Restricted Shares. In the case of Corporate
     Transactions, (x) unless otherwise determined by the Committee, if the
     Corporate Transaction results in shareholders of Common Stock receiving
     cash, securities, property, or any combination thereof in exchange for each
     share of Common Stock, such consideration being exchanged for each share of
     Common Stock shall be substituted for each Restricted Share subject to this
     Agreement, and (y) the Committee may in its discretion make such
     alternative or additional substitutions or adjustments as it deems
     appropriate and equitable, including, without limitation, (i) the
     cancellation of the Restricted Shares in exchange for payments of cash,
     property or a combination thereof having an aggregate value equal to the
     value of the Restricted Shares, as determined by the Committee or the Board
     in its sole discretion (it being understood that in the case of a Corporate
     Transaction with respect to which shareholders of Common Stock receive
     consideration other than equity securities of the ultimate surviving
     entity, any such determination by the Committee that the value of the
     Restricted Shares shall for this purpose be deemed to equal the value of
     the consideration being paid for each share of Common Stock pursuant to
     such Corporate Transaction shall conclusively be deemed valid); and (ii)
     the substitution of other property (including, without limitation, cash or
     other securities of the Company and securities of entities other than the
     Company) for the Restricted Shares. The determination of the Committee
     regarding any adjustment shall be final and conclusive.

9.   Taxes. No later than the date as of which an amount first becomes
     includible in the gross income of the Executive for federal income tax
     purposes with respect to any Restricted Shares, the Executive shall pay to
     the Company, or make arrangements satisfactory to the Company regarding the
     payment of, all federal, state, local and foreign taxes that are required
     by applicable laws and regulations to be withheld with respect to such
     amount. The Executive may direct the Company, to the extent permitted by
     law, to deduct any such taxes from any payment otherwise due to the
     Executive, including the delivery of the Restricted Shares that gives rise
     to the withholding requirement.

10.  Notices. Any notices required or permitted hereunder shall be addressed to
     the Company at its corporate headquarters, attention: General Counsel, or
     to the Executive at the address then on record with the Company, as the
     case may be, and deposited, postage prepaid, in the United States mail.
     Either party may, by notice to the other given in the manner aforesaid,
     change his/her or its address for future notices.

11.  Governing Law. This Agreement shall be governed by and construed in
     accordance with the laws of the State of Delaware without regard to its
     conflict of laws principles.

12.  Successor. This Agreement shall bind and inure to the benefit of the
     Company, its successors and assigns, and the Executive and his or her
     personal representatives and assigns.

13.  Amendment. This Agreement may be amended or modified at any time by an
     instrument in writing signed by the parties hereto.

                                      A-3
<PAGE>

14.  Certificates. Certificates representing the Restricted Shares as originally
     or from time to time constituted shall bear the following legend:

     The Shares represented by this stock certificate have been granted as
     restricted stock under a Restricted Share Agreement between the registered
     holder of these Shares and the Company. The Shares represented by this
     stock certificate may not be sold, exchanged, assigned, transferred,
     pledged, hypothecated or otherwise encumbered or disposed of until the
     restrictions set forth in the Restricted Stock Agreement between the
     registered holder of these Shares and the Company shall have lapsed.

As soon as administratively practicable after the lapsing of the restrictions
with respect to any Restricted Shares, the Company shall deliver to the
Executive or his or her personal representative, in book-entry or certificate
form, the formerly Restricted Shares that do not bear any restrictive legend
making reference to this Agreement. Such Shares shall be free of restrictions,
except for any restrictions required under Federal securities laws.

15.  Laws and Regulations. No shares of Common Stock shall be issued under this
     Agreement unless and until all legal requirements applicable to the
     issuance of such shares have been complied with to the satisfaction of the
     Committee. The Committee shall have the right to condition any issuance of
     shares of Common Stock to the Executive hereunder on the Executive's
     undertaking in writing to comply with such restrictions on the subsequent
     disposition of such shares as the Committee shall deem necessary or
     advisable as a result of any applicable law or regulation.

16.  Registration. As of the Grant Date, the Company shall, at its expense,
     cause issuance of the Restricted Shares and the resale thereof to be
     registered under the Securities Act of 1933, as amended, and registered or
     qualified under applicable state law, to be freely resold. The Company
     shall thereafter maintain the effectiveness of such registration and
     qualification for so long as the Executive holds the Restricted Shares (or
     any portion thereof) or any of the shares of Common Stock that were
     previously Restricted Shares, or until such earlier date as such Restricted
     Shares and shares of Common Stock, as applicable, may otherwise be freely
     sold under applicable law.

17.  Miscellaneous.

     (a)  The Company shall not be required (i) to transfer on its books any
          Restricted Shares which shall have been sold or transferred in
          violation of any of the provisions set forth in this Agreement, or
          (ii) to treat as owner of such shares or to accord the right to vote
          as such owner or to pay dividends to any transferee to whom such
          shares shall have been so transferred.

     (b)  This Agreement shall not be construed so as to grant the Executive any
          right to remain in the employ of the Company.

     (c)  This Agreement may be executed in counterparts, which together shall
          constitute one and the same original.

                                      A-4
<PAGE>

               IN WITNESS WHEREOF, the Company has caused this Agreement to be
duly executed by its officer thereunder duly authorized and the Executive has
hereunto set his hand, all as of the day and year first set forth above.

                                     SEARS HOLDINGS CORPORATION

                                     ---------------------------------
                                     Name:
                                     Title:

ACCEPTED:

The undersigned hereby acknowledges having read this Restricted Share Agreement
and hereby agrees to be bound by all provisions set forth herein.

                                     ---------------------------------
                                     Executive

<PAGE>

                                    EXHIBIT B

                           SEARS HOLDINGS CORPORATION
                       NONQUALIFIED STOCK OPTION AGREEMENT

               NONQUALIFIED STOCK OPTION AGREEMENT, entered into as of [ ],
200[ ], between Sears Holdings Corporation, a Delaware corporation (the
"Company"), and Alan J. Lacy (the "Executive");

               WHEREAS, Sears, Roebuck and Co., a New York corporation, and
Kmart Holding Corporation, a Delaware corporation, and the Executive have
entered into an employment agreement dated as of the 16th day of November, 2004
(the "Employment Agreement"), which has been assumed by the Company, pursuant to
which, among other things, the Company has determined that, as an inducement
material to the Executive's agreement to enter into employment with the Company,
in satisfaction of certain of the Company's obligations under Section 3(b)(iii)
of the Employment Agreement, the Executive should be granted by the Company a
nonqualified option to purchase shares of its common stock (the "Option");

               WHEREAS, the Company desires to grant such Option to the
Executive;

               NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the parties
hereto do hereby agree as follows:

1.   Capitalized Terms. Capitalized terms not defined herein shall have the
     definitions ascribed to such terms in the Employment Agreement.

2.   Grant. Pursuant to Section 3(b)(iii) of the Employment Agreement, the
     Executive is hereby granted as of the Effective Date (the "Grant Date") and
     subject to the terms and conditions of this Agreement, a nonqualified stock
     option (the "Option") to purchase an aggregate of 250,000 shares of the
     Company's common stock, par value $0.01 ("Common Stock"). Shares of Common
     Stock subject to the Option shall be referred to herein as "Option Shares".

3.   Equity Plan. At such time, if any, as the Company shall have adopted (and,
     if required, there shall have been approved by the Company's shareholders)
     an equity incentive plan under which stock options may be granted (the
     "Plan"), the Option and this Agreement shall be subject to the terms of
     such Plan, to the extent the terms of such Plan are not inconsistent with
     the terms of this Agreement and the applicable provisions of the Employment
     Agreement.

4.   Option Term. Subject to earlier termination as provided herein, the Option
     shall expire on the tenth anniversary of the Grant Date (the "Expiration
     Date").

5.   Purchase Price. The purchase price per share of Common Stock with respect
     to the Option shall be [the closing price of a share of the Company's
     common stock on the New York Stock Exchange or the NASDAQ (as to be agreed
     by the parties) on the Grant Date,

                                      B-1
<PAGE>

     provided that such a means of determining the exercise price will not
     result in the imposition of taxes under Section 409A of the Code].

6.   Vesting/Exercisability. The Option shall vested and become exercisable with
     respect to 67,500 shares of Common Stock on each of the first four (4)
     anniversaries of the Grant Date, provided that the Executive is employed by
     or rendering services to the Company or a subsidiary or affiliate thereof
     as of each such date. The Option may be exercised either for the total
     number of shares of Common Stock vested, or for less than the total number
     in multiples of 100 shares of Common Stock.

7.   No Rights as a Shareholder. The Executive or other permitted holder of the
     Option shall have none of the rights of a shareholder of Common Stock with
     respect to the shares of Common Stock covered by the Option until the
     Option Shares are issued or transferred to such holder upon exercise of the
     Option.

8.   Method of Exercise. Upon the exercise of the Option, the purchase price may
     be paid (a) in cash or cash equivalents, or (b) by tendering to the Company
     shares of Common Stock already owned by the Executive, which, in the case
     of shares of Common Stock purchased by the Executive pursuant to the
     exercise of an option granted by the Company, have been held by the
     Executive for no less than six months following the date of such purchase,
     in any case having a total Fair Market Value (as defined in the Plan and,
     if no Plan, based on the closing price of a share of the Company's common
     stock on the New York Stock Exchange or the NASDAQ (as to be agreed by the
     parties) on the date of exercise) equal to the aggregate purchase price,
     (c) to the extent permitted by law, by a "cashless exercise" procedure
     approved by the Compensation Committee of the Board of Directors of the
     Company or any other committee of the board of directors of the Company
     performing similar functions (the "Committee"), or (d) by a combination of
     the foregoing methods. The Option shall be exercised by written notice of
     election in such form as shall be determined by the Committee and delivered
     in person or by regular mail to the Company at its principal executive
     office.

9.   Withholding. The Company may require that the Executive pay to the Company
     at the time of exercise of any portion of the Option the amount necessary
     to satisfy the Company's liability to withhold federal, state or local
     income tax or any other employment taxes incurred by reason of the exercise
     of the Option. The Executive may satisfy the foregoing requirement by (a)
     tendering to the Company shares of Common Stock already owned by the
     Executive, which, in the case of shares of Common Stock purchased by the
     Executive pursuant to the exercise of an option granted by the Company,
     have been held by the Executive for no less than six months following the
     date of such purchase, or (b) by electing to have the Company withhold from
     delivery Option Shares, provided that, in either case, such shares have a
     Fair Market Value equal to the minimum amount of tax required to be
     withheld. Such shares of Common Stock shall be valued at their Fair Market
     Value (as defined above) on the date as of which the amount of tax to be
     withheld is determined.

                                      B-2
<PAGE>

10.  Effect of Termination of Employment.

     (a)  If the employment of the Executive with the Company and its
          subsidiaries and affiliates is terminated by reason of his death or
          Disability, or by the Company without Cause or by the Executive for
          Good Reason, the Option shall become immediately vested and
          exercisable in full as of the date of such termination of employment
          and any portion of the Option that is or becomes vested and
          exercisable pursuant to this Section 10(a) as of the date of the
          Executive's termination of employment shall be exercisable by the
          Executive (or other Option holder, as applicable) for the period
          ending on the third anniversary of such termination of employment, but
          no later than the Expiration Date.

     (b)  If the employment of the Executive with the Company and its
          subsidiaries and affiliates is terminated by the Company for Cause,
          the Option shall immediately be forfeited and cancelled in its
          entirety as of the date of such termination of employment.

     (c)  If the employment of the Executive with the Company and its
          subsidiaries and affiliates is terminated other than as provided under
          Sections 10(a) and 10(b) above, any vested portion of the Option as of
          the date of termination of employment shall remain exercisable for 90
          days, but no later than the Expiration Date, and the remainder of the
          Option shall immediately be forfeited and cancelled in its entirety as
          of the date of such termination of employment.

11.  Adjustment. In the event of (a) a stock dividend, stock split, reverse
     stock split, share combination, or recapitalization or similar event of or
     by the Company (each, a "Share Change"), or (b) a merger, consolidation,
     acquisition of property or shares, separation, spinoff, reorganization,
     stock rights offering, liquidation, disaffiliation, or similar event of or
     by the Company (each, a "Corporate Transaction"), in each case, affecting
     the Common Stock, the Committee or the Board may in its discretion make
     such substitutions or adjustments as it deems appropriate and equitable to
     (i) adjust the number and kind of shares subject to the Stock Option, (ii)
     adjust the exercise price per share of the Stock Option. In the case of
     Corporate Transactions, (x) unless otherwise determined by the Committee,
     if the Corporate Transaction results in shareholders of Common Stock
     receiving cash, securities, property, or any combination thereof in
     exchange for each share of Common Stock, such consideration being exchanged
     for each share of Common Stock shall be substituted for each share of
     Common Stock subject to this Agreement, and (y) the Committee may in its
     discretion make such alternative or additional substitutions or adjustments
     as it deems appropriate and equitable, including, without limitation, (A)
     the cancellation of the Stock Option in exchange for payments of cash,
     property or a combination thereof having an aggregate value equal to the
     value of the Stock Option, as determined by the Committee or the Board in
     its sole discretion (it being understood that in the case of a Corporate
     Transaction with respect to which shareholders of Common Stock receive
     consideration other than equity securities of the ultimate surviving
     entity, any such determination by the Committee that the value of the Stock
     Option shall for this purpose be deemed to equal the excess, if any, of the
     value of the consideration being paid for each share of Common Stock
     pursuant to such Corporate

                                      B-3
<PAGE>

     Transaction over the exercise price per share of the Stock Option shall
     conclusively be deemed valid) and (B) the substitution of other property
     (including, without limitation, cash or other securities of the Company and
     securities of entities other than the Company) for the Stock Option. The
     determination of the Committee regarding any adjustment will be final and
     conclusive.

12.  Transferability of Option. The Option shall not be transferable other than
     (a) by will or the laws of descent and distribution or (b) to the
     Participant's family members, whether directly or indirectly or by means of
     a trust or partnership or otherwise or (c) as otherwise determined by the
     Committee. For purposes of this Agreement, "family member" shall have the
     meaning given to such term in General Instructions A.1(a)(5) to Form S-8
     under the Securities Act of 1933, as amended, and any successor thereto.
     The Option shall be exercisable during the Executive's lifetime only by the
     Executive or by his guardian or legal representative or the permitted
     transferees pursuant to clause (a), (b) and (c) of this Section 12.

13.  Laws and Regulations. No shares of Common Stock shall be issued under this
     Option unless and until all legal requirements applicable to the issuance
     of such shares of Common Stock have been complied with to the satisfaction
     of the Committee. The Committee shall have the right to condition any
     issuance of shares to the Executive hereunder on the Executive's
     undertaking in writing to comply with such restrictions on the subsequent
     disposition of such shares as the Committee shall deem necessary or
     advisable as a result of any applicable law or regulation.

14.  Registration. As of the Grant Date, the Company shall, at its expense,
     cause issuance of the Option, the exercise of the Option and the resale of
     the shares of Common Stock subject to the Option to be registered under the
     Securities Act of 1933, as amended, and registered or qualified under
     applicable state law, to be freely resold. The Company shall thereafter
     maintain the effectiveness of such registration and qualification for so
     long as the Executive holds the Option (or any portion thereof) or any of
     the Option Shares, or until such earlier date as such Option Shares may
     otherwise be freely sold under applicable law. The Company shall take all
     corporate action necessary to reserve for issuance a sufficient number of
     shares of common stock for delivery with respect to the Options.

15.  Notices. Any notices required or permitted hereunder shall be addressed to
     the Company at its corporate headquarters, attention: General Counsel, or
     to the Executive at the address then on record with the Company, as the
     case may be, and deposited, postage prepaid, in the United States mail.
     Either party may, by notice to the other given in the manner aforesaid,
     change his/her or its address for future notices.

16.  Governing Law. This Agreement shall be governed by and construed in
     accordance with the laws of the State of Delaware without regard to its
     conflict of laws principles.

17.  Successor. This Agreement shall bind and inure to the benefit of the
     Company, its successors and assigns, and the Executive and his or her
     personal representatives and assigns.

                                      B-4
<PAGE>

18.  Amendment. This Agreement may be amended or modified at any time by an
     instrument in writing signed by the parties hereto.

19.  Miscellaneous.

     (a)  This Agreement shall not be construed so as to grant the Executive any
          right to remain in the employ of the Company.

     (b)  This Agreement may be executed in counterparts, which together shall
          constitute one and the same original.

                                      B-5
<PAGE>

               IN WITNESS WHEREOF, the Company has caused this Agreement to be
duly executed by its officer thereunder duly authorized and the Executive has
hereunto set his hand, all as of the day and year first set forth above.

                                     SEARS HOLDINGS CORPORATION

                                     ---------------------------------
                                     Name:
                                     Title:

ACCEPTED:

The undersigned hereby acknowledges having read this Nonqualified Stock Option
Agreement and hereby agrees to be bound by all provisions set forth herein.

                                     ---------------------------------
                                     Executive

<PAGE>

                                    EXHIBIT C

     For and in consideration of the payments and other benefits described in
the employment agreement dated as of November 16, 2004 (the "Agreement") by and
among Sears, Roebuck and Co., a New York corporation ("Sears"), and Kmart
Holding Corporation, a Delaware corporation ("Kmart"), and Alan J. Lacy
("Executive"), which has been assumed by Sears Holdings Corporation (the
"Company") and for other good and valuable consideration, Executive hereby
releases the Company, its divisions, affiliates, subsidiaries, parents,
branches, predecessors, successors, assigns, officers, directors, trustees,
employees, agents, shareholders, administrators, representatives, attorneys,
insurers and fiduciaries, past, present and future (the "Released Parties") from
any and all claims of any kind arising out of, or related to, his employment
with the Company, its affiliates and subsidiaries (collectively, with the
Company, the "Affiliated Entities"), his separation from employment with the
Affiliated Entities or derivative of Executive's employment, which Executive now
has or may have against the Released Parties, whether known or unknown to
Executive, by reason of facts which have occurred on or prior to the date that
Executive has signed this Release. Such released claims include, without
limitation, any and all claims under federal, state or local laws pertaining to
employment, including, without limitation, the Age Discrimination in Employment
Act, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section
2000e et. seq., the Fair Labor Standards Act, as amended, 29 U.S.C. Section 201
et. seq., the Americans with Disabilities Act, as amended, 42 U.S.C. Section
12101 et. seq. the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C.
Section 1981 et. seq., the Rehabilitation Act of 1973, as amended, 29 U.S.C.
Section 701 et. seq., the Family and Medical Leave Act of 1992, 29 U.S.C.
Section 2601 et. seq., and any and all state or local laws regarding employment
discrimination and/or federal, state or local laws of any type or description
regarding employment, including but not limited to any claims arising from or
derivative of Executive's employment with the Affiliated Entities, as well as
any and all claims under state contract or tort law.

     Executive has read this Release carefully, acknowledges that Executive has
been given at least 21 days to consider all of its terms and has been advised to
consult with any attorney and any other advisors of Executive's choice prior to
executing this Release, and Executive fully understands that by signing below
Executive is voluntarily giving up any right which Executive may have to sue or
bring any other claims against the Released Parties, including any rights and
claims under the Age Discrimination in Employment Act. Executive also
understands that Executive has a period of seven days after signing this Release
within which to revoke his agreement, and that neither the Company nor any other
person is obligated to make any payments or provide any other benefits to
Executive pursuant to the Agreement until eight days have passed since
Executive's signing of this Release without Executive's signature having been
revoked, other than the Accrued Obligations and the Other Benefits (in each
case, as defined in the Agreement). Finally, Executive has not been forced or
pressured in any manner whatsoever to sign this Release, and Executive agrees to
all of its terms voluntarily.

                                      C-1
<PAGE>

     For and in consideration of the obligations upon Executive as set forth in
the Agreement, and for other good and valuable consideration, the Company hereby
(on its own behalf and that of the other Affiliated Entities, the divisions and
predecessors and successors of the Affiliated Entities and the directors and
officers of the Company in their capacity as such (collectively, the "Releasing
Entities")) releases Executive and his heirs, executors, successors and assigns
(the "Executive Released Parties") of and from all debts, obligations, promises,
covenants, collective bargaining obligations, agreements, contracts,
endorsements, bonds, controversies, suits, claims or causes of every kind and
nature whatsoever, arising out of, or related to, his employment with the
Affiliated Entities, his separation from employment with the Affiliated Entities
or derivative of Executive's employment, which the Releasing Entities now have
or may have against the Executive Released Parties, whether known or unknown, by
reason of facts which have occurred on or prior to the date that the Company has
signed this Release; provided, however, that nothing contained in this Release
shall release the Executive Released Parties from any claim or form of liability
arising out of acts or omissions by Executive which constitute a violation of
the criminal or securities laws of any applicable jurisdiction.

     Notwithstanding anything else herein to the contrary, this Release shall
not affect: the obligations of the Company or Executive set forth in the
Agreement or other obligations that, in each case, by their terms, are to be
performed after the date hereof by the Company or Executive (including, without
limitation, obligations to Executive under any stock option, stock award or
agreements or obligations under any pension plan or other benefit or deferred
compensation plan, all of which shall remain in effect in accordance with their
terms); obligations to indemnify Executive respecting acts or omissions in
connection with Executive's service as a director, officer or employee of the
Affiliated Entities; or any right Executive may have to obtain contribution in
the event of the entry of judgment against Executive as a result of any act or
failure to act for which both Executive and any of the Affiliated Entities are
jointly responsible.

     This Release, and the attached covenants, are final and binding and may not
be changed or modified except in a writing signed by both parties.

     -------------------------                  -------------------------
               Date                                    ALAN J. LACY

     -------------------------                  -------------------------
               Date                             SEARS HOLDINGS CORPORATION

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